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"Uncertainty Theory": How the Pats Do Business?

Discussion in 'PatsFans.com - Patriots Fan Forum' started by mayoclinic, Jun 5, 2012.

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  1. mayoclinic

    mayoclinic PatsFans.com Supporter PatsFans.com Supporter

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    It's the slow season, so I've had some extra time to think and engage in "amateur analysis" - always a dangerous thing. And a bunch of stuff has gotten me thinking about the way the Pats approach the draft, roster competition, team-building in general, and contracts. And I'm not sure I can lay all this out clearly, but it seems to come down to a fundamental belief in "uncertainty" as a guiding principle of the NFL.

    Most of us crave certainty. We want to plug players into slots, lock them up long term, and watch them perform to expectations. But the NFL doesn't work like that very often. Injuries occur. Veterans age and their skills deteriorate, sometimes at an unexpected rate. Some rookies (and new veterans) fail to develop or adjust at the expected rate, while others develop more quickly than expected.

    It seems to me that the Pats tend to incorporate uncertainty into their business and coaching model more than most teams. Some examples:

    1. The Pats believe in diversification. Things don't always work out as expected, so don't throw all your eggs in one basket. Trade back in the draft and acquire more picks. Double up on draft picks at critical positions. Sign multiple free agents at positions of need, and combine signing veterans with drafting rookies. This has multiple benefits: it functions as a portolio diversification strategy to limit risk; it allows players to develop at different rates without putting huge pressure on them to immediately perform, because there are other options; and it generates depth.

    2. Don't overspend at the top. The Pats tend to throw less money at "top end" players and get tied up in long term contracts which could strangle the team if those players didn't pan out. Compare this approach with, say, that of the Jets. This is sometimes called being "cheap" by fans and the media, but I think it's more a factor of the team's business model than being frugal. The Adalius Thomas situation in 2009 was a painful reminder of how a long term contract can strangle a team.

    3. Invest at the middle/bottom. The Pats are probably more willing to throw money at depth than more teams. Depth compensates to some degree for uncertainty. Logan Mankins is coming off an injury, Brian Waters is 35 and contemplating retirement. So the team re-signs both Dan Connolly and Dan Koppen as well as Robert Gallery, giving them added flexibility. That may be overkill, but Gallery also gives them flexibility at tackle with Matt Light contemplating (at the time) retirement. If Nick McDonald or Ryan Wendell develops enough to make Koppen expendable, then the team could cut him. But it gives them insurance. Similarly with the approach to WR. Half the guys signed may end up getting cut, but it gives the teams options and doesn't lock them in to any one guy having to achieve. The Pats are also willing to tie up a role player long term, since the cost is low and it provides insurance against uncertainty. Ryan Wendell and James Sanders are good examples. But that doesn't guarantee them a roster spot if they are outperformed.

    4. Adjust for performance. The Pats believe in competition. Let guys fight it out to earn their spots. Don't hand guys jobs. There are very few exceptions, and even some of the biggest names on the team talk about the constant competition and need to prove themselves. Compare this with a guy like Joe McKnight for the Jets who was drafted with an expectation and then handed a job that he has never proven himself able to perform, resulting in a better player being cut and going to a competitor.

    5. Factor for error. The Pats believe that error is a reality of personnel evaluation in the NFL, and in cutting their losses and moving on. The Pats draft/sign rookies and sign veterans in the belief that those moves have a reasonable potential of working out, but they realize that not all moves will work out as expected, and they tend to cut their losses and move on sooner than most teams, without any beating of the breast or gnashing of teeth in frustration. Chris Baker, Darius Butler, Brandon Meriweather, Chad Jackson, Albert Haynesworth ... the list goes on and on of guys that the Pats have let go because they didn't live up to expectations and had underperformed their contracts, or became distractions to the team. Can you imagine that Santonio Holmes would still be on the team if the Jets were run the way the Pats are?

    6. Expect the unexpected. The Pats believe that change is a constant in the NFL, and in adjusting. Randy Moss is acquired for a 4th round pick in 2007, gets a $30M 3 year contract in 2008, and is traded for a 3rd round pick in 2010. Leigh Bodden gets signed to a 1 year deal in 2009 and has a great year, gets a 4 year deal and never plays another regular season game for the team, and gets cut a year later. Tull Banta-Cain gets re-signed on a low-budget deal, has 10 sacks, gets a 3 year extension, underperforms, and is cut. Andre Carter gets signed on a low-budget 1 year deal, has 10 sacks, injuries his quadriceps, and may be done for his career. Things are constantly changing, and seldom work out as planned, and the team needs to be able to adjust for that.

    This is a bit rambling, and again, it's just my thoughts. And it's not absolute. But it seems to me that the Pats tend to operate more according to these kind of "uncertainty principles" than do most teams. Nothing is set in concrete, and the team adjusts more fluidly than most teams do to a changing environment. It allows them to find guys like Rob Ninkovich, and dump guys like Shawn Crable.

    We (and the media) spend countless hours trying to predict how things will work out and pinning our hopes on guys working out as planned. Things seldom work out as expected. 2012 probably won't be any different. And the Pats will continue to thrive because they adjust to uncertainty better than the rest of the league. Indeed, they seem to incorporate it into their basic philosophy.

    Thoughts?
     
  2. everlong

    everlong Experienced Starter w/First Big Contract

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    #12 Jersey

    Risk aversion is a concept in psychology, economics, and finance, based on the behavior of humans (especially consumers and investors) while exposed to uncertainty.

    Risk aversion is the reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly lower, expected payoff. For example, a risk-averse investor might choose to put his or her money into a bank account with a low but guaranteed interest rate, rather than into a stock that may have high expected returns, but also involves a chance of losing value.


    Risk aversion is the business and economic principal that they adhere to. They want all of their bases covered, they don't want all of their eggs in one basket.
     
  3. PlainOldEd

    PlainOldEd Rotational Player and Threatening Starter's Job

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    Meanwhile, the Jets employ the "Schrodinger’s quarterback" philosophy. That is to say, until you observe something it exists in all possible states. So therefore if they don't observe the Sanchize (i.e. turn a blind eye). He is simultaneously a franchise QB and a bust.

    I don't blame them, since once they open the box and look they will observe that he is a 100% bust......
     
  4. mayoclinic

    mayoclinic PatsFans.com Supporter PatsFans.com Supporter

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    I think it's more than just risk aversion. An investor who optimizes for risk aversion tends to accept a lower return on investment as a trade off for more security. The Pats take plenty of gambles - investments in volatile stocks with "growth potential", to continue the analogy - but they do so in a very calculated way, and with portfolio diversification to limit their exposure. They'll take a risk on an Alfonzo Dennard, but do so in the 7th round, and balance it with a much "safer" rookie (Tavon Wilson) and veteran (Steven Gregory) signing.

    Look at the interior OL, for example. Logan Mankins is the major portfolio investment. Brian Waters is a short term investment that is relatively reliable. Dan Connolly is a medium investment, also relatively reliable. Dan Koppen is a short term investment with known risk that balances some of the volatility in the portfolio. Robert Gallery is a bit of a wild card investment, but the cost and duration have been carefully limited; if it pays off, then a further investment could be warranted. Ryan Wendell is a small investment in a known quantity with limited upside, but very limited risk. And Nick McDonald is the small cap stock with growth potential. If he pans out, then the portfolio could pay off lucratively, but if he flops, then the other bases are covered. Throw in a couple of UDFA fliers (Markus Zusevics, Jeremiah Warren) and the Pats have achieved not only risk aversion but also growth potential. That's a very desirable combination from an investment perspective.
     
  5. everlong

    everlong Experienced Starter w/First Big Contract

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    #12 Jersey

    It's the same thing.

    You don't see the Pats taking guys in the first round who don't meet all their criteria but they'll roll the dice in the middle rounds on a Dowling, Gronkowski or Tate who are undervalued because of their injuries in college. These are acceptable risks. Generally these picks became available by not taking risks in the first round and gaining multiple picks in later rounds. In some cases they pass on a risky player in the first round and take a developmental player later in the draft and couple him with a Carter and Anderson.

    The risk aversion is in wasting\using a high pick on one boom or bust player. Just like in the FA market it's wasting a large chunk of the cap on one player like a Mario Williams. In baseball terms it's value over replacement player or VORP with the added factor of the salary cap thrown in. If you can have Carter and Anderson for a fifth of Williams in terms of salary and coupled they give you twice the depth and 75% of the production you've achieved risk aversion on several different layers.
     
    Last edited: Jun 5, 2012
  6. mayoclinic

    mayoclinic PatsFans.com Supporter PatsFans.com Supporter

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    Nice thoughts, especially the VORP stuff. It will be interesting in light of this to see how the Pats handle the Gronkandez contract situation over the next 2 years.
     
  7. PATSYLICIOUS

    PATSYLICIOUS Pro Bowl Player

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    #12 Jersey

    I think you're theory is pretty accurate. The Pats IMO use the perfect mixture of trying to win now and keeping the future in mind. In a one and done format, it's the smart way to do things as 'superteams' have it harder in this league than any other. Give yourself the biggest window and most opportunities to win.
     
  8. Deus Irae

    Deus Irae PatsFans.com Retired Jersey Club PatsFans.com Supporter

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    Someone out there has posted that the Patriots have never cut a top four (I believe he/she posted that it was round four, I haven't double checked it) round player in year one. It's tough to argue that the team's not handing some guys jobs when that sort of thing is happening.
     
  9. Zeus

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    I have a minor (possibly semantic) disagreement with this. Maybe it's best to say I would voice the same sentiment in a slightly different way.

    I don't think the Patriots area at all risk averse. In fact, they take plenty of risks, but where they do take risks, they seek a significant upside while being careful are careful to manage the downside (as you have pointed out).

    Haynesworth was a highly speculative investment. They managed the downside by acquiring him for a low draft pick and by keeping his compensation low. The upside was a potential difference maker at a critical position. Not really risk averse though, because there was a high probability that this investmewnt would fail (as it did).

    The draft strategy involves taking calculated risks like this fairly often. This is indeed facilitated by the tactic of trading down (or into the future) to accumulate more picks. The selection of players with questions (injury, legal, character, etc.) has a greater risk of failure for each individual pick. In the cases of Gronkowski and Hernandez, they acquired first round talents at a much lower cost both in terms of the draft pick and the salary cap dollars expended. Cannon and Dennard are other recent examples -we'll see what the future holds for them.

    On the other hand, there are many cases where things didn't work out quite so well (or at all). You have to accept this as the cost of employing the strategy and be willing to bust on both the pick and the money involved. The big question is where you end up overall - did the hits outweigh the misses? If you are careful about structuring the bets so that there is a healthy upside while the downside is limited, you should be okay.
     
  10. mayoclinic

    mayoclinic PatsFans.com Supporter PatsFans.com Supporter

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    The closest they've come that I can think of off the top of my head has been Tyrone McKenzie, who went on IR year 1 and then was cut year 2 and signed to the PS, before being finally released in November 2010. He was beaten out for a roster spot by UDFA Dane Fletcher.

    As I said, it's not perfect. I think that if you invest a high pick in a player that it's not unreasonable to give them at least 1 season to fully evaluate them, so I'm not surprised that the Pats would be unlikely to cut such a player in year one. There has to be some "developmental time" factored in for rookies. But that by no means guarantees them any playing time, or even being on the game day roster (Taylor Price was inactive for 15 games as a rookie).
     
  11. Deus Irae

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    I'm not saying that it's right or wrong, although I have a general notion that it's probably best to evaluate such a situation individually. I'm just saying that I can't buy the argument that the team's not handing out jobs when being drafted in the top 4 rounds has guaranteed them a job for at least a year.

    For example, did they really need to keep O'Connell around taking up a roster space? That pick was horrendous from the start.
     
  12. conway

    conway Practice Squad Player

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    I'm not sure they're being handed jobs, but I'm sure that not all players are competing on an even playing field. Players that they have committed to through a high draft selection or a significant FA signing bonus are probably given more opportunities and time than an UDFA signed for peanuts. They have partly "earned" their job by their prior performance, whether it be in the NFL or in college. Certain players are probably expected to take more time to develop. There's no way BB- or any other team- selects a roster based solely on performance at camp. If the high 1st round pick struggles due to injury, he's still going to have a roster spot due to his potential and prior performance (in college), whereas the UDFA that struggles due to injury may get cut. It may be semantics, but I don't think it's fair to characterize that type of situation as being handed a job they didn't earn.

     
  13. everlong

    everlong Experienced Starter w/First Big Contract

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    I think what you descibed is the definition of risk aversion. Washington paid him 100M which was high risk. The Patriots took a shot he had something left in the tank and gave up a low pick for a potential high ceiling and paid him peanuts compared to the Skins. Buy low, sell high.

    It's not that they don't take risks. It's that the risks are calculated with a low cost up front and a high upside. The Redskins on the other hand have been the definition of high risk investments equal to trading in junk bonds.
     
  14. mayoclinic

    mayoclinic PatsFans.com Supporter PatsFans.com Supporter

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    Hey, O'Connell was team captain material. Just ask the Jets. :D

    I agree the pick was terrible. And the Pats surprised most by cutting O'Connell unceremoniously in training camp in 2009 - again, for a UDFA player. Just like they cut 3rd round picks McKenzie and Taylor Price (in favor of UDFA Tiquan Underwood). All 3 were cut in their second year, and McKenzie never actually occupied a spot on the final 53 man roster before being cut. That may not be perfect, but I suspect it's faster than just about any other team in the NFL. It would be interesting to look at other teams' records of getting rid of failed day 1/2 picks.
     
  15. Deus Irae

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    Dude, that's just semantics. It's a way of saying that they're given a job for being a top 4 round draft pick, which is what I was saying, while at the same time trying to argue that it's just a 'boost'. Well, if/when the boost means a 100% rate, it's a gift, not just a boost.

    Again, I'm not saying it's good or bad, because I get the logic of either side of the argument although, if pressed, I'd likely prefer a more individualized approach to a blanket policy. I'm just saying that it doesn't jibe with Mayoclinic's point.
     
  16. Deus Irae

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    I probably shouldn't have used O'Connell, since his being drafted by the Patriots is a bit of a peeve of mine, and I could be tempted to derail the thread. So, let me just say that I'm not sure that refusal to 'give' jobs is something BB actually practices across the board, though it certainly seems that he does it less than most.
     
  17. patfanken

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    Two important rules I remember from my days in the financial industry that the Pats seem to be good at are: Don't be afraid to make mistakes , but when you do make them, DON'T fall in love with them.

    Its one of the things the Pats do best. They admit their mistakes.Way too often I would see Brokers make big losses out of small ones, just because they couldn't admit that they made a mistake in the first place. Picking stocks is a lot like the draft, and equally as precarious. You can do all the research you can, and STILL BE dead wrong.

    Its the reason most day traders LOSE money. They will pick a stock or option and win a point, and then get out. Then they;ll do it again, and again. Then they'll pick another and when it goes down a point, they;ll hold on to it, and when it goes down 2, they still hang on to it in the hopes it will get back to even. Finally when it drops 4 and the pain is too great he will sell. Then he will sit back and wonder how he could be right 3 out of 4 times and STILL lose money.

    ONe of the best pieces of advice I got, was that its not just about how much money you make, its about how much you don't lose. Poker and the draft work in similar fashion. You have to know when it time to fold
     
  18. mayoclinic

    mayoclinic PatsFans.com Supporter PatsFans.com Supporter

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    Deus, I know you're a stickler for precise language. I assume that the "point" that you're referring to is this specific phrase from my OP:

    So if I understand you correctly, you would argue that while rookies drafted in rounds 1-4 aren't necessarily handed "jobs" in terms of playing time, they are in terms of roster spots. Is that correct? If so, I have no problem amended my original language to note that rookies taken in rounds 1-4 appear to be handed roster spots their initial year. Perhaps that is not aggressive enough on the part of the team. The Kevin O'Connell argument is a case in point, though I wonder whether losing Tom Brady to injury in game 1 of the 2008 season may have played a role at not cutting O'Connell sooner. Regardless, I do believe (1) that rookies are treated no different from anyone else regardless of their draft status in terms of earning actual playing time, and (2) that the Pats are probably quicker to pull the plug on failed rookies than just about any other team that I can think of.
     
  19. doesntmatter1

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    There's no way I can argue with our success but we definitely are too conservative. In the past we definitely favored proven vets and we didn't trust younger guys with potential and we don't always cover our bases well but it seems like things are changing for the better. I'll give a few examples.

    We preach competition but sometimes vets win just by showing up. In 09 terrence nunn clearly outperformed galloway and greg lewis but galloway who sucked more than anybody made the team. Same thing with saving spots for troy brown and kevin faulk. Yeah I love them but faulk's spot could have been spent scouring the league for safeties and tight ends since we only had two. In my eyes sterling moore should have never been cut at any point last year or even tiquan when faulk was doing absolutely nothing. We had gerrad warren sitting at home waiting for injuries to happen to get signed but he should've always been on the team and faulk should've been by the phone instead.

    Also BB always plans for the future but the trading of ellis hobbs til this day made no sense too me. We already lost samuel so you go and get rid of our next best guy and kick returner for basically nothing(rich orhberger). And then we get rid of our next kick returner(tate) for ocho. The waste of money and draft picks on derrick burgess and tully made no sense. Tully had the worst 10 sack season i have ever seen and was pissed we resigned him but these failures finally opened up bb eyes.

    We are struggling with a 3-4 pass rush and he finally goes to a 4-3 with carter and anderson and we get the best pass rush since 07. We may very well go back to a 3-4 but jones who projects to do exactly what carter did says otherwise and just the fact that he was willing to trade up for him shows BB is done being stubborn and is going to put a fix to some of the most glaring problems we have seen for a long time. I can really tell things are changing because there are guys im not too fond of but the guys that just flat out held us back are slowly disappearing and im pretty low on whipping boys. BJGE lack of speed is gone, pretty sure sergio brown won't see the field and we got gaffney and lloyd. Also i rewatched the raider game and that shows how ocho can make it in this offense imo. As it stands, the only guys I flat out hate are edelman(hate him as a wideout), sergio brown(no need to explain), and myron pryor(his pass rush doesnt make up for his subpar run defense).
     
  20. Deus Irae

    Deus Irae PatsFans.com Retired Jersey Club PatsFans.com Supporter

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    Obviously, we can only go by what we have in front of us, but that does seem to be the case. As for me being a stickler, it's true that I tend to do that in debates or discussions that are less informal than just a general chat. That's a lesson I was taught repeatedly throughout my educational career. I'm sorry if you feel I've taken it too far here, I just thought it was worth pointing out given your overall thesis.
     
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