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You may be correct, but if so, I have totally misunderstood the way the system works.
It was my impression that that setting calls for a check prior to the the first day of simming, and that all players who will run out of days during the length of the sim are cut prior to the start of the sim. (This would make sense -- In an online league, if there are 7 days in the sim and a player's DFA time will run out in 6 days, once imports are done, there is no further chance that the player would be removed from the DFA by the time his days run out.)
I will test your theory out in tomorrow's sim, but I'd love to get a definitive word on this from above.
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