Down with the draft

Like most everyone else, I’ll tune into the NFL draft. It’s a big media spectacle, and certainly draws a lot of interest, but does it make any sense? And for who? NFL Commissioner Roger Goodell warns us:

In the union lawyers’ world, every player would enter the league as an unrestricted free agent, an independent contractor free to sell his services to any team. Every player would again become an unrestricted free agent each time his contract expired.

Trust us, the draft works great

Rather than some corrupt dystopia, this sounds a lot like the free market and — I don’t know — real life to me, even setting aside the fact that most of Goodell’s arguments are hypocritical (“some players might get paid less” yet the players support the proposal). The draft is extremely anachronistic (and autocratic), and, with free agency now otherwise widespread, probably is not nearly as significant as it once was. Chase Stuart has explained that NFL teams derive something like 50-60% of their “production” from players acquired in the draft versus free agency (with 40% on the low end and 80% on the high end), and my guess is this is skewed given the very short time expectancy for NFL players. So the draft only makes up a piece of how good a team is.

So what if there was no draft? The current draft system is bizarre, and the mystery leads to bizarre turns of events where teams draft players they never met with because they didn’t want to tip off other teams — hiring guys based on his resumes but without the interview) or you uncomfortable watch someone like Texas A&M runningback Leeland McElroy sit through hours of waiting on live television on his way to becoming the lowest drafted player to actually attend. Instead of this, once the NFL imposed waiting period was lifted (call it “Signing Season,” and could run from, say, March through May) teams would begin working out players and giving them offers. Players won’t have to wonder, “Will I be a first round guy? Or will I slip to the third round?” Instead they will know that, say, the Panthers have offered them three years at $15 million, while the Saints have offered four years at $25, or in the case of some other player maybe two years for a total of $1.2 million. Rather than the smoke screens and forced marriages the draft creates, you’d have actual, objective value out there, and players would be more likely to go to teams that fit them.

But what of the teams, and, most importantly, what of that bogeyman, “competitive balance”? As I mentioned above, close to half of all teams (in terms of production) is determined by free agency now anyway, and the NFL still has a reputation as a “balanced” league. More importantly, however, the draft adds very little to competitive balance. As Richard Thaler has noted, having a high draft choice is more of a “Loser’s Curse” than anything else, with the heavy salaries and high risk of a top pick doing more to destroy competitive balance than to help it. And the NFL already has the two best mechanisms for keeping and establishing competitive balance: the salary cap and revenue sharing. A recent study discussed the idea of sharing venue revenue as a way to remedy any remaining competitive balance issues; the draft does little to help. And I’m not persuaded that small market teams will suffer as much as Goodell claims; they said the same thing before free agency, and they seem to be doing fine with that (in the last eleven years, small or mid market teams in St. Louis, Baltimore, Tampa Bay, Indianapolis, Pittsburgh, New Orleans, and Green Bay have all won Super Bowls).

Ultimately, I don’t think the draft is going away. It’s too entrenched and people have convinced themselves they want it. But just think about how much more orderly — and fair — it would be if teams could bid on players rather than this messy, strange draft system. With minimum salaries for players based on experience (as we have now), revenue sharing, and a salary cap, I don’t know why this system wouldn’t be infinitely better than the one we have now. But it’s likely a pipe dream.

  • Chuck

    Won’t players flock to the best coaches and complimentary players? League could become very top heavy like the Miami Heat on steroids.
    Those small to mid-market teams were known for their scouting. Recruiting players is a different animal.

  • Paul

    Chris,

    Do you this this is really an objective for the players? Because I think it’s just propaganda on the part of the league and the owners to sway public opinion in their favor. Goodell is trying to get us to believe that there’s a real threat to free agency and the draft when in fact, I think the players are simply executing a strategy to get the games played and avoid missing paychecks. Obviously, without a CBA, the draft and all the other stuff are unlawful restraints on trade. But I don’t think the players want to get rid of that stuff. They know it’s better for the game, and by extension, for them as a whole.

    In my opinion, Goodell is trying to make it seem like he’s not responsible for this clusterf***, when in fact he is.

  • mat

    Interesting. You make a strong case, but without having seen a draft-free NFL its hard to know how this would manifest. While top 10 draft picks may not perform well on a cost-benefit basis, theres no question that there are cases of elite players (usually QBs) turning franchises around.

    Would losing teams have similar opportunities in a free market? It’s possible that rookies would gravitate to proven franchises with proven coaches. A QB might take less to be Manning or Brady’s heir. WRs may fall over themselves to join up with the Colts. There are a lot of potential circumstances where rookies would accept below-market salaries for whatever reason (e.g. big market team over say Green Bay.)

    Maybe thats fine, but it could potentially compromise the parity that the NFL strives for. It would almost certainly have devastating impacts on the NBA, where the only value contracts are a)max (franchise) and b) rookies. With the max players gravitating towards desirable markets, rookies are the best chance for small markets to compete (i.e. Durant in OKC and Duncan in San Antonio).

    My sense though is that you are right, parity will go on seamlessly because the salary cap exerts far more influence than anything else.

    Not that it matters. The draft is a profitable show and everyone likes to watch it. Its not going anywhere.

  • Pingback: Here’s your real plantation. | Get The Picture

  • Paul

    Do you think*

    Please excuse the typo.

  • Wade

    “Having a high draft choice is more of a “Loser’s Curse” than anything else, with the heavy salaries and high risk of a top pick doing more to destroy competitive balance than to help it.”

    Consistently drafting near the top of the first round is the result of systemically bad organizational decision making. The real “curses” for perpetually bad teams like the Raiders, Lions, Redskins, and Browns are their inept management and ownership. Yeah, every team occasionally misses on draft picks (and free agent signings), but these teams have it down to a science.

  • http://www.google.com/profiles/100857546184516732260 Dr Obvious

    Or the Patriots?

    With a salary cap, but no individual pay cap, I think that’s a problem that won’t be as bad as in basketball. In basketball, you can have three players that you pay individual pay cap who are all more productive than that, and they couldn’t take their business elsewhere for any more money.

  • http://www.google.com/profiles/100857546184516732260 Dr Obvious

    Yep. In a so called ‘rational’ market, those kinds of organizations go bankrupt new orgs with new ideas could take their place. In a fixed market, they get to keep making the same mistake over and over again.

  • Anonymous

    I don’t think it’s a major issue for the players because — and this is my impression — they tend to be represented by veteran guys who are primarily concerned with veteran concerns. Free agency was huge, but where they get drafted is less so (especially considering the one item of agreement between the NFLPA and the NFL is that the rookies make too much). It is important to their antitrust argument though.

  • Anonymous

    I agree with this — no football player can be that big of a swing. (And the one position that can be, Quarterback, is still heavily dependent on the team around him. A bad quarterback on a decent team can have a much bigger effect than a good quarterback on a bad team.

    That said, and I don’t have all the statistics, I’m not that sensitive to the competitive balance issue at all, as baseball and the NBA both grade out much better on competitive balance than is commonly perceived, beating the NFL in many measures (other than public perception).

  • Wade

    It would never happen anytime soon in (American) pro football given the NFL’s market domination, but it would be interesting to see how a promotion & relegation model for teams (like soccer) would play in the U.S. sports scene. Ironic that the “socialist” European countries incorporate much more of a free market system into their major pro sport, while we willingly grant monopoly control to our leagues.

  • Pingback: Bob Futon NFL Mock Draft

  • Wade

    “In the union lawyers’ world, every player would enter the league as an unrestricted free agent, an independent contractor free to sell his services to any team. Every player would again become an unrestricted free agent each time his contract expired.”

    Evidently the commish lacks a basic understanding of the principles of collective bargaining. If every player is an independent contractor free to negotiate with all teams, on any terms to which the two sides may agree, then the players’ union has ceased to exist. And why would the union lawyers want that?

  • kingmatt54

    “(in the last eleven years, small or mid market teams in St. Louis, Baltimore, Tampa Bay, Indianapolis, Pittsburgh, New Orleans, and Green Bay have all won Super Bowls)”.

    And how do you think Indianapolis, Pittsburgh and (especially) Green Bay were built? They aren’t pulling in a large number of free agents.

  • Andrew

    Isn’t that just an incentive for teams to be more competitive in providing better working environments / making better coaching decisions?

  • Jim Meyers

    I am with you except on the balance issue where I disagree that its free agency and the cap as the primary reason for the apparent balance I believe its the limited number of games, roster caps, and unbalanced secludes that are the primary drivers there.

  • Jim Meyers

    A heat type situation probably could not occur in pro football. In the NBA a superstar can be worth more than half the teams total amount of wins while even the best QB by themselves is at most 20 or 30 if you are really pushing it of the wins. Also, in the NBA you have only about a dozen players on a roster while in two plays in the NFL you had that many players on just one side of the ball take a snap. Someone else mentioned a stud QB prospect could decide to go to say NE or Indy sure now they could but lets change the team to the Steelers or Greenbay which stud prospect is going to sign with a team where the QB has 5 or so years of peak ability before the thought even comes up to look at the future so the only time they get on the field is injury. Even without a cap there is not too many examples of teams stockpiling top tier QB talent for years at a time (really on the 49ers come to mind in the 80s).

    Sure some markets might get hurt by this but schools in the middle of nowhere are able to recruit elite talent so maybe Jax has a chance but than Jax should have never received a team in the first place.

  • Jim Meyers

    And what would change? Teams that draft well do so because they scout well which is the same skill set that would be needed for an open market rookie class. Green Bay and Pittsburgh are national teams so there is no need to worry that market size hurts them and Indy is getting close to being a national team if they are not there already.

  • Plbernstein92

    i’m surprised, you’re so into economics, and i consider the NFL draft to be one of the most fun economic experiments around; because of its nature. there’s the huge priority on value, you can trade up, trade back, all of these things, make it as much strategy as whether to blitz on that crucial play in December or not

  • Buster

    People were pretty unanimous that Jamarcus Russell would be a good NFL QB, I don’t think your solution would get rid of busts or work any better than the draft. Missing on players potential is part of the game, it happens at every level, it just isn’t public in college ball.

  • Fav

    Public perception matters though. The fact that people believe “any given sunday” is a huge difference from baseball, where until it actually happens you don’t give a flip because you don’t believe it can.

    A much better comparison is Soccer, which has exactly the system you want (minus revenue sharing). You don’t have to wonder why the top teams in Europe and even in South America have been the same for the last two decades if not more. It’s not just money, it’s the luster and quality of the teams. Would you rather play for Jose Mourinho or random coach X? Would you rather be crossing to players who can pinpoint headers, or to players that whiff on perfect passes?

    Players *will* flock to title contending teams, whether they have as much impact as in other sports is irrelevant. The very fact that they DON’T have as much impact is more of a reason to jump on bandwagons. If you’re Von Miller concerned about your career length and stats (read: earning potential), would you rather spend 5-6 years banging it with the Broncos or play comfortably behind the Ravens front 4? And hey, you’ll get more sacks while you’re at it because your defensive line doesn’t blow (in before someone says the broncos blitz more yada yada).

    Will some players go after the fattest contracts? Sure. But you’ll have the most sensible and long term oriented players (read: the ones you WANT) being wiser with their decisions. And even for agents this would be preferable, because you’re looking to strike it big on a second and possibly third deal not squeeze every penny from rookie contracts.

  • Fav

    Forgot to mention, I’m not sure if revenue sharing is actually legal without a CBA? If someone can confirm or deny.

  • Brad

    While I agree entirely as far as your points on free markets, and even some of your points with competitive balance, I like the NFL draft and think its a fair system. I don’t think economic principles based upon competition work in a system like the NFL, because those principles would mandate that unsuccessful teams fold up and be replaced, which screws the fan loyalty that makes the NFL as successful as it is.

    If there was no draft, I think that it would be incredibly hard for traditionally bad teams or possibly even teams in poor (in terms of perceived quality, not money) areas or poor weather areas to get talent. I think you’d find a lot of top notch QBs who don’t want to go to some terrible team with a bad offensive line because of the negative impact the beatings will have on their career. I think a lot of top notch players would give up some cash in a contract to go to a successful and stable franchise like Indy/Pitt/NE etc., rather than go to Detroit/Raiders/Cincy. In fact, I think NO ONE in their right mind would want to go to Detroit (for the city or the team).

    Also, I agree with others that there is a perception issue. The NFL is the best sports league because of its rabid fan base. That is what makes it money. That whole ‘any given Sunday’ notion really does exist. Last night, my wife (unfortunately a huge Dallas fan) was so excited, and said to me:

    “We had such a terrible year, but I think its great that at least now we get the opportunity over the other teams to go get the better players. Its exciting for next year.”
    (She is a lawyer, and talks like that.)

    And while I would agree that picking high is often detrimental to a team in that there is a big chance you wind up with a flop who you have to pay through the nose for, at least your team is given that equalizing chance to go get “the guy”. And it isn’t like those teams don’t have the opportunity to pass on their pick, or trade down for multiple 2nd and 3rd rounders.

  • Tkbc3

    The average NFL career is only a few years. Rookies would be smart to try and get as much money out of their first contract as they can. It is not certain there will be a second or third contract.

  • Jim Meyers

    It depends on what you mean by revenue sharing if you are talking TV money than yes it would still be allowed because Congress exempted this part of anti trust for sports leagues to collectively sell TV rights in the 60′s. Game day splits would still be allowed for obvious reasons. Appear and other non broadcast type rights though would be illegal. An example EA would have to go to each team for a licenses for Madden and there would be a second NFL game to avoid anti trust issues.

  • Jim Meyers

    To add on to what Tkbc3 said there is not regulation and there are more big clubs in the US compared to the soccer leagues. What is there 3 cities in England with a million people in the metro? While in the US there is close to 40 or 50. There is also many more brand name football teams in this country than there are in most soccer leagues so its not going to be a choice between the Jets and Giants (Barcelona or Madrid) for the spotlight you can also go to Chicago, Boston, SF, Miami, Washington, Dallas, never mind teams in very small markets like Green Bay and Pittsburgh are two of the biggest brands in the sport.

  • Jim Meyers

    Unless you are extremely hard core all of the smart moves are made by teams after the first round with players most people never heard of. The first round and especially the top of the first round are usually picks to laugh at like the Bengals taking a WR at number 4 I mean just look at all the contending teams in history with top 5 pick WR. Or taking a center/guard at 15 that can’t snap the ball and misses assignments because he has a twin brother that was good. A lot of these picks are like the anti value picks.

    Than you have teams like the Vikings getting killed for taking CP7* when they really had no choice under the context. They had to get a QB that could start this season and with the uncertainty around FA that avenue was cut off to them. They couldn’t really move down to take him with Washington rumored to be taking him just a few slots back. The situation of not having a QB can be criticized but the pick I don’t see how.

    Full discloser I am a FSU alumni but my belief in CP7 is really a non homer belief its his high accuracy and good decision making along with putting up the numbers he did with not great talent at WR.

  • Jim Meyers

    With free agency a bad team that wants to go after a QB can make other moves to make that QB happy like taking a LT that normally would go high in the draft and they had no chance at or maybe some receivers to go with him. Smart teams take the best talent when you are a bad team with a lot of needs the draft hurts you more than helps you the only positive factor is the draft hurts other teams also.

    I disagree with you about Detroit sure in the recent past this might have been true but as it currently stands I could see a lot of players wanting to go there. They have a great young head coach and now a front office that knows what they are doing. They have great facilities and while Detroit the city is a dump the suburbs are some of the richest and nicest in the nation never mind some of the best high schools in the world.

  • Mviger11

    No discussion yet of the ‘Compensatory Selections’, which I feel are the main reason the draft is a effective vehicle for competitive balance.

  • Raaaaa

    You have to keep the salary cap at least if you drop the draft. If both were dropped then the big market teams would poach a lot of the small market teams with money.

  • Stevensonmt

    Add to “competitive balance” by giving losing clubs a head start on their recruiting of rookie and veteran free agents. Say the lowest team in each division can make contact with players and agents 2 wks after the superbowl, but the next team has to wait a week, and so on and so forth. This assures that they get the undivided attention of the guys they are really after.

  • Confused…

    I’m confused: what’s the problem you propose to fix by getting rid of the draft?

    The original post states that the draft lacks “free market” qualities. But, in the NFL, we’re talking about a bunch of affiliated entities that play by any number of un-free-market-ish rules, like a salary cap and complicated free agency rules. So what is the “fairness” concern here? How is the draft bad for the NFL? It’s good TV, helps keep the league relevant in a long offseason, provides the draft-pick trade currency, etc. I’m having a very hard time understanding the argument for eliminating it.