Study: Trading up in the draft is a sucker's bet

[Skyy God]

I'm crediting blind luck rather than Pioli's savvy for the success of the Baldwin/Houston trade.

Today the Philadelphia Inquirer profiles Cade Massey, a professor at Penn's Wharton School of business. Already with a study under his belt arguing that the conventional wisdom of the Draft Value Chart is all wrong, Massey was contracted by an unnamed NFL team to study the history of the draft for market inequalities. He discovered something that won't come as a surprise to football fans: the draft is kind of a crap shoot.

There is skill in making individual picks, Massey says, but the fact that draft success isn't sustainable points to the conclusion that every team is fairly evenly matched. What seem to be indicators that drafting is a talent, like the Lions' drought or the Patriots' boom of a decade or so ago, are statistically expected aberrations.

"Some teams have great years, other teams have bad years - and it matters," Massey said. "But those differences aren't persistent year-to-year, which tells me that they are chance driven. Something between 95 and 100 percent - I'm not exaggerating - of team differences in the draft is driven by chance."

If you take issue with that, you'll have to math it out with the math guy; I'm just passing things along. But Massey's field of study seems perfectly designed to tackle the NFL draft— according to his site, his expertise in psychology and economics hones in on "judgment under uncertainty, with a focus on optimism, overconfidence, and learning."

Last year, he co-authored a study with the University of Chicago's Richard Thaler. Entitled "Loser's Curse: Overconfidence vs. Market Efficiency in the NFL Draft," it aimed to determine whether there are any patterns in how front offices value draft picks, and if those patterns expose an opportunity for greater value.

The study is embedded below, but here's a talking point: teams overvalue higher picks in part because they overvalue their own judgment in evaluating players, and that "overconfidence is exacerbated by information." The more front offices know about a prospect, the more they think they know, and they also assume other teams value that prospect as highly, creating a feedback loop that pushes players higher up the draft board than they may deserve.

In terms of practical takeaways, the study says to toss out that hoary chestnut, the Draft Value Chart. You know the one: teams have consulted it for decades to put a rough value on any trade including multiple picks. (Example: the second overall pick would be exactly equal to a sixth and a 16th.)

Massey says the chart is wrong, because it doesn't take into account salaries in a salary cap league. His study looks at "surplus value," or what a player actually gives you compared to what would be expected for his contract worth. Because rookie contracts keep salaries artificially low, the surplus values of draft picks are nearly always positive. But some are more valuable than others.

That treasured first pick in the draft is, according to this analysis, actually the least valuable pick in the first round! To be clear, the player taken with the first pick does have the highest expected performance, but he also has the highest salary, and in terms of performance per dollar, is less valuable than most players taken in the second round.
Here's the chart showing the surplus value of picks from drafts between 1994-2008 (when, it must be noted, the lack of a draft slotting system severely inflated the top picks' contracts). According to the research, teams gained more value from drafting late in the first round than they did early in the first.

Massey and Thaler have advice for GMs: only suckers trade up. Over those 14 years of drafts, they calculated the outcomes of every possible 2-for-1 trade for a first rounder using the Draft Value Chart, and found "overwhelming evidence that a team would do better in the draft by trading down." The team that would have traded down would have gained an average of 5.4 man-starts per season, with roughly the same amount of Pro Bowl appearances, at a cheaper cost.

The study was naturally controversial, in part due to misreadings. It deals only in probabilities, not in individual picks. If you trade up and land a player who turns out to be a superstar, it was a good trade. The study merely says that in most cases, that possibility doesn't justify the risk.

It also has little chance of making an impact in actual front office behavior, because of the very psychological barriers it cites. In terms of "impact"—tickets sold, media coverage garnered, general excitement—a top pick is always going to be desirable. Even more important is the corollary: the fear of missing out on a superstar. That's the kind of thing that costs GMs their jobs, and leads to moves that look sexy in the short term but don't work out over time.

http://deadspin.com/study-nfl-teams-...the-1378701238

[Tombstone RJ]

Originally Posted by patteeu

What leads you to this conclusion? The success of a lucky pick looks the same as the success of a pick based on a good decision.

Manning was obviously the right pick and as of right now, it's pretty obvious that Luck appears to be the right pick. However, you are correct if you are suggesting the jury is still out on the 2011 draft.

[Jakemall]

Originally Posted by LoneWolf

Trading down out of the first five picks is always a good thing?

Yeah, I'm sure Indianapolis would have been much better off trading down and not drafting Manning or Luck. Detroit wishes they would have been able to trade down and not draft Stafford or Megatron. Jesus you are a moron.

Well what if Indy had traded out of the pick..got 3 first rounds. Took

RG3 or Tannehill, Chandler Jones and Star Lotulelei?

The last great example I can think of trading out of that #1 pick was the trade with The Chargers and the Giants. I think that trade worked out for both teams. Sure the Chargers didn't get to the superbowl...but it wasn't because of talent.

[Tombstone RJ]

Originally Posted by Jakemall

Well what if Indy had traded out of the pick..got 3 first rounds. Took

RG3 or Tannehill, Chandler Jones and Star Lotulelei?

The last great example I can think of trading out of that #1 pick was the trade with The Chargers and the Giants. I think that trade worked out for both teams. Sure the Chargers didn't get to the superbowl...but it wasn't because of talent.

I think it was the Rams who the Skins traded with before the 2011 draft, right? Let's see how that huge hall of picks works out for the Rams. If they draft well it could be huge in setting them up for the next 5 years as a very competitive team.

[saphojunkie]

This study is reeruned, because it does not take into consideration that a virtually infinite number of factors AFTER the draft determine success at least as much, if not more than, the talent of the player before and during the draft.

You don't think that Justin Blackmon would have been more successful being drafted at the same spot by New England instead of Jacksonville?

This study might have been done by a PHD in business, but he doesn't understand football one iota.

[Jakemall]

Originally Posted by Tombstone RJ

I think it was the Rams who the Skins traded with before the 2011 draft, right? Let's see how that huge hall of picks works out for the Rams. If they draft well it could be huge in setting them up for the next 5 years as a very competitive team.

Remember when New Orleans traded the house for Ricky Williams? Who made out on that deal?

[saphojunkie]

The study was naturally controversial, in part due to misreadings. It deals only in probabilities, not in individual picks. If you trade up and land a player who turns out to be a superstar, it was a good trade. The study merely says that in most cases, that possibility doesn't justify the risk.

In MOST CASES you wouldn't have traded, so the point is completely moot.

Stupid article is stupid.

[Tombstone RJ]

Originally Posted by Jakemall

Remember when New Orleans traded the house for Ricky Williams? Who made out on that deal?

good question! who did Orleans trade with, I can't remember...

[Tombstone RJ]

Oh, and Cleveland trading UP to #4 for Trent Richardson was stoooooopid.

[saphojunkie]

Originally Posted by Tombstone RJ

good question! who did Orleans trade with, I can't remember...

It was Washington. Were you being serious or making a point?

[Frosty]

Originally Posted by Tombstone RJ

good question! who did Orleans trade with, I can't remember...

Redskins, who pretty much blew the picks.

[LoneWolf]

Originally Posted by Jakemall

Well what if Indy had traded out of the pick..got 3 first rounds. Took

RG3 or Tannehill, Chandler Jones and Star Lotulelei?

The last great example I can think of trading out of that #1 pick was the trade with The Chargers and the Giants. I think that trade worked out for both teams. Sure the Chargers didn't get to the superbowl...but it wasn't because of talent.

Then they still wouldn't have Luck who is the best QB by far of that group. I'm pretty sure the Giants kicked San Diego's ass in that trade. Two Super Bowl championships trumps anything the Chargers have done.

[patteeu]

Originally Posted by Tombstone RJ

Manning was obviously the right pick and as of right now, it's pretty obvious that Luck appears to be the right pick. However, you are correct if you are suggesting the jury is still out on the 2011 draft.

It was obviously the right pick, but it's not obvious whether it was lucky or a result of superior drafting skill. Same with the Luck pick, which was made by an entirely different regime than the Manning pick, btw.

[Frosty]

Originally Posted by Frosty

Redskins, who pretty much blew the picks.

http://nfltrades.tumblr.com/post/212...ywilliamstrade

[Jakemall]

Originally Posted by Tombstone RJ

good question! who did Orleans trade with, I can't remember...

LOL...I wasn't thinking. That first year it really looked like it worked out in Washington's benefit. Obviously they went through a slump afterwards.

The Saints only kept Ricky for 3 seasons then traded him.

[Just Passin' By]

Originally Posted by Cave Johnson

Wouldn't you want to cite an example that supports your position? Because the Pats have been shitty at drafting for a while.....

The Patriots hit a down period from 2006-2009, but the drafts in 2010-2012 have been good ones (too early to tell about 2013)

McCourty
Gronkowski
Spikes
Hernandez
Solder
Vereen
Ridley
Cannon
Jones
Hightower
Dennard

That's a damn good 3 year haul, and that's just the starters/rotation guys.