The #1 Proven Strategy to Build a Winning NFL Team, But No One Does It

In the NFL, it’s my strong opinion that organizations are built and destroyed by draft day decisions. I have plenty of reasons for this and my main point is also the EASIEST way to build a championship football team, yet almost no one team does it.
First, we need to take into account all of the dynamics around building a football team. A few quick things here:

  1. You have 53 guys on an NFL roster and a ton of positions that will get important time
    • More than any other major sport by far
  2. The average career length for a player is only 3.3 years
    • There’s more new faces in and out than other sports
  3. Injuries are far more frequent than other sports
    • Depth is huge, you’ll need it
  4. There’s a salary cap that you must stay under for your team
    • Means you can’t just have the most money and pay everyone a lot
    • There’s a limit, you need to be good at managing payroll

While considering those points, let’s move on to what the draft is. You need to predict the future performance of a college-aged kid at the next level, on your team and with your system. This is incredibly hard, especially in football where one guy makes up such a small part of the team and much of their growth is still to come. Do you think the first pick every year becomes the best player? I hope you said no, otherwise your list of the best players is Sam Bradford, Jameis Winston, Jadeveon Clowney, Andrew Luck, JaMarcus Russell, Cam Newton, Baker Mayfield and Myles Garrett.
Now, I understand those players aren’t all bad and it’s not the fault of those players where they get drafted, but my point is that people value the number one pick so highly that they make it seem as if he’s a shoe-in franchise player. And I’d agree it can change a franchise, but more than likely it will change it for the bad. Why is that? Let’s look at expected salaries for each player taken in the Draft this year.

NFLDraftSalaries

The first conclusion from this graph is that the higher the pick, the more money it costs you, and the more salary space they take up. The salary cap is $198.2 million per team and the opportunity cost of having a high pick is everyone else you are missing out on signing with that money. This means if you choose a player with one of the top picks, it’s even more crucial that that pick is correct. Because if it’s not, the opportunity cost is greater than any of the picks after you. The amount of risk there is very high. Once you see the dip in salary as the 2nd round begins, these players are very similar talent-wise and provide more value to your team AND they cost you less.
A few researchers that are much smarter than me, Cade Massey and Richard Thaler, studied and wrote about how this happens in their work, “The Loser’s Curse: Decision Making and Market Efficiency in the National Football League Draft”. Their original study was in the early 2000s and they have revisited it every five years or so. They studied the performances of players drafted and their salaries.
The average performance of each player does decrease with each round (No surprise there, first round players are generally better than second rounders and so on). But the comparison in picks chosen near each other is interesting.

When teams trade up they are usually moving up to take a player at a spot that they want rather than the next best at the position. They found that across all rounds, the probability that a player starts more games than the next player chosen at his position is only 58%. The probability the player makes the Pro Bowl vs the next one at his position drafted behind him is just 55%. So it’s basically a flip of the coin as to whether the player you trade up for is even better than the next best at that position.

That’s my first problem with trading up. How can you justify that moving up a few picks with a 55% chance to get a better player is worth giving away three more players thrown into draft day trades?!

Massey and Thaler used the surplus value of each player drafted in their sample- that is the value they provide to the teams less the compensation they are paid. What they found here is surprising!

They found as you’d expect, that the expected surplus to the team declines throughout the first round. But what about comparing the second round? They found that the first round has an expected surplus lower than any pick in the second round!

“To be clear, the player taken with the first pick does have the highest expected performance, but he also has the highest salary, and in terms of performance per dollar, is less valuable than players taken in the second round”.

And teams can trade one first round pick for as many as four or five second rounders? Absurd!

Why second round picks are more valuable has to do with the market value of those picks:
“The market value of draft picks declines steeply with draft order—the last pick in the first round is worth only 25 percent of the first pick even though the last pick will command a much smaller salary than the first pick. These simple facts are incontrovertible. In a rational market such high prices would forecast high returns”. However, the NFL Draft is not a rational market and those high prices do not return anywhere near equally high returns.

There are a lot of first rounders who take up tremendous payroll without contributing much, whereas a second-rounder would take up far less payroll while performance is not very different.

This is where my number one key to building a winning NFL team comes in. TRADE DOWN in the draft. Everyone overvalues these first round picks and wants to move up and take “their guy”, but most of the time, these don’t work out for them and they gave up picks or players that leave holes on their roster.

Another reason people value these top picks so high is overconfidence. Teams make their draft boards of guys they like, but they are way too overconfident in thinking they have a guy figured out or that they found their “franchise player”. There’s also this idea that trading up should excite fans because it means your team is going for it and willing to show they want to compete next year. When in all actuality trading up is a terrible understanding of risk management and shows a lack of understanding in building long-term success. It takes a strong owner to do what they know is best for the team despite what others say.

NFL owners and general manager have a fundamental misunderstanding when it comes to risk management relating to the draft. It’s a HUGE gamble to trade up! You have to be absolutely perfect in identifying someone worth it. The Chiefs trading up for Pat Mahomes is one of the only ones that has really worked out. But, they also found a diamond in the rough with Tyreek Hill in the 5th round. Meanwhile, there’s a very long list of teams that have seriously set a franchise back by trading up.
Let’s just look at a few of these:

2012: Redskins trade up to #2 from Rams
-Redskins trade 2012 1st Rd (6th overall), 2013 1st Rd, 2014 1st Round Pick (2nd overall) and 2012 (2nd Rd 39th overall) to Rams

Not only did the Redskins use the pick to select Robert Griffin III, but the opportunity cost can be seen by what the Rams did with their return. They keep trading down and end up with eight players out of the one original draft position. Eight! And no they weren’t all 7th rounders. They ended up with three 1st round picks, two 2nd round picks, a 3rd round, a 5th round and a 6th round pick! They end up with EIGHT players that will contribute versus the Redskins’ one, and that one ended up not panning out. One of these ended up being a 2nd overall pick in 2014!

But did the Rams learn how good of a decision they made and trade down from that pick to further build a championship football team. No… they didn’t, they drafted Greg Robinson, who ended up being incredibly inefficient and is currently without an NFL team.

2016: Rams Trade Up For Goff
Then the 2016 draft comes and the Rams still didn’t learn. Now they trade Six picks- 1st-round pick (2016), two 2nd-round picks (2016), a 3rd-round pick (2016), 1st-round pick (2017) and another 3rd-round pick (2017) to the Titans for the top pick, a 4th round and a 6th round pick.

Are you kidding me?! Six top three round picks for the top pick and two late round picks!

And what do the Titans do with those picks? Trade down some more and end up with OT Jack Conklin, DT Austin Johnson, RB Derrick Henry, WR Corey Davis and TE Jonnu Smith- All members of the Titans team that made it to the NFC Championship Game this past season.

2017: Bears Trade Up One Spot For Trubisky For 4 picks
In the 2017 Draft the Bears traded up one-spot to the number two pick to get Mitchell Trubisky. They gave up the 3rd overall pick, 67th overall pick, 111th overall pick and a 2018 3rd round pick. For. One. Spot. As a Bears fan, the part that drives me crazy isn’t that they could’ve picked Pat Mahomes or Deshaun Watson, they did select the player they thought was the best. What drives me crazy is what they gave up to move one-spot. Use those to fill in your other gaps as a team or trade down to fill in more.

I could keep going on and on, these trades happen all the time.

Trading down is important, so is trading picks now for picks in future years. Massey and Thaler found that teams pay a huge premium for picks now. They tremendously overvalue current picks, Thaler computed the real interest rate of these trades to be 137%. Nobody in their right mind borrows money with an interest rate like that, but teams do it every year!

So, if a team consistently traded down, what would it look like?
Well, let’s look at the one team that has done that: The New England Patriots.
2007– Traded 28th overall to 49ers for 2007 4th rounder and 2008 1st rounder (7th overall)
2008– Traded 7th overall (from 49ers) for 10th and 78th picks
2009– Made seven trades including trading a 3rd round (73rd overall) to the Jaguars for a 2009 7th round and 2010 second rounder. The Patriots used the 7th rounder to draft Julian Edelman.
2010– Traded the Jaguars 2nd round pick with a 7th rounder to draft Rob Gronkowski.
2013– Traded 1st round pick (29th overall) to Vikings for 2nd, 3rd, 4th and 7th round picks.
-The Patriots turned this into three key starters that helped them win the Super Bowl later that season.

I could keep going, but you get the picture here.

If there’s a player the Patriots want, specifically defensively they’ll take the pick like they did in 2012 with Chandler Jones and Devin McCourty in 2010. There’s nothing wrong with that, but this is the general blueprint they follow.

Three of the last eight years the Patriots haven’t even selected anyone in the first round and they haven’t picked in the top 20 since 2011. If football teams were built on top first round picks the Patriots would be a pretty bad team.

They feed their success on other teams’ desperation. They understand that no one pick is that important, but more picks give you much more opportunities to plug holes, find contributors and build winners.

No one knows each guy that will become a great pick or become a pro-bowler, but similar to a lottery, the more picks you have the more chances to get a winner. And when you can get two early second round picks for the same price of one middle of the 1st round pick it’s a steal!

Now in the Patriots case, it undoubtedly helps that they had Tom Brady (6th round pick), but he also takes up a lot of salary, so to stay under the salary cap, this strategy works perfectly and the Patriots didn’t have to worry about trying to trade up and draft a “franchise” QB.

For some reason, teams won’t follow this draft model. The Redskins even hired Massey and Thaler as consultants after reading their findings and what did they do in the next draft? They traded up…

My message to NFL teams and fans that will watch the draft on Thursday- TRADE DOWN, trade picks now for picks later and acquire more picks, more players, more value and more cap space. This is how to build a winning NFL football team!

 

Link: Massey and Thaler’s First Research

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