Economists Analyze The Pats Formuler (sic) For Success

[PatsWickedPissah]

Here's an analysis by economists on why the Pats have sustainability as a winning franchise...

http://american.com/archive/2006/november/patriots-vs-redskins

Football teams have a relatively simple economic problem to solve. They have to fill their rosters with players, and have to pay the entire collection of players an amount fixed by the league. They can add players in two main ways: sign veterans as free agents or hire new players out of college in a league-wide draft. Veteran free agents get a salary set in the free market. Most draftees receive a relatively lower salary set by collective bargaining. What they are paid depends on the round in which they are drafted.Economics has a very clear prediction for optimal team behavior. Firms should load up on draft picks, especially from the inexpensive late rounds. Every team has the same cumulative salary to pay, so, to outperform the other teams, you must receive higher value relative to salary from your players than your opponents receive from theirs. If, for example, you select a Pro Bowl (all-star) receiver in the fifth round of the draft, that player may well receive a salary one-tenth that of a veteran Pro Bowl receiver of roughly equal talent who has had his salary set on the market. So your team gets a huge surplus.
It is nearly impossible to derive surplus from the veteran free-agent market, since you are paying market wages. While injuries and emergencies might require some veteran signing, the draft is the only place to build a winning team.

So economics would predict that teams would uniformly put an enormous effort into perfecting their drafts, and avoid sinking excessive dollars into costly free agents. In fact, this model predicts very well the behavior of one team, the New England Patriots. Their head coach, Bill Belichick, who received his undergraduate degree in economics from Wesleyan University in Connecticut, has been an artist at squeezing value-added out of his draft picks, and has won three of the last five Super Bowls.

We all know the fallibility of BB and Pioli in bust draft picks (e.g. Marquis Hill - Thanks Saban, you devious bastid!) but in the average and over the long run they have done very well, value wise.

 

[shmessy]

Great stuff and well written.

By the way, has anyone heard from poster "Mikey" ("Kraft is cheap") lately?

 

[RayClay]

Here's an analysis by economists on why the Pats have sustainability as a winning franchise...

http://american.com/archive/2006/november/patriots-vs-redskins

Football teams have a relatively simple economic problem to solve. They have to fill their rosters with players, and have to pay the entire collection of players an amount fixed by the league. They can add players in two main ways: sign veterans as free agents or hire new players out of college in a league-wide draft. Veteran free agents get a salary set in the free market. Most draftees receive a relatively lower salary set by collective bargaining. What they are paid depends on the round in which they are drafted.Economics has a very clear prediction for optimal team behavior. Firms should load up on draft picks, especially from the inexpensive late rounds. Every team has the same cumulative salary to pay, so, to outperform the other teams, you must receive higher value relative to salary from your players than your opponents receive from theirs. If, for example, you select a Pro Bowl (all-star) receiver in the fifth round of the draft, that player may well receive a salary one-tenth that of a veteran Pro Bowl receiver of roughly equal talent who has had his salary set on the market. So your team gets a huge surplus.
It is nearly impossible to derive surplus from the veteran free-agent market, since you are paying market wages. While injuries and emergencies might require some veteran signing, the draft is the only place to build a winning team.

So economics would predict that teams would uniformly put an enormous effort into perfecting their drafts, and avoid sinking excessive dollars into costly free agents. In fact, this model predicts very well the behavior of one team, the New England Patriots. Their head coach, Bill Belichick, who received his undergraduate degree in economics from Wesleyan University in Connecticut, has been an artist at squeezing value-added out of his draft picks, and has won three of the last five Super Bowls.

We all know the fallibility of BB and Pioli in bust draft picks (e.g. Marquis Hill - Thanks Saban, you devious bastid!) but in the average and over the long run they have done very well, value wise.

Pretty good analysis execpt for this.

Since there are relatively few marquee free agents and lots of street free agents and draft picks on their first contracts who are also part of the "market", Marquee free agents actually command above market wages.

Same as employees in unions, from Ivy League colleges or in the best companies.

Will the market for David Givens ever be as high? I doubt it. He took advantage of optimum market conditions, not average market price.

 

[ironwasp]

It's a very interesting piece, and right on the money. You set a value to each position and then you stick to it, avoiding the wild impulses of emotion and randomness that lands the Redskins with Antwaan Randle El and prompts Matt Millen to draft wide receivers.

Of course it will never work perfectly - no economic system does - but it is a relatively simple rule of thumb, that is relatively easy to stick with and, as far as the Pats are concerned, has produced great results.

Someone said this in another post - and I have made the point before - and that is that this system does create its own difficulties beyond the fact that the NFL penalises success in the draft and the schedule. And that is: most players play for two reasons: money and rings.

Almost all our guys have their rings - all those here for more than two seasons - and having done that, many feel they have earned the money that goes with them, either here or elsewhere. And by getting the rings and by being associated with the Patriots mystique, their price tag is inflated by teams wanting to buy a piece of that, and therefore the Pats can't afford to keep them.

The - really, as yet unproven - flip side to that is that some guys (those who already have their money) will come here in their quest for a ring. I don't think this part of the equation includes too many players.

So we - by which I mean BB and the FO - now have to work twice as hard to make the draft and the limited FA moves work and have less slack to work with than other teams.

 

[Willie55]

It is nearly impossible to derive surplus from the veteran free-agent market, since you are paying market wages. While injuries and emergencies might require some veteran signing, the draft is the only place to build a winning team.

IMO you have to do three components equally well: draft, trade, free agency - and the Pats have excelled at each (with a few bumps in the road).

Draft - Brady, Givens, Branch, Koppen, Graham, Watson, Seymour, Warren, Green, Samuel, Koppen, Kaczur, Mankins

Trade - Washington, Dillon,

Free Agency - Vrabel, Seau, Harrison, Colvin, Hawkins, Evans, Miller

I'm sure there's some I have missed.

It's all about putting a value on a player in free agency and not exceeding that value. Look at Daniel Snyder - he spends like you read about every year and ends up with a losing record.

They also have to know when to cut bait with players - Vinatieri, McGinest, Bledsoe, Milloy, Law

 

[Patfandango]

Great find PWP, and other posts. This is spot on and I think that BB is as important for his understanding of the business aspect as for his coaching. Kraft is an excellent businessman and BB and Pioli are completely in sync with the idea of value being paramount for sustained success. Value comes from good drafting and coaching up players. In competing in the draft (and free agency and trading to some extent), the Pats have an advantage in that their list of metrics go beyond athleticism and stats. Character, work ethic, passion are also of equal importance. In other words, our board is different than others and the Pats exploit this on draft day. While our success has engendered risk in that we lose players that are valued higher by other clubs, I think this is canceled somewhat by players wanting to come to a winning organization and sometimes taking less (Dillon, for example). One area that seems less worked out is what to do with players at the end of their rookie contract. Givens and Branch this year are examples of players that would have continued to excel here, but we can't match inflated offers from elsewhere. One interesting point is that while winning adds value to a franchise, losing does not necessarily bankrupt you because of local monopoly. Therefore, the Pat's model can continue to be successful, because flawed clubs like the Redskins are not culled.

 

[MoLewisrocks]

I think Belioli have also had a leg up in their ability to derive value from the veteran FA market by doing most of their shopping around the fringes. Doesn't always pan out as Brown and Beisel and Starks proved, but it has paid big dividends in most of the last six seasons. Sometimes those players merely fill a transient need but fill it exactly as they would have hoped, other times it has yielded a core player in the midst of the run. But the rapidly expanded cap may make that market less fluid over the next year or two.

 

[PatsWickedPissah]

One thing remains constant...the market and environs are always changing. That's why it's great to have an analytical management team that strives to read, plan and react to changing conditions. Not always quickly to avoid transient phenomena but most always thoughtfully well. BB is humble enough to abandon what does not work.

 

[arrellbee]

As Willie55 and Mo point out, the article has the serious flaw that they propose that the draft is THE mechanism for building a strong team within the cap constraints. NO team will get enough draft picks to fill a complete roster what with the league-wide yield on draft picks who stay on rosters versus those that never make the roster or drop out in a few years either due to poor performance or injury.

These numbers are a few weeks out of date, but:
29 Draft
15 FA
6 Undrafted
3 Trades

So the Pats, held up as a prime example of the thesis of the article, proves that the thesis is wrong. Only slightly more than half of the Patriots players come from the draft.

 

[spacecrime]

Are you guys for real? I thought this was a joke article until I read the comments, so I went back, and I still think it is a joke.

load up on draft picks, especially from the inexpensive late rounds.

Oh yeah, that's the basic strategy of any winning team. Get rid of all your first day picks and draft 37 guys in rounds 6 and 7.

select a Pro Bowl (all-star) receiver in the fifth round of the draft

Okay it is becoming clear now. Load up on late round picks and only use them on Pro Bowl players. Yeah, now it all makes sense. Use those 37 late round picks on 37 Pro Bowl players.

Anyway, a late round player who makes the Pro Bowl his first couple of years will likely get his contract re-done very quickly. Think Tom Brady. But the fact is that most Pro Bowl players aren't late round picks. There are always a few, but to have your business plan built on selecting Pro Bowl players in the late rounds is silly.

I still think this article is a wannabe escaped from the Brushback or the Onion.

 

[gomezcat]

Here's an analysis by economists on why the Pats have sustainability as a winning franchise...

http://american.com/archive/2006/november/patriots-vs-redskins

Football teams have a relatively simple economic problem to solve. They have to fill their rosters with players, and have to pay the entire collection of players an amount fixed by the league. They can add players in two main ways: sign veterans as free agents or hire new players out of college in a league-wide draft. Veteran free agents get a salary set in the free market. Most draftees receive a relatively lower salary set by collective bargaining. What they are paid depends on the round in which they are drafted.Economics has a very clear prediction for optimal team behavior. Firms should load up on draft picks, especially from the inexpensive late rounds. Every team has the same cumulative salary to pay, so, to outperform the other teams, you must receive higher value relative to salary from your players than your opponents receive from theirs. If, for example, you select a Pro Bowl (all-star) receiver in the fifth round of the draft, that player may well receive a salary one-tenth that of a veteran Pro Bowl receiver of roughly equal talent who has had his salary set on the market. So your team gets a huge surplus.
It is nearly impossible to derive surplus from the veteran free-agent market, since you are paying market wages. While injuries and emergencies might require some veteran signing, the draft is the only place to build a winning team.

So economics would predict that teams would uniformly put an enormous effort into perfecting their drafts, and avoid sinking excessive dollars into costly free agents. In fact, this model predicts very well the behavior of one team, the New England Patriots. Their head coach, Bill Belichick, who received his undergraduate degree in economics from Wesleyan University in Connecticut, has been an artist at squeezing value-added out of his draft picks, and has won three of the last five Super Bowls.

We all know the fallibility of BB and Pioli in bust draft picks (e.g. Marquis Hill - Thanks Saban, you devious bastid!) but in the average and over the long run they have done very well, value wise.

Cheers, PWP. That's an excellent article. The thing I have never been able to understand is why teams pay extremely highly for FAs, to the detriment of a decent depth chart in a sport which is, erm, a tad injury-prone.

The article makes a great point about Branch. Seattle is saddled with a high cap hit for a player who is good but arguably over-valued. We also turned the second we used on him into a likely late round 1st, which isn't bad either.

 

[IcyPatriot]

Great stuff and well written.

By the way, has anyone heard from poster "Mikey" ("Kraft is cheap") lately?

What do you expect from a wanker like him ... everywhere he looks he sees evil and stupidity.

 

[rookBoston]

The key, certainly, is to maximize on the draft. Finding top-end starters like Koppen, Asante, Brady and Givens in the later rounds is the best way to keep the cap healthy.

Even better is to find players like Gay, Neal and Wright from the lists of the undrafted. Those players contribute for next to nothing, the NFL chips in to compensate them with bonuses for performance, and they turn into real players that we can either roll for Compensatory picks when they leave in FA, or we backfill them with new no-name finds that we turn into players.

Not mentioned, but deserving, is the fact that BB has yet to draft a first round bust. All his first rounders have turned into players: Seymour, Warren, Graham, Wilfork, Warren, Mankins and Moroney. Holy crap. He's on such an incredible streak that I wonder if it's a streak at all. People say drafting players in the first round is a risk proposition, but I dont see it out of Foxboro. Those selections are not a mistake. BB just recognizes talent and value. Not a single Chris Canty in the bunch.

This is key because drafting a first rounder is actually a significant commitment of $ for the team, and a long term commitment at that. A few bad first round picks in a row can really hamstring an organization against the cap.

 

[arrellbee]

The key, certainly, is to maximize on the draft. Finding top-end starters like Koppen, Asante, Brady and Givens in the later rounds is the best way to keep the cap healthy.

Even better is to find players like Gay, Neal and Wright from the lists of the undrafted. Those players contribute for next to nothing, the NFL chips in to compensate them with bonuses for performance, and they turn into real players that we can either roll for Compensatory picks when they leave in FA, or we backfill them with new no-name finds that we turn into players.

Not mentioned, but deserving, is the fact that BB has yet to draft a first round bust. All his first rounders have turned into players: Seymour, Warren, Graham, Wilfork, Warren, Mankins and Moroney. Holy crap. He's on such an incredible streak that I wonder if it's a streak at all. People say drafting players in the first round is a risk proposition, but I dont see it out of Foxboro. Those selections are not a mistake. BB just recognizes talent and value. Not a single Chris Canty in the bunch.

This is key because drafting a first rounder is actually a significant commitment of $ for the team, and a long term commitment at that. A few bad first round picks in a row can really hamstring an organization against the cap.

You make what I consider to be a very significant point about Belichick/Pioli success rate on 1st rounders. As I have also commented on in numerous posts, it really strongly appears that one of the big weighting factors for BB/SP in picking first rounders is to pick 'sure things' (ie low risk) rather than take highly touted players who might have a significant risk element. Obviously, from the fact that only about one-third of the first round picks really work out solidly for teams, other teams just take some risks - even though they may not be clever enough to realize that this is what they are doing. But the results tell the story.

 

[PatsFanInVa]

Pretty good analysis execpt for this.

Since there are relatively few marquee free agents and lots of street free agents and draft picks on their first contracts who are also part of the "market", Marquee free agents actually command above market wages.

Same as employees in unions, from Ivy League colleges or in the best companies.

Will the market for David Givens ever be as high? I doubt it. He took advantage of optimum market conditions, not average market price.

Ray, I may be splitting hairs to an extent, but the existence of a high end of a market does not mean the marquis free agent is getting "above market" wages. Same goes for an ivy educated employee, actually... you're just looking at people commanding the market rate for their services. They are still part of the market mechanism, just a happier part of it.

But your Givens comment points up on subtle Belioli advantage and disadvantage: through their successes, they have artificially inflated the value of many "ex-Pats," both in their own eyes, and in the eyes of their new teams. This is especially true in terms of the wideouts. Givens and Patten come first to mind for me. Branch seems to be earning his keep, by contrast... but you get the idea. People come to Foxboro, get a ring, believe their own press, and negotiate with other people who believe their press. Their market value goes up.

But the Belioli model dictates that a value be set for that player for the Patriots. That number is less responsive to the fact that the player is on a Super-Bowl winning team, since many Pats have been on such a team... hence, player's self-evaluation and other teams' evaluation of player, exceed Patriots evaluated worth of player.

Over half of the Pats are drafted Patriots... ...which one poster says means "almost half of them were acquired through trade or free agency."

Well, okay... this count is meaningful if that is more than most teams carry from trade or FA. In other words, the figures are only significant in relationship to the league at large. If the Pats carry 1/2 homegrown and 1/2 FA/trade, and the league average is 1/4 from the draft, then the Pats DO use the draft exceedingly well, by the standards of the article. But if the average NFL team is carrying 75% draftees, then the Pats just aren't (by comparison) a draft-heavy team.

I don't have these numbers, but unless someone else does, it seems pointless to characterize the Pats as particularly draft-heavy or not.

PFnV