Return on Investment

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Return on investment (ROI) is an investment term used to describe the amount of money earned from an investment over time. As a formula, ROI is the profit made in your investment divided by the amount invested divided by the time that it was invested.

Every financial advisor will tell you that ROI isn’t the end of the story and that it needs to be balanced against the risk associated with the investment. Investing everything in an internet company has the potential to give you a huge ROI but it also has the potential to bust completely. Investing in a term deposit has very little ROI but is about as safe an investment as you can make.

Why am I dumping all this on a bunch of fantasy football fans who most likely could care less about financial matters? Because ROI and risk are issues that each one of us has to consider at the draft table.

One example of this principle is Priest Holmes. He is the internet startup company of fantasy football – Priest.com, as I call him. His ceiling is so high that, if you were assured of getting his best production, he is guaranteed to be the number one fantasy player regardless of the scoring settings.

The issue with Priest is that the risk associated with him may not be worth a number one overall selection. There is, of course, the risk of injury. But every player is at risk of getting injured. You could also draft Larry Johnson later on as insurance. As a backup Johnson has no value, but if Priest gets injured, Johnson could perform like a top ten fantasy back.

The bigger risk for Priest actually comes from Larry Johnson himself. As owners of Marshall Faulk and Travis Henry last year will tell you, it stinks when your stud has to split carries with an up-and-coming star. If you own both Johnson and Priest you will want one of them to be the featured back and get 90% of the playing time. If real football gets in the way and the team wants to split carries between the two, your fantasy season will be shot.

All of the signs are there. In January, the Chiefs’ GM Carl Peterson stated publicly that he wants Priest and Johnson to share carries in a running back by committee system. He has since backed off and allowed coach Dick Vermeil to have his way with his preferred featured back approach, but Peterson has not hidden the fact that he prefers both running backs on the field at the same time. Peterson is going to be GM next year while Vermeil is going to retire. If the Chiefs are contending, then Vermeil will get his way, but if the team starts off slowly Vermeil can quickly become a lame duck coach and Peterson will ultimately win out.

In short, Priest could perform like a #1 overall pick, but you are forced to use a high draft choice on Larry Johnson and Holmes could end up splitting carries during the fantasy playoffs. If you were investing your money, it’s fine to buy the high risk internet companies, but you do not want to invest your life savings or your retirement fund in them. That’s what your number one pick is, your life savings. You will invest it but it should not be a gamble; there’ll be plenty of time for that later on in the draft.

When it comes time to make your first round selection, consider LaDanian Tomlinson, Shaun Alexander and Peyton Manning before Priest Holmes. With these studs there is less of a risk that your first round selection will be sitting on the fantasy bench during your playoffs.

 
Patrick Martin follows both the NFL and the CFL (Go Argos!) from his home in Canada. More of his insight can be found in the Cafe’s forums, where he posts as Mookie4ever.