How Belichick/Pioli Operate the Patriots Like Smart Businessmen

[maverick4]

This issue came up elsewhere, but deserves its own thread.

Belichick/Pioli are excellent team managers, maybe the best ever, because they think like businessmen. It's not a coincidence that Belichick has an economics degree, in studying how to best deploy limited resources to achieve maximum gain.

Let me give you a real world example. Some people use their money to invest in assets like real estate, securities, businesses, and early ventures, because with intelligence and hard work, you can make these assets grow and have more value than you started with. Other people use their money to buy non-assets such as flashy cars, boats, entertainment, and clothes, that immediately begin depreciating in value the moment you buy them. Over time, the first group ends up with much money, while the second group has no net worth, as well as a bunch of useless things.

How does this relate to the NFL?

The same concept applies regarding cap-dollar allocation and overall team talent level. The Patriots put an emphasis on drafting well, signing young players, bargain hunting for under-valued veterans, and putting in a lot of work into coaching and practicing. Over time, this creates a team of underpaid players who are much better than their salaries, and gives the Pats the highest overall talent level in the league. Most other teams like to chase big name players in free agency who are usually older, so that his skills diminish while his pay remains at a high level. With all teams operating under the same cap, over time the good businessmen like Belichick/Pioli become wealthy with talent, while the poor businessmen have so much money tied to bad invesments that much of their team is garbage, with little growing assets.

--
Also, I wanted to throw in a pseudo-related point here that doesn't really need its own thread. When people like me criticize our players or a specific position like linebackers, I am not attacking Belichick/Pioli. Sometimes in a market, there just isn't a good asset available at a good price, so you just try to make as many calculated, intelligent guesses as you can out of what is available. Sometimes it takes MORE discipline not to splurge for a perceived need, and just wait things out. So...even though I think Monty Beisel is garbage and that our linebackers have serious depth issues, this is merely a reflection of the linebacker market over the past few years, and does not change my opinion of Belichick/Pioli as talent evaluators, dollar allocators, or team builders.
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[shmessy]

Re: How Belichick/Pioli Operate Like Smart Businessmen

This issue came up elsewhere, but deserves its own thread.

Belichick/Pioli are excellent team managers, maybe the best ever, because they think like businessmen. It's not a coincidence that Belichick has an economics degree, in studying how to best deploy limited resources to achieve maximum gain.

Let me give you a real world example. Some people use their money to invest in assets like real estate, securities, businesses, and early ventures, because with intelligence and hard work, you can make these assets grow and have more value than you started with. Other people use their money to buy non-assets such as flashy cars, boats, entertainment, and clothes, that immediately begin depreciating in value the moment you buy them. Over time, the first group ends up with much money, while the second group has no net worth, as well as a bunch of useless things.

How does this relate to the NFL?

The same concept applies regarding cap-dollar allocation and overall team talent level. The Patriots put an emphasis on drafting well, signing young players, bargain hunting for under-valued veterans, and putting in a lot of work into coaching and practicing. Over time, this creates a team of underpaid players who are much better than their salaries, and gives the Pats the highest overall talent level in the league. Most other teams like to chase big name players in free agency who are usually older, so that his skills diminish while his pay remains at a high level. With all teams operating under the same cap, over time the good businessmen like Belichick/Pioli become wealthy with talent, while the poor businessmen have so much money tied to bad invesments that much of their team is garbage, with little growing assets.

--
Also, I wanted to throw in a pseudo-related point here that doesn't really need its own thread. When people like me criticize our players or a specific position like linebackers, I am not attacking Belichick/Pioli. Sometimes in a market, there just isn't a good asset available at a good price, so you just try to make as many calculated, intelligent guesses as you can out of what is available. Sometimes it takes MORE discipline not to splurge for a perceived need, and just wait things out. So...even though I think Monty Beisel is garbage and that our linebackers have serious depth issues, this is merely a reflection of the linebacker market over the past few years, and does not change my opinion of Belichick/Pioli as talent evaluators, dollar allocators, or team builders.
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That's an excellent analogy, Mav.

 

[mgteich]

Re: How Belichick/Pioli Operate Like Smart Businessmen

The patriots are acting as if their cap is $10M less than it is.

 

[Clonamery]

Re: How Belichick/Pioli Operate Like Smart Businessmen

The patriots are acting as if their cap is $10M less than it is.

You get funnier everyday.

 

[DarrylS]

Re: How Belichick/Pioli Operate Like Smart Businessmen

Excellent analogy and in reality what happens is players who are paid an appropriate wage here, are overvalued by other organizations because of their NE experience, i.e, Andruzzi, Willie, Givens, was is Hochstein in Seattle? on and on... they are more valuable to those franchises than they are to the Pats.

 

[AzPatsFan]

Re: How Belichick/Pioli Operate Like Smart Businessmen

This issue came up elsewhere, but deserves its own thread.

Belichick/Pioli are excellent team managers, maybe the best ever, because they think like businessmen. It's not a coincidence that Belichick has an economics degree, in studying how to best deploy limited resources to achieve maximum gain.

Let me give you a real world example. Some people use their money to invest in assets like real estate, securities, businesses, and early ventures, because with intelligence and hard work, you can make these assets grow and have more value than you started with. Other people use their money to buy non-assets such as flashy cars, boats, entertainment, and clothes, that immediately begin depreciating in value the moment you buy them. Over time, the first group ends up with much money, while the second group has no net worth, as well as a bunch of useless things.

How does this relate to the NFL?

The same concept applies regarding cap-dollar allocation and overall team talent level. The Patriots put an emphasis on drafting well, signing young players, bargain hunting for under-valued veterans, and putting in a lot of work into coaching and practicing. Over time, this creates a team of underpaid players who are much better than their salaries, and gives the Pats the highest overall talent level in the league. Most other teams like to chase big name players in free agency who are usually older, so that his skills diminish while his pay remains at a high level. With all teams operating under the same cap, over time the good businessmen like Belichick/Pioli become wealthy with talent, while the poor businessmen have so much money tied to bad invesments that much of their team is garbage, with little growing assets.

--
Also, I wanted to throw in a pseudo-related point here that doesn't really need its own thread. When people like me criticize our players or a specific position like linebackers, I am not attacking Belichick/Pioli. Sometimes in a market, there just isn't a good asset available at a good price, so you just try to make as many calculated, intelligent guesses as you can out of what is available. Sometimes it takes MORE discipline not to splurge for a perceived need, and just wait things out. So...even though I think Monty Beisel is garbage and that our linebackers have serious depth issues, this is merely a reflection of the linebacker market over the past few years, and does not change my opinion of Belichick/Pioli as talent evaluators, dollar allocators, or team builders.
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An excellent post. Its true that somentimes you just have to wait... and muddle through.

All the Chicken Littles want instant answers, but I would pose the question Name the positions that the Patriots will use their next first-day draft on... Is it CB, Lb, LB,WR or WR, LB, LB, CB? or LB, LB, CB, WR or what exactly? Hmmn?

There aren't any other positions that the Patriots need are there?

Meanwhile we muddle, through.

 

[shmessy]

Re: How Belichick/Pioli Operate Like Smart Businessmen

The patriots are acting as if their cap is $10M less than it is.

I didn't know that the NFL gave teams compensatory W's for spending before August 15th. Danny Snyder would have a dynasty by now.

There's 4 weeks to go. The Patriots will be within a million of the cap by the time the season finishes.

 

[patsox23]

Re: How Belichick/Pioli Operate Like Smart Businessmen

GREAT post, maverick. good stuff. Spot on.

 

[PatsSaintsSox]

Re: How Belichick/Pioli Operate Like Smart Businessmen

As a businessman, the following must be pointed out...

Think of the most overrated player in the NFL. I am going to use Reggie Bush as the model in my argument, because most people have his bust in Canton designed already, and don’t get me wrong, I love the guy, he has been great to the city, but he has yet to take part in a real down in the NFL.
The saints drafted him at number 2, when the RB spot wasn’t even close to a priority as Deuce is a top 10-15 RB and only 2 years ago was a top 5 back. The saints drafted Reggie because they needed to jumpstart the excitement factor and put "the butts in the seats" which is something the Pats don’t have to deal with.

Even if Reggie Bush is a complete bust, he has still, at least partially doubled the Saints’ support in the N.O. area, not to mention the rest of the gulf coast for this year. If the Saints do well this year, even without the help of Reggie Bush, the fans that are watching (because of Bush) will be won over, and become dedicated fans again.

Another thing worth mentioning and is in the same vein is overpriced vets. They may not be worth even remotely close to what they are worth if you are going by pure talent, but because of the name, they are going to bring people to the stadium, and also get the better value players to sign where they think a team is going to win. An example would be if a team like the Browns went out into the open market and bought a player like Marshal Faulk (hypothetical, I know it wouldn’t happen, but pretend he would play again with a team other then the Rams for enough money). Marshal Faulk would bring fans as well as other quality players to the stadium. Which again is something the pats don't have to deal with…

Agree, Disagree?

 

[PatsWickedPissah]

Re: How Belichick/Pioli Operate Like Smart Businessmen

Good point on players who bring fans to the stadium. It could represent an additional cap 'cost' to poor attendance teams, franchises in trouble. But even weak sister Buffalo sells more seats (bigger stadium) than the Pats, albeit at far less cost per seat. Paying Vick the big bucks is an excellent example of overpaying for 'talent' to assuage and stimulate fans.

 

[maverick4]

Re: How Belichick/Pioli Operate Like Smart Businessmen

Excellent analogy and in reality what happens is players who are paid an appropriate wage here, are overvalued by other organizations because of their NE experience, i.e, Andruzzi, Willie, Givens, was is Hochstein in Seattle? on and on... they are more valuable to those franchises than they are to the Pats.

On top of that, we get compensatory draft picks when those some of those players sign elsewhere.

 

[mikey]

This issue came up elsewhere, but deserves its own thread.

Belichick/Pioli are excellent team managers, maybe the best ever, because they think like businessmen. It's not a coincidence that Belichick has an economics degree, in studying how to best deploy limited resources to achieve maximum gain.

Let me give you a real world example. Some people use their money to invest in assets like real estate, securities, businesses, and early ventures, because with intelligence and hard work, you can make these assets grow and have more value than you started with. Other people use their money to buy non-assets such as flashy cars, boats, entertainment, and clothes, that immediately begin depreciating in value the moment you buy them. Over time, the first group ends up with much money, while the second group has no net worth, as well as a bunch of useless things.

How does this relate to the NFL?

The same concept applies regarding cap-dollar allocation and overall team talent level. The Patriots put an emphasis on drafting well, signing young players, bargain hunting for under-valued veterans, and putting in a lot of work into coaching and practicing. Over time, this creates a team of underpaid players who are much better than their salaries, and gives the Pats the highest overall talent level in the league. Most other teams like to chase big name players in free agency who are usually older, so that his skills diminish while his pay remains at a high level. With all teams operating under the same cap, over time the good businessmen like Belichick/Pioli become wealthy with talent, while the poor businessmen have so much money tied to bad invesments that much of their team is garbage, with little growing assets.

--
Also, I wanted to throw in a pseudo-related point here that doesn't really need its own thread. When people like me criticize our players or a specific position like linebackers, I am not attacking Belichick/Pioli. Sometimes in a market, there just isn't a good asset available at a good price, so you just try to make as many calculated, intelligent guesses as you can out of what is available. Sometimes it takes MORE discipline not to splurge for a perceived need, and just wait things out. So...even though I think Monty Beisel is garbage and that our linebackers have serious depth issues, this is merely a reflection of the linebacker market over the past few years, and does not change my opinion of Belichick/Pioli as talent evaluators, dollar allocators, or team builders.
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Picking up undervalued assets at deep discount with low PE ratio is called "value investing". The opposite is called "growth investing", which is investing in high PE stocks (like Google).

I thought Belichick/Pioli "value" investing works because of Tom Brady. If we still have Drew Bledsoe or if Belichick/Pioli had drafted Tim Rattay instead, I am not sure where they would be today. I don't think Belichick would have survived another 5-11 record in 2001.

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[maverick4]

Picking up undervalued assets at deep discount with low PE ratio is called "value investing". The opposite is called "growth investing", which is investing in high PE stocks (like Google).

I thought Belichick/Pioli "value" investing works because of Tom Brady. If we still have Drew Bledsoe or if Belichick/Pioli had drafted Tim Rattay instead, I am not sure where they would be today. I don't think Belichick would have survived another 5-11 record in 2001.

There are risks in picking up "cheap" players. One example is Duane Starks.

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1. Value investing is what made Warren Buffet the 2nd richest man in the country. It seems that what works in finance and real life also applies to the NFL. It is especially useful in the NFL since everyone has the same cap number.

2. I'm not so sure about the Tom Brady point you made, mikey. An argument could be made against this. BB/Pioli's strategy is to accumulate undervalued assets and coach them up to the point where they are underpaid. I respect Belichick, Pioli, Weiss, and the coaching staff so much that I'm not willing to say they wouldn't have found another QB and coached him enough to get the job done for them (so instead of a Joe Montana, rather a Phil Simms-type QB who could win like he did for Belichick with the Giants).

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[mikey]

1. Value investing is what made Warren Buffet the 2nd richest man in the country. It seems that what works in finance and real life also applies to the NFL. It is especially useful in the NFL since everyone has the same cap number.

2. I'm not so sure about the Tom Brady point you made, mikey. An argument could be made against this. BB/Pioli's strategy is to accumulate undervalued assets and coach them up to the point where they are underpaid. I respect Belichick, Pioli, Weiss, and the coaching staff so much that I'm not willing to say they wouldn't have found another QB and coached him enough to get the job done for them (so instead of a Joe Montana, rather a Phil Simms-type QB who could win like he did for Belichick with the Giants).

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(1) True, the second richest man is a "value" investor. But the richest man got his money from investing in the "overvalued" growth stock MSFT.


(2) There is a reason why Joe Montana is in Canton, Ohio, while Phil Simms is not. Phil Simms needed Lawrence Taylor to win one SB. Brady, alone, has picked up 3 Lombardis for New England.



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[PatsFanInVa]

Excellent thread, and excellent jumping off point, Mav.

I do have to say this, however: These guys are the best in the business, but not, therefore, infallible. We may never see it, or not for five or ten years, but it's possible they'll say "in retrospect in setting our values for the 2006 offseason, we underestimated the effect of the new CBA cap inflation on the values we set for different players."

I am far from certain this will be the case, of course, but NE did not make many "value" or other moves in FA, especially in those "need" positions. Reche and Automatica come to mind, but not much else.

Of course, the approach they have taken is "value investing" (buy low sell high,) and they have done a tremendous job.

I like to put it this way:

They get guys cheap, get them rings, and then sell them AND their jewelry. (Really, of course, they just let people pay for the jewelry and refuse to pay for it themselves.) That "Ring bump" is what everybody is holding out for, and the reason they don't get it from the Pats is they're still the same guy at the end of the day, but with a ring. (If you don't believe me, call Deion.)

But I digress. I just want to pull back from the koolaid pitcher long enough to opine that there are guys Belioli might look back on as having been worth that extra half-mil. This might be the year that the value approach begins to look a little too timid, in light of the cap inflation hitting elsewhere.

But of course, might, shmight... they made their calls on value knowing full well the current economics, and probably knowing they'd miss a lot of boats this year. That discipline is what got us to so many super bowls in the first place... so yeah, maybe they look back at where they pegged those values with a little bit of dismay, or maybe the values were spot on, and other teams are overpaying.

Or maybe, they just didn't see pieces of the puzzle available, at what the organization is willing to pay.

So we'll maybe play the Power I n the wishbone for a few hundred downs, with some 4 TE sets in the mix for good measure, and hook up Monty Beisel to a bluetooth joystick on D ...

I'm refilling my koolaid now... and when Reche goes over 1000 yards, I will feel good again.

PFnV

 

[maverick4]

(2) There is a reason why Joe Montana is in Canton, Ohio, while Phil Simms is not.

Right, but the Giants DID win two superbowls, did they not? One of them was with their backup QB!

I have to believe that Belichick/Pioli inevitably would have had success with their system. Brady happened to be the perfect fit, but as much as it pains me to say this (Brady is one of my favorite athletes), I still think Belichick would have won championships with someone else.

If players like Mark Rypien, Trent Dilfer, and Jeff Hostetler can win superbowls, then it IS possible to win championships with proper coaching and player drafting/selections.

 

[shmessy]

(1) True, the second richest man is a "value" investor. But the richest man got his money from investing in the "overvalued" growth stock MSFT.



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Gates didn't "invest" in it. He founded and created the "system" that he owned. He built the system. He didn't "buy" it. He created and operated it. The system, got it Mikey?

See the analogy to one who builds a "system"?

Paraphrasing the ol' fish quotation: "Give a man a free agent and he wins in the short term, teach a man a system and he wins over the long-term".

Mikey, may I suggest you become a Redskins fan?

 

[maverick4]

Excellent thread, and excellent jumping off point, Mav.

I do have to say this, however: These guys are the best in the business, but not, therefore, infallible. We may never see it, or not for five or ten years, but it's possible they'll say "in retrospect in setting our values for the 2006 offseason, we underestimated the effect of the new CBA cap inflation on the values we set for different players."

This is a great point that I wholeheartedly agree with.

The Patriots could have scooped up some talented players this year through desparation cuts if the new bargaining agreement hadn't bumped everyone's cap limits up.

I am sure that there are cases where the Patriots were too conservative and, in retrospect, would have liked to spend a little more for better talent or potential.

However, given our current situation, we are one of the few teams now who have enough space to sign our young talent in 2007, while having enough room to pick up good players because other of the poor financial management of other teams.

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[shmessy]

Brady, alone, has picked up 3 Lombardis for New England.

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Proof positive that you are clueless about the New England Patriots and their dynasty.

 

[PatsFanInVa]

Paraphrasing the ol' fish quotation: "Give a man a free agent and he wins in the short term, teach a man a system and he wins over the long-term".

Or the Chayut corrolary:

Build a man a fire, and he's warm for one night. Set a man on fire and he's warm for the rest of his life.

PFnV