Have you ever had the first pick in the 2020 NFL fantasy draft and thought about drafting Christian McCaffrey? Maybe you looked back at his stats from his career and thought that he would be a sure thing for this year. You have judged his future production based on previous production.
There is a chance that past production does not always predict future success. Economics does not just apply to money. Opportunity cost is identifying what you have to give up to get something. What are you missing out on with any choice that you make?
There is a formula for investments that works well with fantasy football players. According to Investopedia,
OC = FO - CO
OC - Opportunity Cost
FO - Return on best Foregone Option
CO - Return on Chosen Option
All examples are based on PPR scoring with 12 team leagues.
Fantasy points scored are from fantasydata.com
Average draft positions are from fantasyfootballcalculator.com
Let’s look at Le’Veon Bell's hold out year for example. In 2017 Le’Veon Bell was the RB2 overall and scored 341.6 points. Judging from his past success as an RB3 overall in 2016, expert consensus rankings were very high on his expectations for 2018. Average draft position (ADP) had him going with the third overall pick in redraft. Owner JetPack Galileo trusts the experts and decides to choose Bell with the third overall pick. He wound up scoring 0 points in 2018.
CO - Le’Veon Bell Return on Investment (ROI)= 0
One option that was foregone with his selection was James Connor, whose ADP was in the 14th round. In 2018, he scored 280 points and was the RB6 overall.
FO - James Connor ROI = 280
Therefore, the opportunity cost of selecting Le’Veon Bell over James Connor was
OC = FO - CO
OC = 280 - 0
OC = 280
JetPack Galileo’s choice of Bell over James Connor was 280 points that his fantasy team missed out on in 2018. The opportunity cost was 280 points.
This example used James Connor for his relevance to Le’Veon Bell, but any player selected with the 3rd overall or later can be used to compare to his score.
For example, Michael Risher was very excited about Patrick Mahomes after his breakout year in 2018 as the QB1 overall in scoring.
Sorry, I meant Patrick MAHOMES
Risher decided that, based on Mahomies’ previous production, his ADP in the second round was a fair price. In 2019, Patrick Mahomes dislocated his knee cap and missed some time.
Meanwhile, Lamar Jackson, a previous Heisman Trophy award winner in college, had little work in 2018 with the Baltimore Ravens and his ADP was in the 9th round.
With his second round pick, Risher chose Mahomes over Jackson.
CO - Mahomes ROI - 287.04 points
FO - Jackson ROI - 415.68 points
OC = 415.68 - 287.04
OC = 128.64
Michael Risher misses out on 128.64 fantasy points for his team by choosing Mahomes over Jackson. The opportunity cost was 128.64 points.
Looking at raw points is the easiest way to understand the opportunity cost. We can step it up a notch by looking at the sunk cost.
How much did you pay for these assets? Draft capital has different costs. From my previous article on Points Above Replacement, the average points scored by the top 24 quarterbacks with 4 point passing touchdowns was 268 points. If you take the highest rated QB you expect higher production than the average. In 2019, Jackson scored 168 points above the QB12, while Mahomes only scored 39 points above the QB12.
On top of the loss of points when each are compared, there are other options that would only be available with similar picks that are also lost. These are other ways to look at the opportunity cost. With a second round pick in 2019 you could have chosen a running back like Derrick Henry or a tight end like Travis Kelce then acquired Lamar Jackson in later rounds.
The problem with having the first overall pick is that the best player in fantasy for that next year was on the board, and you could have picked that player. Maybe it is Christian McCaffrey, and maybe it is Todd Gurley. We will not know until players take the field.
How can the opportunity cost be used to help build your fantasy football team? It can be used to compare different positions for specific picks. If the goal is to maximize the number of points scored in a year, you can look at the opportunity cost between different positions.
Say you have a second-round pick in 2020 redraft, and you could take Travis Kelce, Chris Godwin, or Leonard Fournette.
Previous stats show in 2019,
Godwin is the best choice.
Projections for 2020 are more difficult with the numerous sources of information. Let's stick with ADP from Fantasyfootballcalculator.com.
Kelce: 2nd round 7th pick
Godwin: 2nd round 9th pick
Fournette: 3rd round 7th pick
Kelce is the best choice.
Scarcity can also be looked at when valuing positions. In my previous Points Above Replacement article, I showed that top running backs are the most valuable because they have the most significant drop off in points between starters and replacement across all positions.
You may also say that there are less tight ends, so they are scarce. This is true, but the difference between a starting tight end and the TE12 is 130 points compared to RB1 to RB12 of over 240 points in 2019. Therefore, the highest-scoring running back has an opportunity cost above tight ends of
OC = FO - CO
FO: TE1 = 130 points above replacement
CO: RB1 = 245.8 points above replacement
OC = 130 - 245.8
OC = 115.8
The top running back scored 115.8 points more than the top tight end. Every top running back since 2016 was a top ten running back the year before. So taking a shot on Fournette may make a bigger splash for your team than either of those options that look like the consensus picks.
Opportunity costs get more exciting for dynasty! In dynasty, projections are not just for a single year. There are more factors in place than redraft. The opportunity cost of a trade can be shown for multiple years.
No running back has repeated back-to-back years as the RB1 since 2015. Travis Kelce has been the top tight end since 2016. For longevity purposes, if you had the RB1 in 2016, David Johnson, and traded him for TE1, Travis Kelce, you can track the opportunity cost over the time since 2016,
2016 - 327.8
2017 - 7
2018 - 196.6
2019 - 105.5
Total - 636.9
2016 - 223
2017 - 233.5
2018 - 294.6
2019 - 254.3
Total - 1005.4
Opportunity cost of keeping David Johnson verses trading him for Travis Kelce
OC = 639.9 - 1005.4 = -368.5
Over the last four years, not trading David Johnson cost a fantasy owner 368.5 points.
Trading top running backs during their prime can give great returns that are more stable over years to come. Just think how much someone would have been laughed at for trading David Johnson straight up for Travis Kelce after the 2016 season.
Who had the last laugh?