David Rosenthal: belief

Transcript context

…And even if you and the player collude on a lower price to save cap space, it doesn’t mean that the bidder at the table next to you isn’t just going to bid a higher amount for that player. Everyone ends up going for their actual market value. You can collude all you want and it will never work, because everyone goes for their market value, because an auction is a point of time event that maximizes market value for each asset. The order that players come up, they come up in lots. Then the order within those lots is randomized. It is all architected in a way such that the only way for a team to gain an advantage over any other team in the auction is to have superior market intelligence, which has come to mean have superior analytics and superior player evaluation. In the first year of the league, the Rajasthan Royals who have the lowest salary, they actually don’t hit the minimum salary, and they get fined by Lalit. The maximum salary that he sets for year one is $5 million or maximum purse for the auction. Then that means the minimum purse is (I think) $3. 3 million. The Royals don’t even hit $3.3 million. They’re so cheap. They were the cheapest franchise that was sold at the franchise auction too. So they get penalized by the league. They end up winning the championship because they come into the auction with better analytics than everyone else. Amazing. I do think the one thing that’s really important in this though, to your point of collapsing it all into one single point in time, all contracts are three-year contracts which really reduces the gaming.…

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