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What’s a draft pick worth? (part II)

Posted by Doug on March 30, 2007

A couple of posts ago I summarized the work of Cade Massey and Richard Thaler who, after studying the NFL draft rigorously, claim that it is not what it seems. Where I hope to add to the discussion is by seeing if the Massey and Thaler's theoretical results actually translate to the field.

I don't have that done yet, but it will happen next week. In the mean time, the following fact is worth pointing out. If you add up the Massey-Thaler surplus value of every draft slot, the team with the first pick (i.e. the worst team) still has the most surplus value, and the team with the last pick has the least. More interesting, though, is that the difference between the most and least amount of total value is almost nothing:

TM value
1 3.723
2 3.717
3 3.709
4 3.702
5 3.694
6 3.686
7 3.677
8 3.669
9 3.659
10 3.651
11 3.640
12 3.629
13 3.617
14 3.607
15 3.595
16 3.582
17 3.569
18 3.555
19 3.543
20 3.529
21 3.514
22 3.499
23 3.487
24 3.475
25 3.462
26 3.449
27 3.435
28 3.423
29 3.410
30 3.395
31 3.382
32 3.366

The units are millions of dollars of surplus value. So the Raiders endowment of draft slots is theoretically worth $3.72 million in surplus performance, while the Colts' is worth $3.37 million. So the logical conclusion of Thaler and Massey's paper isn't that the worst team gets the worst draft slot. It's that the worst team gets, all things considered, the best draft slot, but only by an insignificant amount.

If you think about it, it should be obvious that, even under the Massey-Thaler hypothesis, the Raiders' collection of picks is worth more than the Colts'. If you consider #33 equivalent to #32, #65 equivalent to #64, and so on, the only difference is that the Raiders have #1 while the Colts have #224. Massey and Thaler do not claim that the #1 pick is a liability. While not as valuable as the other picks in the first round, it's still more valuable than pick #224.

Back to the main question. If, as maurile suggested in the comments to Wednesday's post, having draft slots with extra theoretical surplus value is like having extra money added to your salary cap, then we're talking about a maximum possible difference between teams that is less than half a percent of the cap. I should have figured this out as I read the paper; it says that the surplus value of the #1 pick is about $600,000 and the that of the best pick (#43ish) is around $750,000. That's $150,000. Do you want every edge you can get? I guess, but having an extra .15 million added to your nine-figure salary cap is about as much of an advantage as playing a game needing 9.995 yards for every first down instead of 10.

So Massey and Thaler contradict themselves in their own title. There is no "Loser's Curse." There just isn't much of a Loser's Blessing, either. Assuming you buy into their methodology, what they've shown is that the market has organized itself in such a way that all 32 teams have a roughly equivalent endowment of theoretical draft value each year. That's pretty neat.