Coyote Blog

Forget the UN and judge nominations and other trivial matters.  This weekend is the NFL draft.  Via Marginal Revolution comes this cool article about the economics of the NFL Draft.

The article is pretty long, so let me summarize the couple of things I thought were pretty interesting.  The first was the relative value of draft picks.  They did a lot of work quantifying the performance of players selected at different positions in the draft (i.e first pick, second pick, etc).  You'll have to see the detailed study as to their methodology, but it struck me as pretty reasonable.  They also looked at the cost or salary by draft pick.  Combining the two got this curve:

The "surplus" line is the difference of the curves, ie performance value minus compensation cost.  Since compensation costs fall faster in the late first round (the first round is 30 picks) and into the second round than does performance, the surplus value peaks in the second round.  This does not mean the best players can be found in picks 25-75, but it does mean that the best values can be found there.  Since the NFL works under a salary cap that equalizes total compensation, the best team should be the one that consistently picks these value players (this is different than the baseball / NY Yankees model, where there is no cap, and maximum performance presumably comes from getting the top players, irregardless of salary).

If this is correct, teams should be willing to straight-up trade a pick in the top 15 for a pick around 35.  However, in reality, they can usually trade a pick in the top 15 for two or more picks in the 25-75 ranges, which should make the trade a no-brainer.  Interestingly, the market for picks is actually going the other way:

The researches studied hundreds of past draft day trades of picks to generate these curves.  It basically says that early picks are valued exponentially higher than even late first round picks, and this preference for very early picks has actually increased in the past few years.  This curve says that a #5 pick might be worth at least 3 and possibly many more picks in the 25-75 band.

Given these two curves, if they are correct, why don't more teams trade their top picks into the 25-75 band.  There are at least 3 answers to this:

1. Read Moneyball.  Once you read it, you will understand that sports GM's do not understand these concepts of value.
2. There may be other values, other than player performance, that teams get from top picks.  For example, most fans will have heard of the top ten people drafted, but will know few from the 25-75 band.  The top, well-known picks generate a disproportionate amount of fan excitement and "hope" which can translate into more paying butts in seats, which this study does not take into account
3. Some teams are getting it.  In listening to several mock drafts lately, it is clear many teams want to trade down from the top picks this year - no one wants to pay the signing bonuses commanded at these levels.  By the way team that has traded for the most picks in this band is ... Philadelphia.  Who has been in the NFC championship game 4 years in a row, so maybe someone out there does get it.

I try to keep on the lookout for odd, niche blogs out there.  Previously I linked to the remote (as in TV remote) blog and the NFL Cheerleader Blog. 

The niche blog today is the Payphone Project, which is both a photo blog as well as a news site about payphones.  Make sure to look at the pictures, but here is my favorite-- The Antarctic Payphone at Scott Base, Antarctica  (uhhh, anyone here have 426 quarters they can lend me?)

Though I must admit that this one on Lake Victoria is cool:

I actually first ran into this site when I was working in the online directory world at Whitepages.com. 

Update: While I called this a niche, it must be a big niche, because the Payphone Project has competitors (and here, and jeez, here too)

Coming soon: Carnival of the Payphones?

Hats off to ex-Arizona Cardinals cheerleeder and Phoenix resident Sarah Coggin for being part of the work to support our troops by visiting them overseas.  And here is more on other cheerleader visits here at the NFL Cheerleader Blog (as I have said in the past, if I could get paid to write that blog, my life would be set).  And shame on you cynics who think that I posted this just to have an excuse to get a cheerleader picture on the front page.  I actually did it to get two cheerleader pictures up:

Like much of the media, the proliferation of blogs are leading new bloggers to seek out new niches.  Here are two pretty narrow, though as a guy, fairly compelling ones I found today:

The first is the NFL Cheerleader Blog.  Hmm, if I could find a way to get paid to write that blog, my life would be complete.

The other is RemoteBlog, a blog dedicated entirely to universal remote controls.  If that is too niche for you, you might like Gizmodo or Home Theater Blog.

By the way, if anyone is itching to send Coyote a Christmas gift, I will gratefully accept one of these bad boys.

Previously, I explained why I like Football Outsiders here. Their week 12 statistical rankings of teams is here.

If you really want to dig into NFL stats, this is a great site.  Also, they just ran their model restrospectively on the year 2000.  And, what do you know, our beloved Arizona Cardinals again came in dead last, with the worst full-season score in the history of the rankings.

One of the government habits that consistently irritate me is the public funding of stadiums.  Never has so much public money been transferred for so little economic benefit to so many billionaires who don't need it.  For example, Seattle ponied up hundreds of millions of dollars for a stadium for Paul Allen, one of the five richest people in the world (and who probably has spent more than the cost of the stadium searching for aliens). 

Credit the owners of sports teams, I guess, for they have learned to use gun-to-the-head threats of moving the team out of town to get local taxpayers to vote them new stadiums.  I mean, for god sakes, we are building a stadium here in Arizona for the hapless Cardinals (and here is our new Glendale Arena, constructed by taxpayers just in time for the NHL strike - but we get roller derby!) Some thoughts:

• Public funding is totally unnecessary.  Many private owners have built their own stadiums, either through private capital or Personal Seat Licenses.  In fact, with naming rights and luxury boxes, there are more revenue streams than ever to pay for these stadiums.
• Its all about blackmail. If the mayors of the 50 largest cities in the country got together tomorrow and made a no-public-stadium funding pledge, then owners would be forced to build their own stadiums.  Congrats to Los Angeles for resisting the the NFL's outstretched hand.  What the owners have created is a classic prisoners dilemma for the cities (see update#1 below)
• Sports teams bring little net economic benefit.  No disinterested economist has found any justification for the premise that they improve the local economy - instead, they just shift benefit around.
• Teams take better care of stadiums they actually own.  Private stadiums are steadily improved, year-in and year-out.  Public stadiums (I am thinking of Veterans Stadium and the Astrodome in particular) are used up and thrown away.
• Teams always underestimate the tax burden of the stadium and the implied subsidy.  Often you see them arguing that the stadium will be funded only out of the revenues from the stadium itself -- well if that's the case, then why does the public need to be involved at all?

Here is a Cato paper debunking the economics of the proposed new DC baseball stadium.  Matt Welch has a great article on this topic in Reason here.  Hit and Run has an update today on the Angels' jacking both Anaheim and Tempe at the same time.  Makes Me Ralph (lol) has a series of posts here, just keep scrolling.  For even more, see the website Field of Schemes and the related book Field of Schemes : How the Great Stadium Swindle Turns Public Money into Private Profit.

UPDATE#1

Marginal Revolution makes the counter-case for public funding, citing a study by two economists who try to put a value on the intangibles of having a team in town.

I have to disagree for three reasons:

• I am against taxing for such value.  If everyone finds value, find a free-market approach to get the same thing.  Have a telethon or something.  And by the way, this value is fleeting and much more limited than owners let on.  One good example - has anyone south of Chicago noticed that the NHL season has not started?
• This is a very slippery slope argument.  How many times have you heard politicians say something like "Everyone I know would pay a dollar a week to get this, its not that much".  Yeah, it sounds great, but a dollar a week per person in the US gets us a new $15 billion a year program or tax. 
• Most importantly, though, is that private enterprises don't NEED the public funding to make stadiums work.  If the product works, like the NFL, they don't need public funding.  And if the product isn't working, like the NHL, then no amount of public funding, like our new arena here, will save it.  Team owners get public funding only because they can, not because they have to.  And they can because of the threat of moving the team out of town.  This is a classic prisoner's dilemma.  If all major cities collude and refuse to fund public stadiums (like the two prisoners agreeing not to cooperate with police) then everyone except the owners is better off, because the NFL will still exist but without public subsidies. 

UPDATE #2

A nice post with lots of good links from Houston's Clear Thinkers.  A nice blog based in my old hometown and birthplace.