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.
