There's a trend in fantasy sports that has emerged over the past few years - Free-Agent Acquisition Budget bidding, or FAAB for short. I've seen more and more leagues implementing it including half of my 2012 leagues, so it's worthwhile to explain what it is and how it can be used.
But first, the issue that it solves... All of the players that are not owned by someone have to be offered in some way to the fantasy managers in the league, unless you are in a league that does not allow any (or extremely limited) roster alterations. (Those leagues exist, though rare.) Sometimes unowned players are automatically free agents, though in almost all leagues there is some sort of waiver process where the unowned players can be viewed for a period of maybe 2 days (give or take) during which time claims are made on the player. The issue happens when multiple people want the same guy. How do you determine who receives the player?
Well, the most common is to have a rolling priority list. It usually starts in the reverse of the draft order, though I have seen it randomly determined or assigned based on the inverse of the standings the previous year. In this setup, if you want a player you have to have a better waiver priority. For example, if you are #6 on the list and one of your opponents also wants the same player you do, you would get the player if that opponent was #7 on the waiver list or worse. Your waiver priority would then drop to last and work it's way up as people ahead of you select players on waivers.
Quick Note: I'm avoiding the use of "higher" and "lower" when referring to waiver order because they mean different things to different people in this context... It is exactly like if you want the air conditioning to be colder. Do you turn it "up" or "down"? Um, how about you just go ahead and turn it colder. No confusion that way.
So anyway... The thing about the rolling wavier process is that there is a specific strategy associated with it. If you make it up to #1 or #2, should you grab a middling player and burn that asset or should you wait until someone more worthwhile becomes available?
There is also a process whereby the waiver order is continually reset. This is usually once a week in the inverse order of current standings. This allows the lower ranked teams to get better and create a more competitive league. This is very common in fantasy football, though it happens in baseball too. Usually in head-to-head leagues or weekly roster-set leagues.
The FAAB process was created to (almost entirely) replace the waiver order list. You get a budget of fictional dollars at the beginning of the year, like the dollars in an auction draft. When a player is put on waivers you have to put in a claim and assign a dollar figure to it. So, basically you have a shot at every available player and you have another resource to manage... which improves the reliance on skill.
One of my fantasy football friends hates the rolling waiver process since it allows players who aren't very good at fantasy football to luck into being more competitive. For example, if you have a terrible score in week one you could have ended up with Michael Vick in 2010. Or a couple years' prior, Matt Cassel when Tom Brady was injured in week one. That increases the luck factor. Maybe you had a playoff-caliber team anyway, and just had a terrible week one. Boom. Michael Vick. Championship.
By the way, I said that FAAB 'almost entirely' replaces the waiver list. I said this because the list is retained for the fairly rare occurrence when two or more players tie on their bid. For example, I just won Jake Arrieta for $7 and another player bid $5. If I had bid $5 I would have lost Arrieta based on my worse position on the waiver list.
Another wrinkle is that in leagues that have an auction draft and a FAAB process you can make the FAAB price equal their keeper value for the following year. That is the case for me with Arrieta. I'm likely not going to keep him for seven bucks, but if he is really good this year I might. It's a calculated risk.
It should also be noted that some leagues use $100 for FAAB and some others (including big ones like Tout Wars, I think) use $1,000 and still others use a different number. The number doesn't really matter too much, as long as it is consistent. I do like the fine-tuning you can do with bigger numbers, though. For example I may have bid $65 of a $1,000 budget on Arrieta and my opponent might have bid $54, instead of our $7 and $5 bids from our $100 budget. That would have left me with slightly more resources left over, though it ultimately doesn't matter too much.
The bottom line is that FAAB increases reliance on skill, increases the need to manage resources, and reduces the luck factor. Those are all things I can surely get behind.