Draft Economics: Why Trading Up Is A Bad Investment

If you got to here, then let me assure you there is no reason to be worried about being inundated with formulae or statistics. This discussion of economics is going to be based on simple, common sense concepts everyone can understand. You know, the kind "experts" and people with doctorates in the subject seem to have lost all knowledge of.

The unfortunate injury to Dallas Cowboys second-round pick DeMarcus Lawrence has added some more fuel to the burning argument about whether the team made a mistake in trading up to draft him.

The short answer is yes. Not because Lawrence was a bad value to take at that spot in the draft. All indications in training camp were that he was everything the Cowboys were looking for at the RDE position. No, the problem is this: Dallas put too much of the most valuable resource they had at the time, draft picks, into getting him. Period.

All those who argue that he was worth it, or that he was a player the team had to have, are approaching this from the wrong direction. This is not about the player or players involved. This is all about how you use your wealth. In this case, treating draft picks like money you have to spend to buy what you need at the time, the only thing that counts is what you get in return for expending it. When you go into a draft, the idea for all teams should be to maximize the return you get for the picks you expend. And when you compare players that are near each other in the draft (for this argument, say the first three rounds), you are much more likely to get a good return by going with numbers. The more players you get in those high-value rounds, the better chance you have of getting more effective plays on the field, which is all that matters. By trading up, a team is always minimizing their chance of return. Always.

The mistake that is made is trying to evaluate the talent and future contributions of the player. This is fallacious in trying to figure out how to use the currency of draft picks. Unless a team in is in the almost impossible situation of not needing more than a bare handful of new players to add to the roster, numbers are more important than increasing an individual player's value by moving up several positions in the draft. Those who don't see this, especially the people who actually make these decisions on NFL staffs, can be said to be blinded by their own knowledge. They are so focused on the business of talent evaluation that they try to apply it to how to expend draft picks. They are making a qualitative decision, looking for basically a matchup in future games. They need to make a quantitative decision, one based on basic economic principles of future risk and future utility. How do we get the maximum number of useful and healthy bodies out there each week? In general, two good players are better than one player who is better than either of those as an individual. In the end, that one player is just that: One player filling one position on the field. Yes, I am pounding on the point that numbers are what really counts here.

I was going to pull together some figures, but Bob Sturm conveniently did so already in his own post (he has been arguing against trading up in the draft for years). Here are some facts and figures he came up with on recent Dallas moves to trade up (Sturm is actually quoting his own article on the same topic from just after this year's draft here):

In 2007, they traded up to get Anthony Spencer (a 2nd, a 3rd, and a 5th), Mike Jenkins in 2008 (traded up using a 1st, 5th, and 7th), Dez Bryant in 2010 (a 1st and a 3rd for Dez and a 4th), Sean Lee (a 2nd and a 4th), and in 2012, Morris Claiborne (a 1st and a 2nd). Add in the 2009 Roy Williams trade (a 1st, a 3rd, and a 6th for Roy and a 7th), and this weekend's Demarcus Lawrence trade (a 2nd and a 3rd) the total is shocking: 7 players for 17 picks (and 2 additional lesser picks in return).

In each case, afterwards, those who wish to look at the cup as half full reason the deal as saying, "well, if you are sure that he is that good you should secure the player." But, in aggregate, you continue to give away bodies. If you consider Top 100 picks where teams find the majority of their starters (and most experts do), then you gave 2 starters for Spencer, 2 for Dez, 2 for Lee, 2 for Claiborne, 2 for Roy Williams, and 2 for Demarcus Lawrence. In other words, 6 players at the cost of 12 starters.

That is a very strong argument, particularly "6 players at the cost of 12 starters". To further bolster the point, let's consider some facets of each player's time with the Cowboys:

• Anthony Spencer: Seen as underperforming until 2011 ("Almost Anthony"). Gets franchised in 2012 and has a breakout year. Franchised again, misses all but part of one game in 2013. Trying to return from injury this season.
• Mike Jenkins: After some good seasons, he missed all of the 2011 preseason due to injury (neck stinger). After fighting through the injury and managing to be productive that year, starting 12 games, he was involved in an apparent dispute with the team over his rehab in 2012. After missing all of the offseason and preseason, he only started two games for Dallas that year and became a free agent.
• Dez Bryant: The one undisputed success story here. On the cusp of getting a big payday now that the Cowboys have completed the contract extension of Tyron Smith, he is widely acknowledge as one of the very top receivers in the league.
• Sean Lee: An undeniable talent on the field, his problem since he joined the Cowboys has been staying on the field. He missed 18 games in his first four seasons, and now will miss all of 2014.
• Morris Claiborne: His play has been rather uninspiring so far, but based on early returns from Oxnard, he may have turned the corner. Several knowledgeable observers credit this to him being healthy enough this year to participate in the full offseason program, a first since he was drafted.
• Roy Williams: Pardon me while I jab a fork into my eye.
• DeMarcus Lawrence: Out eight to twelve weeks with a broken bone in his foot.

You may notice the boldface in the above lines. All are references to injuries or health issues. And that is the fact of draft economics that anyone in favor of trading up usually misses.

As a reminder, this is best applied to high-value draft picks (first three rounds). The first three rounds are where, obviously, you expect to find the most success in the draft. But they are also the players that are generally the best known and most extensively analyzed, thereby increasing the chances of teams to hit on them (assuming you have a competent scouting staff).

No matter where players are drafted, however, one thing is inescapable: injuries happen. And whenever you trade two or more picks for one higher pick, you are, to paraphrase Sturm, putting too many eggs in too few baskets. You now are putting multiple draft picks at risk with one injury. How big is that risk?

Look at that list of players again. Or, see Robert Griffin III.

Conversely, when sticking with the original picks, or trade down to get even more picks, you spread the risk out. Consider a typical case comparing using your first- and second-round picks versus trading them both for one pick higher in the first round. Any two players are, in any season, statistically unlikely to both miss significant time, as opposed to any one player. You have a very high probability of getting a full return from at least one of the players involved if you stick with your original position in the draft. But if, just to go with a pure hypothetical, that single player you traded for breaks a bone in his foot early in training camp, you now lose all the utility of those draft picks for however long the player is out.

It is a simple matter of economics. Trading up minimizes your likelihood of a successful outcome. Sanding pat increases it, and trading down increases it more. Injuries, by and large, are random. They cannot be predicted, but they are inevitable in the NFL, where collisions are not just side effects, they are by and large the whole objective of the game. The best way to minimize their impact on the team is to build depth - which can be done more effectively when you don't keep giving up draft picks to pursue a more "ideal" player. I don't care how talented someone like DeMarcus Lawrence is. By giving up two picks for him, the Cowboys put themselves at a significantly greater risk of having an injury impact their season.

Boom.

The Dallas front office has been doing a much better job of late. The cap problems are being handled. The Smith contract extension looks to be very team friendly, as were all the free agent acquisitions this year. Jerry Jones even managed to hold himself back (possibly under threat of severe bodily injury by his son, Stephen) and not draft Johnny Manziel. But the team still looks at draft picks in an economically foolish way. It is time to change.