In the book 'Scorecasting - The Hidden Influences Behind How Sports Are Played And Games Are Won ' by Tobias Moskowitz and L. Jon Wertheim, there is a chapter about the draft value chart invented by the Dallas Cowboys. I thought it interesting to present their findings here.
In the early nineties the Cowboys liked to stockpile picks and trade up and down during draft day. But these decisions had to be taken quickly, in a matter of minutes, and there was no fast enough way of knowing whether a proposed trade was good value or not. Enter then Cowboys minority owner Mike McCoy. He analysed all the trades of the previous 4 years and came up with a chart that reflected the value assigned by the teams. There was no subjective interpretation, he took the information and plotted in on a graph. He then assigned a numerical value to each pick, a 'price list' as he called it. For instance the first pick of the first round is worth 3000 points, the sixth pick 1400 points, the 32nd pick 590 points, etc... All the way down to Mr. Irrelevant, worth a mere 0.4 points.
In 1991 the chart allowed the Cowboys to take 17 players, 3 of which turned into Pro Bowlers. Soon other teams started using the chart as well, and it is still in use today.
However, the chart only reflects the value of each pick the teams assign to it, not the performance of the actual player, including his salary. Based on the chart, the first player should be twice as good as the eight (3000 points vs 1500 points). No one can seriously think that that holds true, on average. But it wasn't until 2004 that two behavioural economists did a detailed analysis. What they found was that teams overvalue the top of the draft, especially if one takes the exorbitant salaries into account. On the other hand future picks are seriously undervalued.
Using stats that reflect performance (roster, starts, Pro Bowls), they found that higher picks are better than lower picks, 1st rounders better than 2nd rounders, etc... But they aren't that much better. For instance the chart suggests that the 1st pick of the 1st round is worth FIVE times more than the 1st pick of the 2nd round. But in actuality that 1st pick is not even twice as good as the 33rd. Same goes for players at the same position. The first picked player is only better than the fourth player by a mere 6 percent.
When it comes to trading future picks for current picks, teams once again overpay. A pick in this year's draft is somehow worth 2-3 times as much as the same pick in next year's draft. This kind of short term thinking can seriously undermine a team's future.
Quite simple, a clever team will take advantage of these trends and:
Trade down and get multiple picks.
Trade current picks for future picks.
Bill Belichick and Andy Reid are two people who do this routinely. The Patriots for instance have two No. 1 picks, two No. 2 picks, two No. 3 picks and two No. 4 picks in this years draft. It is simply mindboggling that they still manage to do this, despite all the evidence that this is daylight robbery.
By the way
The book is definitely worth a read. There are loads of interesting articles, such as the one showing the source of home field advantage: the referees.