The Economics Behind The Draft

It seems that every April, the casual ESPN viewer cannot help but be bombarded with mock drafts and player projections in preparation for the upcoming NFL Draft.

When draft day comes I witness a new crop of twenty-something’s go from Ramen noodle eating college kids to multi-millionaires. But how does this affect the franchises? Does the talent at the top of the draft justify the escalating salaries that accompany them?

The skyrocketing salaries of number one overall picks are astounding. In 2007, The Oakland Raiders selected strong-armed quarterback JaMarcus Russell out of LSU. The Raiders agreed to pay Russell $29.2 million in guaranteed money. This seems to be a hefty amount of money considering many players with decorated collegiate careers fail to make the grade at the professional level.

This year, the Detroit Lions made Russell’s salary look puny. Detroit drafted quarterback Matthew Stafford from Georgia and agreed to pay him $41.7 million guaranteed. This trend is likely to continue if the NFL does not implement a ceiling on rookie salaries.

Is it advantageous for a team to draft high in the NFL draft? Particularly when teams at the bottom of the league tend to have more than just one hole to fill? Fiscally, it does not make sense.

When a team drafts a player at the top of the draft they are most likely to sign the player to a four to six year contract. Thus, they are paying top dollar for a player who may not adapt to the nuances of NFL play.

This leads me to believe that it is in a team’s best interest to trade down in the draft. The financial burden of a top pick has now offset the talent. If a team trades down they are able to draft more players at positions of need.

They are able to acquire two top-level players for the same price as one player at the top of the draft board. Moreover, by trading down, a team will have more cash to spend on free agent acquisitions.  If a team uses free agency to its advantage they can find proven talent at a relatively low cost.

Furthermore, by paying these athletes top dollar, where is their motivation to perform? Sure, there are incentives built-in to the contracts, but they are set monetarily regardless if they exceed these incentives. Thus, it is crucial that a team drafts a player who has both the tools and the brains to compete at the NFL level.

So here’s my advice to NFL GM’s and front office personnel, trade the pick. Whatever needs your team has, search vigorously through free agency to acquire these players. Between the extra picks you will acquire from trading down in the draft and the newly acquired free agents your team acquires via free agency you will be maximizing your cost-benefit ratio.