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Three years ago in this space, I began tracking the performance of an economic
model of the National Football League draft that was developed by Richard Thaler
of the University of Chicago and Cade Massey of Yale University. When I did so,
it seemed unlikely that the model would be successful in determining the winners
and losers of something as dicey as the annual draft.
The model’s performance, though, has been striking.
Its rankings of each draft provide a statistically significant predictor of
wins the following season, and some of the predictions have been startling. For
example, of the eight clear draft winners in 2007 and 2008, four were in the
playoffs this past season, including three rather unlikely candidates–the Miami
Dolphins, the Baltimore Ravens and the Carolina Panthers. Since losing teams
tend to start the draft with the most ammo, such a hit rate is impressive.
The model also identified nine big losers in the 2007 and 2008 drafts,
including such big-time favorites as the Dallas Cowboys and the New England
Patriots. Only one of the nine, the Minnesota Vikings, made the playoffs last
season. The Vikings lost in the first round.
So while the television screens were buzzing with expert analysis of the
draft this weekend, I dutifully entered numbers in my computer.
The headline is that this year, two of the biggest winners are already
powerhouse teams. It looks like there is a strong chance there will be another
Super Bowl between the Patriots and the New York Giants, who faced off in
February 2008, with the Giants prevailing.
Cap Is Key
Before jumping all the way to the Super Bowl, let’s review how the system
Since NFL teams operate under a salary cap, success requires that a team find
players who perform better than their salaries would suggest.
If there were no cap, you could just pay $10 million to every player on your
roster and produce a winner. Call this the New York Yankees Strategy.
With the cap, if you spend that much on one player, you have less money to
spend at the other spots. You need to get superstar performance at low, low
The draft allows you to do that. Players chosen in the first round get
stratospheric salaries. This year’s top pick, Matthew Stafford, has already
signed with the Detroit Lions for an astonishing $78 million maximum over six
years. But players chosen later on get much lower salaries.
Thaler and Massey examined the history of drafting and found that teams that
choose at the top do not necessarily get their money’s worth, while teams
picking in the later rounds, especially the second, tend to get real
To put their system into practice, I used their results to calculate the
historic value associated with each spot in the draft–10th, 55th, 97th,
etc.–and then added up the values for each team’s choices in the first four
The system is player-blind. That is, it doesn’t care who the fourth pick in
the second round is; it simply gives a team credit for selecting a typically
successful player in that slot.
Looking at this year’s scores, the four big winners were, in order, the
Patriots, the Denver Broncos, the Lions and the Giants.
New England’s coach, Bill Belichick, who majored in economics in college, has
clearly been reading the literature. He ditched his first-round pick altogether
and loaded up on four second-rounders. In addition, he traded some of his later
picks for other teams’ second-round picks next year.
The Patriots’ haul was the second-highest-scoring draft since 2003, when my
calculations begin. The only team that did better was the 2004 Cincinnati
Bengals, a team that, if you are keeping score, went on to win its division in
Belichick disciple Josh McDaniels, now coaching the Broncos, clearly has
taken a page from the master. His team, and the Lions, are probably rebuilding
next year, and they are off to a great start.
The big news is that the Giants maneuvered to get two second-round and two
third-round picks, elevating their final scores. Expect them to once again be
the class of the National Football Conference.
It didn’t take a computer to spot the big loser in this year’s draft, the
Washington Redskins. The Redskins once again revealed their extreme economic
ignorance, trading away their second-round and fourth-round picks. U.S. bailout
money is the only thing that can save the Redskins now. (How convenient: Their
plea for help would be a local call.)
The other big losers were the San Francisco 49ers and New York’s other team,
Still the Jets
The Jets made a classic error, falling in love with University of Southern
California quarterback Mark Sanchez and virtually guaranteeing they will have a
large number of undrafted scrubs on their roster. Given the high salaries at the
top of the draft, Sanchez will probably not generate much value above that
demanded by his salary, even if he becomes a superstar.
Why has the Thaler-Massey system worked so well? The best explanation is that
football is a violent sport. Having a star might not guarantee success, since
the star might get injured. Having two solid second-round talents at a position
might well be a better call, since the backup plan is in place if the starter
gets injured. And that backup plan is cost-effective, since second-round
salaries are relatively low.
So next year, if New England loses its starting safety to injury, its first
pick in the second round, Patrick Chung, can step right in and perform
adequately. The Giants will be just as prepared. When injuries strike the
Redskins, the replacements will come from the street. Which is why Patriots and
Giants fans should be feeling pretty good right now, and Redskins and Jets fans
should prepare for yet another disappointing season.
Kevin A. Hassett is a senior fellow and the director of economic policy
studies at AEI.
It looks like there will be another Super Bowl between the New England Patriots and the New York Giants.
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