# A version of Price/Earnings valuation for fantasy soccer

I've been looking at the MFLS statistics and I was thinking of a quick way to assess the value of my players relative to the rest of the fantasy market.  I decided to borrow one of the more popular terms from stock market investing to do this — the Price/Earnings ratio.  It's really simple, so simple in fact that I refuse to believe that I'm the first one to come up with this valuation for fantasy soccer.  I know that I've seen it discussed in some other fantasy sports, but I haven't seen a similar discussion for soccer.  (But I'm sure someone will send me a link right after I send this message!)

As I'm sure most of you know, the Price/Earnings ratio is the best known of the investment valuation metrics.  It is the ratio between the price per company share and its earnings per share.  A high P/E ratio indicates higher future earnings growth (so investors are paying a higher price for a share in expectation of a bigger payoff in the future), which a low P/E indicates a lower earnings growth in the future.  These ratios can also indicate which stocks are overvalued or undervalued in the marketplace.  I will approach the use of a P/E-like ratio from the latter perspective.

To apply the P/E to fantasy soccer, view 'Player Salary' as 'Price' and 'Fantasy Points' as 'Earnings'.  Then divide Salary by Points to obtain a Fantasy P/E ratio.  This is simple to do; all you need is a spreadsheet with tabs to collect players at the same position (Goalkeeper, Defender, Midfielder, Striker).  There will be players who have not made appearances in league matches, which will yield an infinite P/E, and players with negative Fantasy Points, which will result a negative P/E.  I find it useful to compute an average P/E across all position players with positive P/E ratios.  This average ratio gives some insight into who might be undervalued, overvalued, or average.

I applied this valuation metric to the current roster of players in Major Fantasy League Soccer.  I'm not going to claim that it's perfect, but the most valuable players in MFLS are the ones you expect.  There are some undervalued players who show up, which could indicate a promising metric.  I'm not going to post all the results here, but I'll give what I think are the major findings:

• The most undervalued players are not necessarily the ones who are paid low salaries.
• The most valuable position in MFLS is goalkeeper, by a wide margin.  There are slight differences in value between striker, defender, and midfielder (in that order).
• LA Galaxy have players among the most undervalued at every position.
• The lowest P/Es per position are:
• Goalkeeper: Andrew Dykstra (Chicago)
• Defender: Mike Chabala (Houston)
• Midfielder: Chris Wondolowski (San Jose)
• Striker: Edson Buddle (Los Angeles)

It would be interesting to plot the P/Es on a week-by-week basis, and perhaps use a moving average of points won in the calculations.

Just wanted to show that I can develop metrics without using any advanced math!