Breakdowns

The Hidden Reality of Draft Value: Part 3 — Late-Round vs. Early-Next Round

The Hidden Reality of Draft Value: Part 3

In the last article of the series, we concluded the positional view of how first round picks turned out according to SCPR (Second Contract Pay Ratio), which compares the ratio of guaranteed money on a player’s second contract to their first. 

At the end of the article, it was suggested that the next edition of the series would take a closer look at which positions performed best outside of round one. However, the data showed that focusing on the transition between rounds may be worth looking into. A question we asked ourselves is this: Is there a big difference between the end of round one versus the start of round two?

Remember, the SCPR is a metric that indicates the value of a pick given the position in the draft that player was taken and the money spent on said player. It is a metric used to help determine your draft strategy. With that being said, let’s have a look at what was found in the data.

Read Part 1 of this Series

Read Part 2 of this Series

Does where you pick in round one matter?

In this year’s draft, many teams have several early picks in round one (New York Jets/New York Giants) and late picks in round one (Green Bay Packers/Kansas City Chiefs). Grouping picks based on the following categories, picks 1-10, picks 11-20, and picks 21-32 yield the following results:

  • There is a negative, linear relationship between the position a player was picked during the first round and his SCPR. This linear relationship shows that teams might judge the first round correctly. By the time the second contract comes around, players drafted early in the first round are still deemed the best in their class and tend to sign the biggest contracts.
  • Teams can either judge the top of their boards pretty well or can just double down on draft pedigree. One way to find this is to split teams into two, based on who signed their second contracts with the same team and who had to go elsewhere to get top money.

Round One SCPR per Same Team vs. New Team

Understanding where the players sign their second contracts is crucial for a team to build their long-term strategic plan. 

When we view only those that re-signed with the same team, we begin to understand that those picked in the top ten offer the least return in SCPR. The reasons this may happen are addressed below:

  • Guaranteed money for the top ten picks is significantly higher than the rest of the draft
  • Teams that pick 11 through 32 regularly tend to be teams that are better at drafting. This ultimately leads to picking later in the round. This is a vicious cycle. You draft well, you re-sign, you make successful draft picks, and then you pick later on in the draft. Then the process repeats.
  • Conversely, teams picking in the top ten tend to draft poorly, which leads to a lower overall value on the second contract. This combined with a high guarantee on the first contract leads to a lower SCPR.
  • The negative, linear relationship for players signing with a different team represents players whose second contracts probably represents their initial draft pedigree. 
  • The Packers and the Chiefs represent successful franchises that have a history of drafting well. They should strongly believe in their chances of being represented more by the red columns than the blue and should stick and pick most likely as opposed to trading up. Should they try to trade down?

What about round two?

As SCPR decreases towards the back end of round one, does this decrease continue into round two?

In the above graph, we see the following:

  • The return on investment in round one decreases as the round continues. Instead of continuing to decrease in round two, the SCPR is twice as large as the picks categorized 1-10.
  • The difference between picking thirty-second and thirty-third could equate to almost twice the amount of value financially over the course of the rookie contract.

Throughout the draft, does the guaranteed money not decrease?

There are two ways this could happen:

  1. Later-round picks really perform so highly that they earn so much money on their second contracts suggesting teams regularly don’t draft the correct players to go in round one. 
  2. There is a gap in the market to exploit with regards to the drop in guaranteed money each round sees as the draft progresses. 

Let’s take a look on point number two above:

The above chart is all the proof we need to exploit this market inefficiency. From 2014 onwards, all of the trends tend to gradually increase as rookie contracts get more and more guaranteed money. 

Some things you may be asking yourself are this:

What should we be seeing?

  • In a perfect world, the gap between each bucketed group would be roughly equal, indicating a leveling decrease of guaranteed money between picks.

What do we actually see?

  • The difference between guaranteed money at each bucket varies significantly. 
  • Picks 11-20 get 53% of the guaranteed amount than picks 1-10 (23.7M vs. 12.6M)
  • Early, second round picks get 49% of the guaranteed money that late, round one picks get (4.4M vs. 9M). This opportunity offers a lot of room for a high SCPR return which leads to overall value for a franchise. It also provides more room for error and space to distribute money elsewhere. 
  • For late round one picks, this represents a great opportunity to trade back a few spots, garner assets, and exploit this gap in the market.
  • The fifth-year option would be a sacrifice here, but with only one in three first round players going on to sign a second contract with the same team, this strategy should be heavily considered in order to maximize market value.
  • Again, we would expect to see the difference in guaranteed money between these buckets to be similar but what we in fact see is graphed below:

This graph shows that the early picks of the next round get significantly less guaranteed money than the late round picks of the previous round, which is where the opportunity to secure value is. 

Recap

Given we now understand the opportunity that presents itself in the draft, what would a plausible strategy be for either New York team with their top ten picks or for Green Bay or Kansas City with mid to late-round picks?

If you pick a good player, a later pick gets you a better return on your investment. Picking later also offers more room for error due to the uneven distribution of the guaranteed money. 

Since picks 11-20 on average get 50% of the guaranteed money of picks 1-10, the Jets and Giants should try to move back, recoup assets, and provide themselves with the opportunity to have a greater return on SCPR on their pick. 

Since picks 21-32 on average get around 72% of the guaranteed money of picks 11-20 while picks 33-43 get 49% of the guaranteed money of 21-32, the Packers and Chiefs should also be trying to move back with at least one of their picks, if not both, to attempt to exploit the inefficiencies here in the pay scale. 

Not only does history suggest that moving back a few spots doesn’t significantly decrease the chances of picking a quality player, but also that moving back at certain points in the draft significantly increases your chances of securing a quality-value player.

Looking Ahead

With the understanding of which points in the draft to try and move around, we will next take a look at which positions offer the best value per round, outside of round one.

 

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