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Will Economists Whip NFL Experts Again on Draft?: Kevin Hassett
By Kevin Hassett
May 7 (Bloomberg) -- U.S. sportswriters analyzed the National Football League draft during the past week and quickly reached a consensus: The Cleveland Browns were the champs.
The Browns wowed the football establishment by choosing both highly regarded offensive lineman Joe Thomas from the University of Wisconsin and quarterback Brady Quinn from the University of Notre Dame on the first round. Yet while both players may well turn out to be outstanding, the opinionated rankings aren't worth the paper they are printed on.
Why rely on opinion when there is scientific evidence? The best available model of the football draft tells a very different story: It suggests that the Browns' draft was only the 17th best out of 32 teams. The big winner: The Oakland Raiders.
To come to this conclusion, I relied again upon a model developed by economists Richard Thaler of the University of Chicago and Cade Massey of Yale University. A year ago, I used their study to evaluate the NFL draft, and the results were amazingly on target.
On average, the teams that the model indicated had succeeded most in last year's draft won 2.25 more games in the 2006-2007 season than they had in the previous year. And the draft's losers on average lost 3.5 more games than they had the year before.
So if you really want to know which club is going to improve the most next year and which ones will fall back, you should tune out the sports geeks and tune in to the economics of football.
So Simple
How does the model work? It is devilishly simple. Thaler and Massey found in their research that NFL teams make systematic errors in their valuations of players in the draft. They place too high a value on picks near the top of the first round and too low a premium on players in the lower rounds.
The problem isn't that the players at the top are bad, it's that they seldom outperform their salaries. Since every team in the league has the same salary cap to work with, the only clubs that create winners are those that load up on players whose performance exceeds their earnings.
If you select a running back in the later rounds and pay him $500,000 a year and he plays at a level normally associated with a $5 million-a-year veteran, then that player has given the team a ``surplus'' of $4.5 million. It is the teams with the biggest surpluses that gain the most.
To make this insight operational, Thaler and Massey sifted through mounds of data and estimated the expected surplus from each position in the draft. They found that the surplus was actually highest for teams in the second round. They base their projection on the historic performance of players in the draft.
Biggest Winners
Using a back-of-the-envelope version of their model, I calculated the expected surplus in the 2007 draft for every NFL team, based on their picks in the first three rounds.
The results? In addition to Oakland, the biggest winners in the draft were Atlanta, Detroit, Carolina, Miami and Tampa Bay. Interestingly, Oakland and Detroit were hamstrung with top picks; Oakland picked first overall, and Detroit second.
But the management of these teams shrewdly maneuvered to stock up on later high-value picks as well. Oakland also had the 38th, 65th, 91st and 99th selections, giving them five in the first three rounds overall. Detroit did the same.
The six biggest losers contain some familiar faces, and one big surprise. They were, in order, Washington, New England, Houston, Seattle, Dallas and the New York Jets.
The Washington Commanders repeat as the worst loser of the draft. They squandered valuable later picks and left themselves with only one selection, a relatively low-value choice near the top of the first round. If they keep this sorry performance up, the model is going to end up implying a negative number of wins for the Commanders. Even they, as incompetently managed as they are, will be unable to accomplish that.
Penalty on Seattle
Similarly, Seattle foolishly gave up a late first-round pick as compensation for having acquired receiver Deion Branch last year -- and are paying Branch a salary that's likely to vastly exceed the value of his performance.
The New England Patriots, a team that has demonstrated in the past a clear understanding of the economics of football, surprisingly also appeared in the loser column this time around. The Patriots not only traded their picks for established veterans like storied receiver Randy Moss, but exchanged other draft choices for selections in next year's draft.
That means they will likely show up as big winners the next time around, which will help them in the long run, but the 2007- 2008 season will disappoint Patriots fans.
The Problem With Veterans
The problem with pursuing established veterans is that their salaries are set in a competitive market, so they are paid in a manner commensurate with their performance. Hence, they deliver little surplus.
Economics can be a glorious field when it works, and seldom does it work better than the Thaler and Massey model did last year. The odds are, the winners and losers of the 2007 draft will be the winners and losers again next year in the regular season.
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was chief economic adviser to Republican Senator John McCain of Arizona during the 2000 primaries. The opinions expressed are his own.)
http://www.bloomberg.com/apps/news?pid=20601039&sid=aMZM4MOpUzVM&refer=home
By Kevin Hassett
May 7 (Bloomberg) -- U.S. sportswriters analyzed the National Football League draft during the past week and quickly reached a consensus: The Cleveland Browns were the champs.
The Browns wowed the football establishment by choosing both highly regarded offensive lineman Joe Thomas from the University of Wisconsin and quarterback Brady Quinn from the University of Notre Dame on the first round. Yet while both players may well turn out to be outstanding, the opinionated rankings aren't worth the paper they are printed on.
Why rely on opinion when there is scientific evidence? The best available model of the football draft tells a very different story: It suggests that the Browns' draft was only the 17th best out of 32 teams. The big winner: The Oakland Raiders.
To come to this conclusion, I relied again upon a model developed by economists Richard Thaler of the University of Chicago and Cade Massey of Yale University. A year ago, I used their study to evaluate the NFL draft, and the results were amazingly on target.
On average, the teams that the model indicated had succeeded most in last year's draft won 2.25 more games in the 2006-2007 season than they had in the previous year. And the draft's losers on average lost 3.5 more games than they had the year before.
So if you really want to know which club is going to improve the most next year and which ones will fall back, you should tune out the sports geeks and tune in to the economics of football.
So Simple
How does the model work? It is devilishly simple. Thaler and Massey found in their research that NFL teams make systematic errors in their valuations of players in the draft. They place too high a value on picks near the top of the first round and too low a premium on players in the lower rounds.
The problem isn't that the players at the top are bad, it's that they seldom outperform their salaries. Since every team in the league has the same salary cap to work with, the only clubs that create winners are those that load up on players whose performance exceeds their earnings.
If you select a running back in the later rounds and pay him $500,000 a year and he plays at a level normally associated with a $5 million-a-year veteran, then that player has given the team a ``surplus'' of $4.5 million. It is the teams with the biggest surpluses that gain the most.
To make this insight operational, Thaler and Massey sifted through mounds of data and estimated the expected surplus from each position in the draft. They found that the surplus was actually highest for teams in the second round. They base their projection on the historic performance of players in the draft.
Biggest Winners
Using a back-of-the-envelope version of their model, I calculated the expected surplus in the 2007 draft for every NFL team, based on their picks in the first three rounds.
The results? In addition to Oakland, the biggest winners in the draft were Atlanta, Detroit, Carolina, Miami and Tampa Bay. Interestingly, Oakland and Detroit were hamstrung with top picks; Oakland picked first overall, and Detroit second.
But the management of these teams shrewdly maneuvered to stock up on later high-value picks as well. Oakland also had the 38th, 65th, 91st and 99th selections, giving them five in the first three rounds overall. Detroit did the same.
The six biggest losers contain some familiar faces, and one big surprise. They were, in order, Washington, New England, Houston, Seattle, Dallas and the New York Jets.
The Washington Commanders repeat as the worst loser of the draft. They squandered valuable later picks and left themselves with only one selection, a relatively low-value choice near the top of the first round. If they keep this sorry performance up, the model is going to end up implying a negative number of wins for the Commanders. Even they, as incompetently managed as they are, will be unable to accomplish that.
Penalty on Seattle
Similarly, Seattle foolishly gave up a late first-round pick as compensation for having acquired receiver Deion Branch last year -- and are paying Branch a salary that's likely to vastly exceed the value of his performance.
The New England Patriots, a team that has demonstrated in the past a clear understanding of the economics of football, surprisingly also appeared in the loser column this time around. The Patriots not only traded their picks for established veterans like storied receiver Randy Moss, but exchanged other draft choices for selections in next year's draft.
That means they will likely show up as big winners the next time around, which will help them in the long run, but the 2007- 2008 season will disappoint Patriots fans.
The Problem With Veterans
The problem with pursuing established veterans is that their salaries are set in a competitive market, so they are paid in a manner commensurate with their performance. Hence, they deliver little surplus.
Economics can be a glorious field when it works, and seldom does it work better than the Thaler and Massey model did last year. The odds are, the winners and losers of the 2007 draft will be the winners and losers again next year in the regular season.
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was chief economic adviser to Republican Senator John McCain of Arizona during the 2000 primaries. The opinions expressed are his own.)
http://www.bloomberg.com/apps/news?pid=20601039&sid=aMZM4MOpUzVM&refer=home
