You Will Never Look at the NFL Draft the Same

so every year roughly 250 players are selected to play in the National Football I am a football league 23 NFL drafts teams are slotted in this NFL draft based on how they finished the previous year any fan be aware of this but after going through a considerable amount of data I am convinced that seemingly every fan let's go bird apparently every GM in just about every owner it's D-Day for the deal makers as they look through rain in football's best Playmakers it's completely unaware of the true value of these picks this is a story about billionaires making billion dollar blunders even with million dollar staffs and analysts this is a story about the NFL draft and how even the wealthiest Elites can't overcome simple human behavior now in any sports draft there is a clear advantage to picking earlier obviously it's better to have the first pick than the 20th pick but the question is how much of an advantage is there and does this Advantage line up with what teams actually follow how they actually trade or value their picks are there any rounds or picks that seem to be overvalued now fortunately all this data is public we obviously watch the NFL we know what players get paid and certainly how they'll perform spectator sport so we can analyze the perceived market value of each pick and how that lines up with compensation and performance it's not going to be too difficult but it'll require a little digging for example how the first pick of the first round number one is compared to the first pick of the second round the 33rd overall pick to do this again we have to examine how players actually performed and how they were paid the earlier the pick the higher the compensation and in a league with the salary cap compensation is an obvious variable worth considering here so it's kind of similar to running a business is the sales person that you're paying 200 000 producing more than well two could at let's say a hundred thousand dollars of pay each so we're gonna rely on Dr thaler's Data here he's worked with a number of NFL teams he's kind enough to share this data with the world data that is shocking let's start first with the market premium for draft picks since teams regularly trade draft picks even as late as the day of the draft we can see what the league thinks the market value is for picks based on historical data Illustrated in this graph and what we find is the first pick of the draft it's worth about five times as much as the first pick of the second round the 33rd overall pick in this case based on historical Behavior so I'm going to pause there real quick because that is insane what that means is the first overall pick could be traded in a series of trades for five second round picks so again that is a steep graph and what's even more odd here is just how orderly the data is it is rare that you find data that follows the line This closely so what the heck is going on here how are these teams evaluating these trades how are they making these decisions well it happens to deal with a chart that was created by then Cowboys minority shareholder Mike McCoy when he was helping out Jimmy Johnson but here's the thing uh this was never supposed to be gospel McCoy was just trying to show Jimmy how teams had done deals in the past he wasn't trying to give advice it was merely a historical representation of how teams have evaluated trades but if teams are still following this chart basically today well then it must be accurate I mean think of how much scouting's improved think of how much analytics have improved these are billion dollar organizations it wouldn't be following a chart like this unless it made sense right to test this we need to again look at compensation and performance of The Players so this first step is actually quite easy because there's a salary cap in the NFL unlike let's say the MLB or the Liv where you got folks like Dustin Johnson flying around in the PJ just to play golf not even two win golf be a little bit harder if there was Saudi money here where there's no profit but each team has to live within their own budget in the NFL so let's look at this graphically we are met with a similar steep curve higher picks are getting paid a lot more than later picks and this is critically important because well money is finite each team only has so much money within their own salary cap and really the only way a team can win in the NFL is if it's aggregate players outperform what they're getting paid so high picks are expensive in two ways first they're expensive because the potentiality of the trade they can be traded for a number of different picks and second well they just get paid a lot more but that expense could be worth it if the player performs Peyton Manning for example was picked just one pick higher than the next quarterback person at the same position Ryan Leaf yeah well Peyton won a Super Bowl won a lot of playoff games obviously brought in a lot of money into the Colts Brian Leaf did not so it appears the Crux of this is how good are teams at picking players we know that teams aren't perfect at picking players because obviously there are sleepers in every round players that dramatically outperform their draft position players like Tom Brady and Tom Brady that was taken sixth in the sixth round that is Tom Brady the quarterback he certainly ended up being worth more than a traditional sixth round again how good are teams and picking players suppose you were to rank all players at every position not just before the draft thanks Mel Kuiper but also after they've played in the NFL what's the percentage chance that a player will be better than the next player taken at his position so for example let's say you have a wide receiver that's taken number 33 overall what's the chance that he is better than the next wide receiver taken at maybe for example number 57 overall about 50 [Music] I didn't have a coin but it's a coin flip so let's think of this recent Bryce Young trade that the Panthers made the full package of assets sent to Chicago reads more like a shopping list all just to move up eight positions in draft rice young so the Panthers must be sure that he's the guy Bryce is the guy now it is entirely possible that Bryce young has an amazing rookie season he has an amazing career we're talking about how freaking stupid this video is for saying the Panthers gave up too much to go get them but I was just personally curious teams in the past how is this fared for them when they've traded to go get their guy so I looked into this 10 times 10 putting 10 fingers up here 10 times teams have traded up into the top five to go get their guy to go get their quarterback and only twice is this maybe made sense I emphasize maybe because one of them was Michael Vick many remember what happened he had an unbelievable career for a little bit there with the Falcons got cut short with that incident few remember what they gave up they didn't give up nothing to go get this guy they gave up LaDainian Tomlinson future Hall of Fame running back to go get Mike big as well as some other players so it wasn't like they just got him for free the other time that it was a maybe well that was Jared Goff and they gave up a little bit for him too uh Jack Conlin All Pro Derrick Henry a decent running back he's the best running back in football uh some other pretty decent players too Corey Davis other starters as well so it's not like they didn't give up anything for Jared Goff that's the only time that I would say it's maybe arguable because well these other players uh they're not great there was uh the Mitch tabrinsky trade one spot this is highway robbery Sam darnold treylands RG3 Mark Sanchez smashed his face into the offensive lineman's butt Jeff George Ryan Lee talk to me all right and Carson Wentz so it wasn't great I guess we'll find out with the Panthers now I want to be clear here that miscalculated trades don't just involve these guys quarterbacks so here's some historically bad trades uh just for fun perhaps my favorite the Mike Ditka Ricky Williams trade where he followed a negotiation tactic I probably don't recommend anyone he let the city know that Ricky was the savior and then proceeded to give up basically the entire State's future their entire draft class plus two picks for the next year eight picks these are just recent examples here there's also the Herschel Walker trade where they literally traded an entire football team six draft picks and five players to go get Herschel Walker wow that didn't work out teams just do not follow rational Behavior while performance of early picks is certainly better meaning early picks do perform better compensation is also higher and this Surplus value the key ingredient for team success players performing better than they are paid well that doesn't come close to matching up with the initial graph We examined of the market value of picks so if the market value for trade picks was efficient these two graphs would be identical but we can see here that with all key factors examined we have a much flatter curve meaning late round picks aren't as worthless as GMS might trade them to be also take a look at how this curve slopes up to begin with this means that with compensation and performance taken into account the early picks are actually worth historically less than the late first round picks because well they are getting significantly larger rookie contracts and again with a salary cap in place money is finite the teams in the NFL you have to consider performance and compensation so why do they do this the answer is not as straightforward as you might think it's not just emotion the answer is actually a little bit deeper in the complexity and what we find is a substructure that I find truly fascinating one that you can find in business in organizations and in many political systems let me illustrate this causality by example let's imagine that a newly elected politician has two options number one raise taxes and decrease the payout for Social Security to help balance the budget number two do nothing and continue to pay out Social Security even though the Social Security fund is running out of money within the next 10 years which of these two options do you think our newly elected politician will choose yeah it seems crazy to even debate this or question obviously option A is more rational at least seems far more rational but option b is far more likely because the incentives are wrong much of what this newly elected politician probably cares about is getting reelected not necessarily what things will look like 10 years from now and very similarly in the NFL general managers get paid now they get paid for having a job now in the present so the priority is to keep a job it's not necessarily what do things look like five to ten years from now it's hey I want to make sure that we win now so I still have a job now the incentives again are somewhat misaligned and this creates a massive present bias where general managers are willing to sacrifice sizable future rewards for much smaller present rewards and it's not necessarily bad to have you know a present bias obviously you know really all we have guaranteed is the moment that we're in right now in a lot of ways but the question is you know again what cost are we making these trades if we look at Mike Ditka he wasn't as concerned obviously with what was happening to the Saints uh five ten years from now when he was giving away five future rounders for Ricky Williams he wanted to win now and he was willing to sacrifice just about everything from a future first round standpoint to do so and one other Factor here if we look at the NFL owners time is finite and they're not necessarily getting any younger so rebuilding for three to five years might be more of an estate plan than a game plan and furthermore there's a risk to unconventional thinking even when you're right let's say that you maybe trade all your present picks for future picks and you load up on future picks well guess what you might not be around to enjoy that so even if you're doing probabilistically what makes total sense GM you get one shot you might not have a job and be able to enjoy the benefits of that so again the incentives are wrong it's just one opportunity teams are not only overestimating early first round picks but they're also overestimating present picks significantly more than future picks we know there should be some present bias but it is significant to get any team to win requires a commitment to a long-term strategy so in a way that makes the NFL no different than anything else in life there are no shortcuts you need everybody in the team to buy in starting with the owner otherwise the GM and coaches will just get fired for unconventional thinking so they're just going to keep following the conventional wisdom even if that is completely wrong now a few NBA teams seem to have figured this out at least tried to the Sixers followed the trust the process where they tanked historically bad and got guys like Joel embiid became a contender some might argue they never won one but they at least became a contender out of that we also have the Oklahoma City Thunder doing this the Utah Jazz and there's a present day bias that exists in the NBA even if it's different than the NFL there is still a present bias a few teams are willing to try that time will tell with the NFL and one final personal note on this our relationship with time has always been profoundly interesting to me you don't get to choose whether or not you're sacrificial but you do get to choose what sacrifices you make you bet the farm on one player today likely won't work out for you that likely isn't a shortcut is sacrifice for the future and the future might be a little bit brighter hope you found this video helpful hope you enjoyed it take care [Music]

Channel: Michael MacKelvie

Views: 920,138

Keywords: NFL, NLF Draft, NFL Trades, NFL Offseason, 2023 Draft, 2022 Draft, 1999 Draft, Peyton Manning, Ryan Leaf, Robert Griffin III, RG3, Ricky Williams, Mike Ditka, Manning VS Leaf, Tom Brady, Brady, Bryce Young, Panthers, Bears, Saints, Redskins, Carson Wentz, ButtFumble, Mark Sanchez, Dallas Cowboys, Eagles, Titans, Julio Jones, Derrick Henry, Sam Darnold, Bad Trades, Good Trades, Future Picks, NBA, NFL Owners, Jerry Jones, Stephen A Smith, Breaking News, NFL Fails, NFL Fans

Id: 1-0xWcSYlh4

Length: 15min 55sec (955 seconds)

Published: Thu Aug 03 2023