Every fan evaluates this draft debate through the lens of their own life experiences, both personal and professional. A marketer may analyze this opportunity in a different way than would an engineer, or a teacher, or a journalist - I respect all those perspectives. Through an investment lens, here are my reasons why I really hope the Giants take a QB and really hope they do not take Barkley or Nelson.
Options:
I think of every pick in the draft as a series of staggered securities options. Each pick has
1) an initial cost, signing bonuses and early salary,
2) an initial term, the early years of the initial contract, and
3) an embedded series of future options, i.e the next contract, franchise tag, etc.
From an option perspective, the options that hold the most value have the lowest theta, a measure of price decay due to the passage of time.
RBs a) have the shortest careers (very high theta) and b) the most injury risk (low expected value of embedded options). I would avoid paying up for RB options, preferring to get more cheaper options in later rounds. In this respect, I also appreciate those concerns re: Rosen’s concussions limiting his embedded option value.
Theta for the cost: Buy QB & OL, Sell RB
Selection Alpha:
This is the relative outperformance of a security against some index or benchmark, e.g. Apple stock vs a technology index or the S& P500. Another way to think of this is value vs replacement cost. In football, this cost/benefit would be the cost and output of a player vs the cost and output of the average player of the same position.
As a money manager, you’re paid to outperform a benchmark. If you don’t then you have no value. If I’m a GM or a professional scout – I get paid to find these later round guys, that if teams could redraft they would get taken higher.
Of course there are the late round exceptions of the Wilsons and Bradys, but there are many more examples of late round gems along the OL and RB. Guards like Hernandez or Wynn, RBs like Penny or Michel will likely have a higher overall alpha than Nelson or Barkley. Assumes these QBs are the real deal - which only Gettlemen knows.
Alpha for the cost: Buy QB/DE/CB, OL neutral, sell RB
Portfolio Construction / Optimization:
Akin to roster building, where do you spend your money –defense, offense, QBs, OL, skill players, rushers, corners. With our superbowl teams in mind, we spent relatively little capital on the OL and the RBs. 5th, UD, UD, 2nd, 3rd. Brandon and Ahmad were late rounders as well. The eagles OL was also like this: 5th, 3rd, 6th, 1st, 2nd. I would argue that the cowboys have over allocated to their OL and under allocated to QB and skill players.
The argument can go the other way as well – too much allocation on high cost / high output RBs isn’t a great investment either. How many superbowls do Barry Sanders, Ladanian Tomlinson, and Adrian Peterson etc, etc etc have?
Portfolio Allocation: Buy QB/DE/CB, OL/DT neutral, sell RB
Portfolio Concentration:
Also re: roster building, where do you spend your money – diversified or concentrated. Here is a great article on how much the teams spend on their top 10 players as a percent of their cap. In a nutshell, the best teams are heavily concentrated on their top talent, their winners, BUT without overdoing it so there’s no depth.
https://www.sbnation.com/2018/3/15/17114596/nfl-free-agency-2018-salary-cap-formula-winning-teams
In this sense, I don’t love the idea of trading down.
Financial Leverage:
Simply put, adding debt to your portfolio so that the portfolio can outperform if your investment returns are higher than the cost of your debt. You add risk, you add potential reward. In a football sense, this to me is which players do you overpay hoping they will enhance the value of other members of your roster, thus levering other players returns. For example, could a big investment in say a Nate Solder, lever the value of an Eli Manning – absolutely. Can a top QB make the right line calls to make his receivers or RBs better – absolutely. Can a shutdown corner, allow average pass rushers to get to the QB easier – absolutely.
Investment Goal:
1) Long term vs short term
2) High risk, high reward vs steady and safe.
For me, I would rather have in 10 years, two superbowls, 3 playoffs, and 5 stinkers vs 10 competitive yet superbowl-less seasons. That’s me. I want the volatility. I want the chance of that amazing season. Give me the downs with the ups and do that for the long term.
TAKE SOME RISK.
Investment Goal: Buy QB/DE, sell RB/OL
Thank you to anyone who made it all the way through this - one man's perspective. Would love to hear your thoughts.
-VIG
Most will not understand.
The prime positions of value ( QB, DE, OT, CB ) are the ones that should be prioritized.
Based on your post I can assume that if the Giants feel Darnold is the only QB they want they need to trade up with Cleveland and pay what they want? What if NYG doesn't like Rosen or Allen? If Darnold is gone then what?
There is a plan and the plan is to do what is best for the NY Football Giants and the pick at 2 needs to be a gold jacket player. Not my words, Gettlemen's words.
IF he sees Nelson or Barkley as hall of fame players he will pick them, maybe trading down to equate the value.
As we know, what happens on a football field is less predictable than the market.
I think looking at it the way you do would result in good teams very consistently, more than likely. But I would side on building a GREAT team, and I would take a risk with a player that might not make sense in most years because of the position he plays. I generally agree you do not take RBs or OGs early from a cost-benefit perspective. I also believe however, there are some very rare instances in which you take a chance because the talent is just too great. Barkley is that player, to me. He might not be in the league as long as Bradley Chubb or Josh Allen or Rosen, but he could make our team great for the time he is in the league.
If you ever make an exception to the rule, here it is.
Belichick the Economist - ( New Window )
darnold
rosen (recognizing more investment required in OL)
trade down to DEN, Nelson
allen
trade down to BUF
in a perfect world, you convince CLE that if they take darnold, we take Barkley and he's not there at 4. maybe they go allen and barkley at 4.
But the analysis omits:
- Webb's potential value and how the Giants view him with respect to the current crop of QBs.
- How the Giants view the current crop of QBs. Are we looking at the next Bortles? Leaf? Peyton? Rodgers?
- Webb's potential value and how the Giants view him with respect to the current crop of QBs.
- How the Giants view the current crop of QBs. Are we looking at the next Bortles? Leaf? Peyton? Rodgers?
then trade him for a first and get another special player or keep him for insurance in case the drafted QB doesnt work out.
darnold
rosen (recognizing more investment required in OL)
trade down to DEN, Nelson
allen
trade down to BUF
in a perfect world, you convince CLE that if they take darnold, we take Barkley and he's not there at 4. maybe they go allen and barkley at 4.
I think Darnold may be the highest on their board with Rosen as the next in line at the QB spot but not on the value board.
I honestly won't be too upset with Rosen because the position is so important but I really like Nelson and more picks. Plus I have a hope Webb is a guy that can be the guy.
Trade #2 and receive 4-5 players /draft picks
Spread out risk . maximize $ return