Archived

This topic is now archived and is closed to further replies.

falcoatlantae

Origin Of The Draft Value Chart

12 posts in this topic

Good background information, but not necessarily state of the art doctrine by any team. Three separate articles.

Overload? Perhaps. But offered as an alternative to the pre-training camp coulda-shoulda-woulda message board version of Wrath of Khan smile.png

link1: http://bolttalk.com/...lue-chart.6045/

Origin of the Draft Value Chart

Apr. 27, 2007 By CLARENCE E. HILL JR. Star-Telegram

DALLAS -- When then-Cowboys minority owner Mike McCoy turned an idea by owner Jerry Jones and coach Jimmy Johnson into a practical application in 1991, he thought nothing of it.

They wanted McCoy to analyze the pattern of past draft-day trades and come up with a value chart to help them determine whether a deal was worth it.

McCoy, an engineer who had a special gift for numbers, simply ran some figures and plotted a graph.

It wasn't unlike what he had been doing his entire life.

It certainly wasn't as complicated as the risky oil and gas exploration business, from which he made a small fortune a decade or so earlier.

"Jerry and Jimmy both liked to trade from Day 1," McCoy recalled. "I was always in the draft meetings. So I said I would give it a try. It took only two days and a few tries. I started out with the basic assumption that a second-round pick is worth two third-round picks. That was the rule of thumb that owners and coaches used for a long time. It wasn't hard once you figured out how to do it."

Said Jones: "He thought you could quantify something that was not numerical just on the face on it. That's a value of trade, and anybody that has ever been around Mike McCoy knows that he is a genius when it comes to his being able to work with numbers.... The engineer in him makes him very practical, very practical, and so he was the perfect guy for the job."

Today, McCoy, by choice, is a forgotten man in the NFL. He left the Cowboys in 1996 following three Super Bowl titles and went back to what he knows best: running ARKOMA, an oil and gas business, from a scenic mid-rise office on North Dallas.

But his simple invention remains an NFL staple, as it is now common practice for teams across the league to use a draft trade value chart as a guide before making a deal.

You can be sure a trade won't be made in this weekend's NFL Draft without the use of one of these charts.

With 15 minutes between picks in the first round, 10 minutes between picks in the second round and 5 minutes in the subsequent rounds, the draft value chart makes making deals simpler.

"To me, it wasn't that special. But it became so to others," said McCoy, 58, whose relationship with Jones dates to 1981 when they started working in the oil and gas business. "I thought it was obvious. But you can't underestimate how valuable it is to make a trade when you have only 15 minutes and it feels like 2 minutes. That's why it became more special than I thought it was. Having that chart gives you confidence that you are making a good decision to trade or not trade based on what the return in value is."

According to McCoy, then-Cowboys scouting director Bob Ackles gave him a worksheet with all the draft-day trades from the previous four years. McCoy then assigned arbitrary numeric values to each pick in the draft, obviously with the No. 1 overall pick getting the highest number.

To make a trade, all a team needed to do was match points.

A good example would be the 2004 draft-day trade between the New York Giants and San Diego Chargers. For the Giants to get quarterback Eli Manning, whom the Chargers took with the first overall pick, they gave up the fourth pick in the first round (quarterback Philip Rivers), a third-round pick and first- and fifth-round picks in 2005.

According to a basic chart, similar to the one McCoy developed, the first pick is worth 3,000 points. So, for the Giants to trade for Manning they needed to come up with a deal that totaled at least 3,000 points. Well, the fourth overall pick is worth 1,800 points. The third-round pick, 65th overall, was worth 265 points. The 2005 first-rounder, which became the 12th overall, was worth 1,200 points and the fifth rounder, 144th overall, was worth 34 points.

The Giants gave up a total of 3,299 points which, in hindsight, suggests the Chargers got the best value in the trade. But the Giants got the quarterback they coveted.

That's how the chart worked when McCoy developed it and that's how it works today. Former Cowboys scouting director Gil Brandt said teams see the chart as a veritable draft-day bible.

Brandt said when he began working for the Cowboys in 1960, making a trade was as simple as one general manager walking across the room and telling another general manager, "I will give you this if you give me that."

Things changed over the years, with teams having their own rule of thumb on prospective deals. Nothing had ever been put to paper that teams could go by until McCoy developed the first trade value chart for the Cowboys.

"It's a point system relative to the history of the draft," said former Cowboys scouting director Larry Lacewell. "When someone would call you and offered you a draft pick, you could total it up in numbers and see if you really had your history book right there. I think it's a great way to determine very quickly what you are giving or gaining."

McCoy said the chart was initially kept secret. It allowed Jones and Johnson to make trades with confidence. They knew who they could trade with and who traded too much. They often used a history of prior trades against teams.

"It gave us an edge on what to offer and who to offer it to quickly," McCoy said. "It was something we protected."

But soon the word got out. Teams began developing their own charts, and when coaches left the Cowboys they took the chart with them.

"There was a point where it was in our best interest for everybody to have it," Jones said. "A common language or, certainly in this case, a common denominator of value was a plus for us at the time because we were trying to make something happen."

Thanks to McCoy -- not Johnson, who has historically been credited with its creation -- the use of the draft trade value chart is the only way to make something happen on draft day.

"Having that chart gives you confidence that you are making a good decision to trade or not trade based on what the return in value is."

Share this post


Link to post
Share on other sites

link 2: http://cowboysblog.d...round-deal.html

Man who created trade-value draft chart understands why Cowboys made first-round deal

IRVING – A mild look of annoyance flashed on the face of Cowboys executive vice president Stephen Jones when he was questioned about the Thursday trade with San Francisco that changed the complexion of Dallas’ draft.

The Cowboys surrendered its 18th pick, receiving the 31st and 74th selections in return. After Dallas grabbed center Travis Frederick with its highest choice, some believed the Cowboys got fleeced after taking a careful look at a version of a chart one of the Jones family’s former business partners, Mike McCoy, invented 22 years ago.

“That’s not accurate,” Jones said curtly.

Jones’ response wasn’t received well among the cynical crowd who were quick to accuse the Cowboys’ brass of spin-doctoring. But McCoy disagrees, saying the table he came up with in 1991 is merely a guide that gives the Cowboys team owner Jerry Jones, and his son, Stephen, the framework to orchestrate a deal.

“It is not the price list for draft picks,” said McCoy, the president of Arkoma Production Company of Texas, an oil and gas firm. “It is what has been done historically. It was to help Jerry move quickly when he needed to and hopefully have an advantage over teams that didn’t have it.”

That statement is backed up former NFL executive Pat Kirwan. In Kirwan’s book, Take Your Eye off the Ball, he wrote, “The bottom line is the chart does not provide teams with an exact formula, but it is a valuable tool for moving talks along from the speculative to the specific.”

When McCoy, a former Cowboys minority owner, was first recruited by the team to produce the chart, he examined trades from four years between 1987 and 1990 and came up with a value scale for every choice. The top pick, he said, was assigned 2,500 points and the worth of each of draft choice that followed depreciated.

“Jerry loved to trade and he kind of exhibited that,” McCoy said. “So with that inclination, he asked me if there was a way to come up with relative value of draft picks.”

Originally the chart McCoy designed was a carefully-guarded trade secret. But coaches, including Jimmy Johnson, eventually left the organization and McCoy’s table began to find its way into war rooms around the NFL.

“Now it’s obviously not an advantage because Tom, **** and Harry all have a copy of the same thing,” he said.

These days, McCoy only watches the draft with mild interest. But he paid enough attention to the developments Thursday to arrive at the conclusion that teams looking to move up in the first round, such as the 49ers, were in a better position to get what they wanted.

“San Francisco, in a buyer’s market where everybody else was wanting to trade down, that was a perfect situation for them,” McCoy said.

Jerry Jones, meanwhile, was convinced that Dallas made a “successful trade.”

“It boils down to the right time at the right place, and does it fit you,” Jones said.

And as McCoy is the first to acknowledge, not all of the answers can be found in the chart he created way back when.

Share this post


Link to post
Share on other sites

The following is an excerpt from the latest revision of an academic study in the press,

The Loser's Curse: Decision Making & Market Efficiency in the National Football League Draft.

It provides another historic reference and a general explanation of the numerical nature of the chart.

link3: http://papers.ssrn.c...tract_id=697121

We estimate the market value draft picks using a two-parameter Weibull distribution (see Appendix A for details). Figure 1 plots this function, showing the value of the first 160 draft picks (the first 5 rounds) relative to the first draft pick. It does this by comparing the estimated values for “both sides” of a trade – the value of the top pick acquired by the team moving up, and the value paid for that pick by the team moving up, net of the value of additional picks acquired . The model fits the data exceedingly well, in part because of the reliance on The Chart, discussed in detail below.

post-193676-0-57441400-1373948242_thumb.

As noted above, one reason why our trading-price estimates fit the data so well is that teams have come to rely on The Chart to help them negotiate the terms of trade. The Chart was originally estimated by in 1991 by Mike McCoy, then a part-owner of the Dallas Cowboys (McCoy, 2006). An engineer, McCoy estimated the values from a subset of the trades that occurred from 1987 to 1990. His goal was merely to characterize past trading behavior rather than to determine what the picks should be worth. The Chart then made its way through the league as personnel moved from the Cowboys to other teams, taking The Chart with them. In 2003 ESPN.com posted a graphical version of The Chart, reporting that it was representative of curves that teams use.16 McCoy’s original curve, as well as the ESPN curve, closely approximates the one we estimate for the 1983-2008 period.

Teams were beginning to agree about the market value of picks by the time McCoy estimated his chart. As The Chart spread around the league, it became standard for teams to openly use it to negotiate the terms of trades.17 A norm emerged for trades involving future picks, as well: “gain a round by waiting a year.” For example, this year’s third-round pick would bring a pick in next year’s second round. McCoy mentioned this heuristic explicitly when discussing his construction of The Chart, and it is clear in the data. This rule-of-thumb leads to huge discount rates since they must equate the value of picks in two adjacent rounds. It is also surprisingly arbitrary. Consider that it depends on the number of teams in the league (which in fact has changed over time).

Predictably, the emergence of widely accepted prices made trading easier - between 1983 and 2008 the deviation in prices from The Chart dropped by 50% (and the year-to-year volatility of that deviation shrunk considerably). Also, trading activity tripled, to over 20 trades per year.18 Thus the emergence of consensus – a norm – seems to have lent the considerable power of precedent and conventional wisdom to the over-valuation we suggest has psychological roots.

16 http://sports.espn.g...tory?id=2410670

17 In a conversation with the authors McCoy stated, “It gave us more confidence. If you just had a sticker – bread is 49 cents – everything would be easier.” It also provided cover. “A standard price list also protects you,” McCoy added. “Now nobody gets skinned.” (McCoy, 2006)

18 By 2008 the average absolute deviation from The Chart was equivalent in value to a mid-4th-round pick, 1/50th the value of the top pick in draft. See the supplemental analysis for a figure showing these trends.

Share this post


Link to post
Share on other sites

Some things that annoy me about this chart. One, future picks cannot be accurately valued since the next season hasn't been played yet. Second, if say one team gives up five picks for one, that's five players for one player. To me those five picks are way undervalued because of the number of players involved. Each of those picks should be a round lower than the chart says to reflect this disparity in the number of players involved. Or something.

Share this post


Link to post
Share on other sites

What's your feeling on the current relevance of the DVC? Is it more or less applicable in the rookie cap era?

It is relevant in the sense that it is still ostensibly the norm. As a tool to evaluate expected performance value, it is not as relevant, because other methods have been identified which yield higher confidence in expected performance. In addition, if any performance data was used in the original computation of the DVC, that data is by now very stale.

The idea of using a curve to evaluate the net expected performance value received in a trade is still valid. However I doubt that the DVC would be produced from the most recent draft data using the sophisticated methods employed by Massey-Thaler (link 3). If I were a GM, I would use an updated curve every season, and would have done so even before the rookie cap.

That's not the whole story. While an updated DVC might be considered useful to evaluate a trade, cap costs also must be considered.

One of the main conclusions of the Massey-Thaler paper is that while early first round picks may outperform on average late first round or early second round picks, the extra performance purchased is not worth the extra cap dollars required to sign the draft pick. The new rookie cap attempts to fix the over pricing of first round picks. It will be interesting to see the next revision of the study.

GM might ask himself the following two questions when making a trade:

  1. Am I receiving equivalent or better expected performance value?
  2. Is the expected performance of the draft picks obtained a 'good deal' in terms of cap dollars spent? (e.g. what is the current compensation for a free agent pro-bowl X WR)?

Note that while an external observer might use aggregate expected performance to evaluate a trade in a generic sense, a GM will very often have one or more players in mind when making a trade for a different position in the draft order. His organization might therefore compute expected performance value not as a function of draft pick, but from an normalized forecast of the specific player in question. This might be done using a proprietary regression analysis of player characteristics (regression variables). He would then evaluate the deal according the cap dollars he would have to spend for this forecast performance.

Share this post


Link to post
Share on other sites

Some things that annoy me about this chart. One, future picks cannot be accurately valued since the next season hasn't been played yet. Second, if say one team gives up five picks for one, that's five players for one player. To me those five picks are way undervalued because of the number of players involved. Each of those picks should be a round lower than the chart says to reflect this disparity in the number of players involved. Or something.

This is one of the observations from the Massey-Thaler study (link 3). It says it a different way, and I paraphrase:

the discount rate for a future draft pick is a whopping 136%!

Share this post


Link to post
Share on other sites

It is relevant in the sense that it is still ostensibly the norm. As a tool to evaluate expected performance value, it is not as relevant, because other methods have been identified which yield higher confidence in expected performance. In addition, if any performance data was used in the original computation of the DVC, that data is by now very stale.

The idea of using a curve to evaluate the net expected performance value received in a trade is still valid. However I doubt that the DVC would be produced from the most recent draft data using the sophisticated methods employed by Massey-Thaler (link 3). If I were a GM, I would use an updated curve every season, and would have done so even before the rookie cap.

That's not the whole story. While an updated DVC might be considered useful to evaluate a trade, cap costs also must be considered.

One of the main conclusions of the Massey-Thaler paper is that while early first round picks may outperform on average late first round or early second round picks, the extra performance purchased is not worth the extra cap dollars required to sign the draft pick. The new rookie cap attempts to fix the over pricing of first round picks. It will be interesting to see the next revision of the study.

GM might ask himself the following two questions when making a trade:

  1. Am I receiving equivalent or better expected performance value?
  2. Is the expected performance of the draft picks obtained a 'good deal' in terms of cap dollars spent? (e.g. what is the current compensation for a free agent pro-bowl X WR)?

Note that while an external observer might use aggregate expected performance to evaluate a trade in a generic sense, a GM will very often have one or more players in mind when making a trade for a different position in the draft order. His organization might therefore compute expected performance value not as a function of draft pick, but from an normalized forecast of the specific player in question. This might be done using a proprietary regression analysis of player characteristics (regression variables). He would then evaluate the deal according the cap dollars he would have to spend for this forecast performance.

I believe that while it may be dated, the DVC is more applicable under the new CBA. High picks warrant the extra value when not paired with $12M/year contracts.

Share this post


Link to post
Share on other sites

I believe that the current Rookie CAP format adds an often forgotten value to the higher picks....

High picks have longer contracts, usually with an Option year to the club also. This guarantees the drafting club the high-level performance services (assumed) of a top talent for a longer period at an economical cost versus a lower pick that could ball out and get PAID much much sooner than the higher draft pick.

Share this post


Link to post
Share on other sites

I believe that while it may be dated, the DVC is more applicable under the new CBA. High picks warrant the extra value when not paired with $12M/year contracts.

I agree with that. I didn't elaborate on this aspect very well in the last post. The new CBA definitely makes the DVC more applicable, however the DVC is still not optimal. Given the difference in convexity between the M/T expected performance curve and the DVC, I would bet that the DVC adds significant error into a forecast of performance, especially near the 'knee' of DVC.

So to reiterate, I agree that the new CBA makes the DVC more relevant to us as external observers, and more relevant in negotiations with GMs whom still do not appreciate the sophisticated numerical analyses which have been applied to the draft.

If I were a GM, I would definitely employ an updated DVC to assess my club's player evaluation process.

Share this post


Link to post
Share on other sites

I agree with that. I didn't elaborate on this aspect very well in the last post. The new CBA definitely makes the DVC more applicable, however the DVC is still not optimal. Given the difference in convexity between the M/T expected performance curve and the DVC, I would bet that the DVC adds significant error into a forecast of performance, especially near the 'knee' of DVC.

So to reiterate, I agree that the new CBA makes the DVC more relevant to us as external observers, and more relevant in negotiations with GMs whom still do not appreciate the sophisticated numerical analyses which have been applied to the draft.

If I were a GM, I would definitely employ an updated DVC to assess my club's player evaluation process.

It is tough to apply it unilaterally. The poor class of 2009 for example, or even 2013's deep class, lacking in high end talent.

Share this post


Link to post
Share on other sites

It is tough to apply it unilaterally. The poor class of 2009 for example, or even 2013's deep class, lacking in high end talent.

Oh definitely. It's only a general benchmark, and only should be used as such. It describes historic average performance for all players on all teams. Teams draft specific players not averages. They need forecasts of expected performance according to player. In some cases, a forecast might be simply subjective scouting reports and 'gut feel'.

A more objective approach would be to use quantitative player evaluation and some forecast model which analyzes these reports, such as regression analysis, which I mentioned in a previous post. (link: http://en.wikipedia....ession_analysis). Coincidentally, one of the processes which Dimitroff brought with him from New England was quantitative player evaluation. I read somewhere that the main motivations for quantitative player evaluation are reporting consistency and tolerance of changes in scouting personnel. However, such quantitative evaluation can also be used as the basis for a regression analysis.

I would not be surprised in the least to learn that such an analysis is one of Karl Pierburg's contributions to the Falcons organization.

Share this post


Link to post
Share on other sites