"We have two No. 1 picks in the most economical part of the draft. The best value for high-quality players, if you pick right, is the second half of the first round." -- Robert Kraft, Jan. 21, 2007
The words serve as a reminder on team-building in today's NFL. Long gone are the days when it simply was about the X and the O. The $ is now a crucial part of the equation as well.
The Patriots are a solid example of realizing that value, making a nice living in the back half of the 32-pick first round in recent years. The team will look to continue its success with the 24th and 28th selections in next weekend's NFL draft.
Since coach Bill Belichick and vice president of player personnel Scott Pioli teamed up to run the Patriots' football operation in 2000, players picked in the second half of the first round include tight ends Daniel Graham (21st in 2002) and Benjamin Watson (32d in 2004), nose tackle Vince Wilfork (21st in 2004), offensive lineman Logan Mankins (32d in 2005), and running back Laurence Maroney (21st in 2006).
While all have been significant parts of the Patriots' on-field success, their contributions go beyond the stat sheet. Check the team's balance sheet, as all have played under salary-cap-friendly contracts.
To fully understand the value, it helps to make a comparison to top draft choices.
Take Maroney as an example. After joining the Patriots last season, he signed a five-year contract worth a total of $8.735 million, which was a pre-slotted deal for the 21st pick. Meanwhile, the top overall selection in the draft last year, defensive end Mario Williams, landed a six-year, $54 million contract from the Texans, with $26.5 million guaranteed.
Williams was likely rated the superior player by most NFL teams, although those looking through an economic lens might assess both contracts and determine that Maroney offers greater value, with significantly less risk.
This leads to some not-often-asked questions:
Because the NFL assigns the team with the worst record the top overall selection in the draft, is that pick truly a reward, based on the lucrative contract that an unproven player receives -- and the high risk the team assumes?
And, closer to home, are the Patriots better off picking in the bottom half of the first round based on the economic reward and their sharp scouting in that area?
Thaler's initial instinct was that the move couldn't be rational, and that the NFL draft would be a fun topic for an investigation of economic principles.
So in April 2005, along with Cade Massey, who is now a professor at Duke University's Fuqua School of Business, Thaler completed a 59-page paper on market efficiency and rationality. The results caught the attention of some NFL teams -- "they seemed to agree with our analysis," Thaler said -- and reinforced Patriots owner Robert Kraft's words on the value of lower first-round draft choices.
"What we found was that teams seem to put a very high value on picking early," Thaler explained. "We infer that from the fact that if you look at trades, early-round picks are really valuable. There is also the draft chart, which originated with the Cowboys and Jimmy Johnson, and what the chart says is that you could trade the first pick for roughly the last four picks of the first round. That tells you that teams think picking first is really valuable.
"But the first guy picked is very unlikely to be worth more than four guys you could pick at the end of the first round. Because of the structure of the rookie salary cap, those guys will cost about the same as the first guy. What we do is a systematical evaluation to see if that conjecture of ours is right, and what we find, which is complete heresy, is that those picks the Patriots have appear to be, to us, worth more than the Raiders' first-round pick.
"Kraft's intuition is right because you don't have to pay them so much."
But what about the chance to land a franchise player like Peyton Manning with the top overall pick, as the Colts did in 1998?
Wouldn't he be considered more valuable than the final four first-round draft choices that year -- offensive lineman Victor Riley, cornerback R.W. McQuarters, running back John Avery, and receiver Marcus Nash -- three of whom are out of the NFL?
Thaler agreed that Manning is the most productive first pick in recent memory, but he also offered a reminder that the cost of paying the top pick can restrict a team from spending money on other players. In addition, he pointed out that the player selected after Manning was quarterback Ryan Leaf, a bust.
"The most common mistake that fans can make," said Thaler, "is to say, 'The reason why those early picks are so important is that you can get a franchise player.' There are very few franchise players."
Manning, Palmer, and Pace would probably top most lists, while the busts would be Couch, Carr, and Carter. And those who fall into the bust category can significantly dent a team's salary cap. Such is the case with Carr, who signed a seven-year, $46.75 million contract as a rookie but has since been cut. In contrast, teams making a first-round mistake later in the round won't feel such a sting.
This is one reason Thaler believes teams at the top of the draft would be wise to trade down and accumulate more choices. He said the second round is a spot of true value.
Another benefit to trading down is that since most draft picks are crapshoots anyway, the more choices a team has, the better its chances of getting a productive player.
Also, picking lower in the draft can save a team money to devote to veteran free agents, who are easier to evaluate because they have a body of work.
One interesting hypothetical this year would be if the Raiders, who own the top pick, shipped it to the Patriots for the 24th and 28th picks. Even though the draft value chart would indicate the Patriots would get the better of the deal, Thaler doesn't necessarily agree because of the economic impact.
"Whoever is taken first -- whether it is JaMarcus Russell, Brady Quinn, Calvin Johnson -- each of those players is in fact a better prospect than anybody who will be available at picks 24 and 28," he said. "But [top prospects] cost four times as much as one of those players, and I don't think they're four times better."
The 2001 and 2003 drafts were the only recent ones in which the team picked in the top half of the draft, and it struck gold with Richard Seymour (No. 6) and Ty Warren (No. 13). The team traded up one spot to nab Warren, surrendering a sixth-round pick to do so.
As for their work in the bottom half of the round, in 2002, the Patriots traded up the board from 32 to select Graham at 21. In 2003, they traded one of their two first-round picks for a second-round pick and a 2004 first-round choice, a deal that ultimately netted solid starters in defensive back Eugene Wilson and Wilfork.
The trade that landed Wilson and Wilfork is one example of a smart economic approach, according to the work of Thaler and Massey, who found that teams are often impatient by trading away future picks for current ones. The patient team that accumulates more future picks, they believe, has the better chance to be successful.
The Patriots often emphasize value as they prepare for the draft, and as Kraft pointed out, that means more than just the X's and O's on the field. Being smart on the economic side is a big part of the approach, especially in a sport with a level playing field and salary cap.
Thaler sees the Patriots as a model franchise in this regard, and their success with late first-round draft picks is part of the reason.
"The Patriots seem to have been better than anybody in the league at figuring out the economics of post-salary-cap football," he said.
Mike Reiss can be reached at firstname.lastname@example.org.