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Save the NFL Draft. It works

By Forest Yang
web posted October 8, 2018

Every year, after the confetti has fallen and the Super Bowl finishes in February, football fans nationwide (including yours truly) focus their attention on the NFL Draft. The run-up to the actual event is almost as dramatic, filled with mock drafts, trades of players and picks, analysis of the top players in the Draft, and constant speculation about every little hint or perceived hint dropped by coaches and team executives. Finally, the day comes in April when devoted fans flock to whichever city hosts the draft, while their less devoted, or more financially burdened, counterparts watch from their couches as the NFL commissioner steps to the podium and announces, “With the first pick in the NFL Draft, the --- select…” The extravaganza continues past the three days of the draft as teams sign their draftees, some of them to eight figure contracts, and analysts and fans debate each team’s choices. Little thought is given to the format of the draft. It seems simple enough; the worst team gets the first pick, the second-worst team gets the second pick, and so on. However, in his 2010 article When a First Pick Isn’t the Best Pick, economist Richard Thaler suggests that the current draft system favors teams that pick lower. Thaler claims that lower draft picks have a higher value to the team, since they are paid significantly less than higher picks, but often have little difference in quality. Thus, in his words, “the rich get richer.” However, Thaler’s idea has several major issues.

One issue stems from Thaler’s method of assigning value to a player: counting how many games he started in his first five years. This method fails to take into account numerous factors that influence games started. For one, injuries can and do often occur in the NFL. These injuries cannot be controlled by the team and have nothing to do with a player’s value. Good and bad players alike can be taken down by an injury. As a result, injuries, the amount of time it takes to heal, and the effect it has on a player’s athleticism will have an effect on the number of games started. In addition, much of what goes into determining whether a player starts depends on his situation. If a player ends up on a team with a coach who knows how to get the most out of him, he will start more games than say an equally talented player with a bad coach. A good system and friendly playing style can go a long way to improving a player’s performance. Also, players can be pushed into playing time due to injuries to others, which again have nothing to do with a player’s value. Players can also end up drafted by a team who already has established starters at their position. For example, Green Bay Packers quarterback Aaron Rodgers was drafted in 2005 with the 24th overall pick. However, he spent his first three seasons on the bench while future Hall of Fame quarterback Brett Favre played. According to Thaler’s method, Rodgers has little value. However since 2008, when he first started, Rodgers has won a Super Bowl, thrown the ball for 38,502 yards and is considered by many to be the one of the top quarterbacks, if not the top quarterback, in the NFL. Basically, more games started does not equate to a higher value since many variables can affect the amount of games started by a player. Thus, it is false that teams have no idea what they are doing when they draft players. At times, they will make mistakes, but they do make educated decisions when they draft.

Another issue arises from Thaler’s claims that teams pay too much to higher drafted players, which makes the rich richer. Money is not an issue in today’s NFL. The reason the salary cap exists is to limit how much teams can spend. Without a salary cap, teams would likely spend exorbitant amounts on player salaries. However, from an economic standpoint, signing a draft pick works somewhat like a supply and demand model. In this model, the supplier is the player chosen, who is supplying playing time to the teams, who are the consumers. The quantity supplied and demanded is fixed in this model, since a team must sign a draft pick to a minimum of four years. However, supply and demand “curves” (in this case more of a point) can move depending on how much the player wants, how much the team is willing to pay, and how much other teams are paying draftees. The NFL does set a minimum salary of $480,000 per draftee for the first year, which is a drop in the bucket, and teams do have a maximum amount that they can spend on all their draftees. However, within those limits, the supply and demand points can move around. Players can choose to hold out and refuse to sign with the team that drafted them, but they will not be able to sign with any other team. Teams can also choose not to sign their players, but they will not receive any return from their draft pick. In the end, all these different factors balance out at the equilibrium point at which a player is willing to play for the same amount that a team is willing to pay him to play. As a result, teams and players both end up getting what they want. Thus, the NFL has not created a system where players are paid too much. Instead, the NFL has set up reasonable guidelines for a market and allowed supply and demand to work themselves out. If the NFL did not set up guidelines such as the salary cap, teams would likely be willing to pay even more for players, since NFL owners have no shortage of money (they wouldn’t own an NFL team if they didn’t) and the NFL is in essence a money-making machine.

Teams often pay hefty sums for a seemingly unproven player’s services for several reasons. First of all, these players are not unproven. They have spent much of their lives showing what they can do on the high school and college level. In a way they have already proven themselves. The only question is if their proven skills will translate to the NFL. Secondly, for bad teams, the draft is often the only way of acquiring talented players. The only other alternatives for acquiring such players are free agency or trades with other teams. Talented free agents rarely choose to sign with bad teams, opting instead to sign with teams on which they can win. Trades for talented players are often pricey, since a good team won’t trade a talented player unless offered numerous incentives. As a result, often the only way for bad teams to improve is to draft potentially talented players, sign them, and hope they develop into stars. However, good teams also routinely trade up to draft and sign players, but for a different reason. Good teams do so because it saves money in the long run. If a player pans out and ends up as a star, he can save a team millions while he is still on his rookie contract. For example, Philadelphia Eagles quarterback Carson Wentz is currently playing on a 4 year, $26,676,338 rookie contract, while the aforementioned Aaron Rodgers is playing on a 5 year, $110,000,000. Wentz was a second team All-Pro selection last year (translation: he’s the real deal). This means that the Eagles are paying about $15 million per year less than the Packers are for quarterback, while getting roughly the same production. As a result, the Eagles can then use this extra $15 million to sign other talented players. Although this example is a bit bloated due to quarterbacks usually receiving exorbitant amounts of money, the principle that young stars still on their rookie contracts save a team millions still applies to every position, even kickers and punters, though on a slightly lesser scale.

The current NFL draft system is not broken. Admittedly, many variables can and do affect if a player can succeed at the NFL level. Oftentimes, players drafted high end up as busts, while players drafted lower become stars. Thaler brings up the example of Tom Brady, a seventh round pick, and Peyton Manning, a first overall pick. However, far more Manning’s exist than Brady’s. Teams understand this, and that is why the current system is the way it is. There is a reason why the current system of worse teams receiving higher picks is used in varying forms by the NBA, MLB, and NHL. That reason is because it works. Although it is far from perfect, it gives worse teams the best chances to improve. Unlike Thaler claims, it does not make the rich richer. Instead, it gives every team the chance to improve, while giving the most chance of improvement to the less-talented teams. ESR

Forest Yang is a high school student taking AP Macroeconomics. © 2018 Forest Yang

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