From Finance to Fantasy Football

by Jason Dean 

The NFL season kicks off tonight, and I’m in the mood to write about football… But this is a personal-finance blog… So how can I combine the two?

How about this: You can apply fantasy-football logic to your investments, and you can apply economic principles to your fantasy football league — and both your portfolio, and your league will benefit!

First, your finances: A good strategy for investment diversification is to think of your portfolio as a fantasy football team. You can’t have all quarterbacks on your fantasy team, and you can’t have all growth stocks in your portfolio. Treat your investment “lineup” like a fantasy football lineup. Like this:

  • 1 quarterback: Pick any stock from the Dow Jones Industrial Average. Solid, reliable, but not a whole lot of difference between #1 and #30. If you exclude Peyton Manning, the same can be said for fantasy quarterbacks.
  • 2 running backs: For your running backs, take powerhouse growth stocks from the S&P 500. Google could be thought of as the Ladanian Tomlinson of the stock market.
  • 2 wide receivers: Your WRs should be riskier bets. Select your first wide-out from the Nasdaq 100, and your second from the Russell 2000 index of small-cap stocks.
  • 1 tight end: At the TE position, you need someone really sturdy and reliable. Take a stock from the defense-contracting, pharmaceuticals, or consumer-staples sectors for this pick.
  • 1 placekicker: For your kicker, you can take a flier. Choose one wildcard, micro-cap stock, maybe even from the OTCBB. But just as you shouldn’t draft a fantasy kicker until the last round, you shouldn’t invest a lot into your kicker investment, either.
  • 1 defensive team: For this position, you need a defensive investment. Gold or silver make the best defenses.

Now for how to apply economic logic to improve your fantasy football league: The biggest problems most leagues suffer from is the excessive value of running backs. In leagues with drafts, the first two solid rounds are often nothing but RBs, and it’s even worse for leagues in which up to three running backs can be started. Some leagues sidestep this problem by holding an auction instead of a draft, but even this can get ridiculous, as running backs suck up so much of the fantasy money that good QBs and WRs end up going for the minimum bid — the same as a kicker!

So here is what our league did this year to combat the problem: Rather than trying to lessen the value of running backs, we increased the value of quarterbacks, wide receivers, and tight ends, and we did it in a logical manner.

First and foremost, we decided to count all yardage and touchdowns equally. Our new system grants a player 1 point per 25 yards of total offense (passing + rushing + receiving), and 6 points per TD, regardless of whether it’s a passing, rushing, or receiving TD. Obviously, this leads to QBs scoring a lot more points, and when the numbers are increased, so is the separation between quarterbacks — and separation; i.e. the distance between one QB and the next; is what’s really important. Creating even further separation, we began deducting 3 points for each interception thrown. Another way to think of this is that a QB with a 2:1 TD-to-INT ratio will score 4.5 points per TD pass; only 0.5 more points than traditional scoring systems.

As for WRs and TEs, we just required one more starter each. Instead of our old lineup system of 1 QB, 1 RB, 2 WRs, 1 TE, and 1 RB/WR/TE (which almost always resulted in a second RB), we moved to a system of 1 QB, 2 RBs, 3 WRs, and 2 TEs. The extra WR and TE in the starting lineup increases their value and forces teams to draft more of them, at the expense of running backs. Plus, now each team’s lead running back scores a lower percentage of the team’s points, with the extra starters.

Net results: Using our scoring system and lineup configurations, Peyton Manning moved from #20 on the Draft Dominator software’s value list to #2. Antonio Gates went from the 40s to #13. Running backs are still critical, but not the end-all, be-all. I highly recommend that other fantasy leaguers adopt this system.

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3 Responses to “From Finance to Fantasy Football”

  1. AskDong » Articles from the Carnival of Personal Finance #118 on September 17th, 2007 3:15 pm

    [...] Jason at Smart Money Daily likens a portfolio to a fantasy football team.   Maybe this year my portfolio can bring home championship. [...]

  2. Carnival Of Personal Finance #118: Fun Money Facts Edition on September 18th, 2007 9:29 am

    [...] From Finance to Fantasy Football by Jason @ Smart Money Daily. You can’t have all quarterbacks on your fantasy team, and you can’t have all growth stocks in your portfolio. [...]

  3. The 118th Carnival of Personal Finance: Fun Money Facts Edition on September 18th, 2007 9:12 pm

    [...] The 118th edition of the Carnival of Personal Finance was recently published by one of my favorite blogs, Money, Matter, and More Musings. Editor, golbguru, cut down the more than one hundred submissions to a final eighty-eight, one of which was my article, From Finance to Fantasy Football. [...]

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