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Strategy V - The Von Miller rookie effect

The latest addition to the strategy series is about rookie salary schedules. I call this the Von Miller strategy. As a rookie, even before he was drafted, Miller was one of the union players who sued the NFL over the last CBA bargaining.

Background

As noted earlier, teams should avoid having too many stars on a team. Stars get an abnormally high level of salary even compared to players who are above average in talent. This is because talent and salaries do not go up equally on a straight line basis. Teams with too many stars tend to skimp on quality backups. Thus, when the inevitable injury occurs, then a hole can develop that other teams can exploit.

One strategy I suggested was the DAT effect. DAT was not the biggest name LB, but he was better than average - about the 5th or 6th best at his position. As such, he was also a lot cheaper than the big name, while not sacrificing much talent. Then, the team could then take the difference in salary cost and invest elsewhere.

Rookie Salary Schedule

The bargaining with the union provided a new CBA. One area of concern was the sky rocketing price of rookies often before they had shown anything on the field. This caused some equity issues with existing players.

The union had a conflict of interest, but made the decision to sacrifice rookie salaries to maintain other money for existing members. Thus, the rookie salary schedule was introduced. Fundamentally, the rookie salaries are based on the slot in which they were drafted. In return, the length of rookie contracts are limited and just about everyone can be a UFA after the fourth year. Some first round draft picks’ contracts are still five years in length.

With the new rookie salary schedule in place, there is another way to exploit the salary differentials. Teams should trade existing talent for draft picks. Rookies are much cheaper than veterans and the team can invest that differential elsewhere. This will increase the quality and depth of the team.

Risks

Yet this strategy has its own drawbacks. First, rookies make mistakes and take time to develop. Yet, the bigger risk is that they might never develop. Thus, this strategy is best used by a team with a well-rounded roster that can afford to bring rookies around slowly.

If the team drafts well, using other strategies to maximize their risk/reward profile of the draft, it is entirely possible that they find several great players in the draft. When they show their promise on the field, eventually their second contracts will be much higher.

This is good problem to have. At that time, the team should consider their options according to the last article - the high end of the roster. Teams must have budgets for each player and for each position. They should know the talent and salary cap effects for each and act accordingly.

Timing

Teams should consider which of the young players to get new contracts and reap their developed talent on the field and which young players should be harvested by trades. The key time to decide is the year before FA, waiting too long and the decision is sign or lose them. Then, the process can continue near their end of their second contract.

Conclusion

The new CBA provides another strategy for teams to exploit salary differentials. Rookie salary schedules mean that they are much cheaper than veterans. Thus if a team can develop rookies, they can invest the differential in other quality depth elsewhere on the team.

Teams have had several strategies already. The Walker effect was to trade away high talent to reap the returns. Another strategy was the DAT effect where teams should invest in slightly less than the best players - about the 5th or 6th best. The stars get an abnormally high salary compared to even the above best players. Teams could invest the differential in other quality depth.

Another user-created commentary provided by a BTB reader.

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