Dynasty, in Theory: The Injury Bounce

There's a lot of really strong dynasty analysis out there, especially when compared to five or ten years ago. But most of it is so dang practical-- Player X is undervalued, Player Y's workload is troubling, the market at this position is irrational, take this specific action to win your league. Dynasty, in Theory is meant as a corrective, offering insights and takeaways into the strategic and structural nature of the game that might not lead to an immediate benefit, but which should help us become better players over time. (Additionally, it serves as a vehicle for me to make jokes like "theoretically, this column will help you out".)

On Markets

Markets, or places where buyers and sellers gather, are a subject of constant fascination for me. When they operate efficiently, they're far and away the single best tool ever developed to find out what something is "worth". (There are many reasons why a market might not operate efficiently, including hidden information, asymmetric bargaining power, regulatory capture, and so on; these are beyond the scope of this post.)

Markets are by no means perfect, and there are always opportunities for arbitrage, but one of the key features is their ability to constantly update. Billy Beane and the Oakland Athletics found out that on-base percentage was mispriced in baseball. The market caught on to their discovery (writing a book about it probably didn't help), and suddenly on-base percentage wasn't mispriced anymore.

For fantasy managers, this property of markets is both a blessing and a curse. It's a blessing because you can rely on information gleaned from markets to be fairly accurate given our current level of understanding. This is why, for instance, NFL draft capital is so strongly predictive-- the draft is a market. It's why dynasty ADP and trade values are so useful because those are negotiated by buyers and sellers in a competitive marketplace.

But it's a curse because when you work hard and finally find an inefficiency in the market, you're only able to exploit it for so long until the inefficiency closes. When I started playing dynasty in 2007, managers treated older running backs like they'd play forever. Shaun Alexander was a 2nd-round startup pick in my first league despite being 30 and coming off the worst season of his career as a starter. (I'm not casting stones; my first dynasty pick was a 28-year-old Brian Westbrook.)

For a couple of years, you could have made a substantial profit by fading older running backs. And that was true until suddenly it wasn't anymore; Alexander and Westbrook and LaDainian Tomlinson and Clinton Portis and the rest of the top older running backs had virtually all fallen off a cliff by 2009 and the market, now burned, corrected.

This idea that inefficiencies close as quickly as they're identified is one of the cornerstones of my dynasty play style. And yet... and yet...

On Modern Medicine

I started writing about dynasty leagues in 2010, and the first position I became associated with was my belief that the market dramatically underrated the power of modern medicine. Around the community, I quickly became known as the "buy injured" guy. Within seconds of anyone getting hurt on Sundays, I'd have multiple tweets jokingly asking if I'd put in any offers yet.

This wasn't by chance. I wrote at least a half-dozen articles on the subject and went on multiple podcasts to discuss how sloppy the analysis around "injury-prone" players was. I propagated catchphrases like "past suspensions predict future suspensions better than past injuries predict future injuries" and "you'll never go broke betting on modern medicine". And for years, the results confirmed my core hypothesis. Surely you'd expect the competitive market to wake up and close this inefficiency, right? And yet... and yet...

Here's a chart from an article I wrote in June of 2014 about how important it was to know how confident to be in a given belief. I used "dynasty managers overreact to injuries" as the belief I was most confident in and used this chart as evidence.

The main thrust was that not every injury resulted in a massive value drop, but everyone that did inevitably saw a subsequent rebound before the player even returned to the field. In Harvin's case, he saw the drop and the rebound, returned to the field, got hurt again, and saw another drop and another rebound afterward.

You'd think the market would have caught on to this tendency by now, but witness these tweets about the value trajectories of Travis Etienne, J.K. Dobbins, and Cam Akers.

Just noticed, but according to @DLFootball ADP, Travis Etienne is now being drafted higher than he was before his injury.

He hasn’t *quite* caught up on @KeepTradeCut, but his value fell from ~6200 to ~4500 and has now rebounded back to ~6100. pic.twitter.com/QzZn600V0X

— Adam Harstad (@AdamHarstad) July 22, 2022

Here are the dynasty ADP charts for JK Dobbins & Cam Akers, showing how they lost value post-injury and have steadily been gaining in the months since, but not reaching their previous peak. Expect Javonte Williams to follow a similar path. pic.twitter.com/Cd563IdFvi

— Ryan McDowell (@RyanMc23) October 3, 2022

Early on, I thought that injured players were too heavily discounted because people were basing recovery expectations on results that were 10-20 years out of date. When Terrell Davis tore his ACL in 1999, that was the end of his career as an above-average NFL player. When Edgerrin James tore his ACL in 2001, he was able to return and play at a high level, but he never regained his pre-injury explosiveness. When Willis McGahee tore his ACL in 2003, it took him more than a year to return to the football field. Wes Welker tore his ACL in the 2009 playoffs and was able to return eight months later, setting a new record for recovery timeline, but was clearly not at full strength for the 2010 season. Adrian Peterson tore his ACL on Christmas Eve in 2011 and won league MVP in 2012.

And surely that's part of it, as we see players every year making recoveries that are literally without precedent. Peyton Manning was the first quarterback to return from a spinal fusion. Demaryius Thomas and Michael Crabtree were the first offensive players to reach a high level after a ruptured Achilles. Jimmy Graham was the first to return from a torn patellar tendon. Emmanuel Sanders set records for returning to play after a torn Achilles again, only for Cam Akers to break them, and now James Robinson looks like the first running back to fully regain his pre-injury form.

But underrating modern medicine can't be the only explanation. Dobbins, in particular, suffered a torn ACL with a full year to recover, which by now is the most routine of the "significant" injuries. (The irony of this, given its history, is not lost on me.)

Ultimately I don't really know what causes this massive injury discount and why it comes for some players but not others. I certainly have my theories. And I don't mean to suggest that any discount at all is inappropriate. If a player is lost for the season, his dynasty value should decline; we're losing out on a year of his prime, and there is some uncertainty about his recovery, however trivial.

But for the last decade and longer the market has occasionally decided to dramatically drop players after an injury, and in every single case that I'm aware of, the market has then changed its mind and moved that player back up in the ensuing months, even in the absence of any new information that would trigger this shift.

This isn't to say that players who receive big injury discounts are guaranteed to be a good long-term bet. Akers has yet to show any signs of his pre-injury form, and managers who bought or held him certainly have to be discouraged with the returns so far. (Though managers who bought or held James Robinson are feeling substantially happier.)

But players who receive big injury discounts are virtually guaranteed to be a good short-term bet. I normally hate the idea of "timing the market" to buy low and sell high because, ordinarily, it's difficult (if not impossible) to pull off. But this is one of the rare exceptions; buying steeply-discounted players immediately after an injury and selling before the beginning of the next season is one of the easiest market-timing moves in the book.

I'm not sure why this inefficiency has persisted for so long. But the reality is that large post-injury falls still almost inevitably result in a significant bounce.