Are there too few trades during the NFL draft?

ABSTRACT

College football players are initially assigned to teams in the National Football League (NFL) through the league’s draft selection process. At each team’s turn to pick, the team has the option of exercising the pick itself or trading it to another team. If gains from trade are exhausted, draft picks should be exercised by the team with the highest expected value. That is, the expected player contribution garnered from a given pick should not be dependent on whether the pick was traded or retained. Regression results, however, indicate that controlling for a player’s draft position, when a team trades up to acquire a player, that player is more likely to have greater on-field success. This suggests that there are too few draft day trades. Plausible reasons are high transaction costs or the fear of media scrutiny that draft trades can engender.

KEYWORDS:

• NFL
• football
• draft
• transaction costs

JEL CLASSIFICATION:

• L83
• J44

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ A pick can be traded multiple times. For example, a team could trade the third overall pick for the tenth. When the tenth pick is to be made, the team must again decide whether to retain or trade it.

² A notable case is time expiring on the Minnesota Vikings in the first round of the 2003 draft as they attempted to complete a trade with the Baltimore Ravens. See http://sports.espn.go.com/nfldraft/columnist?id=1545117.

³ To mitigate negotiation costs, many teams use established trade charts that attempt to provide value equivalencies between early and later round picks. The chart values themselves are often a source of debate, however (e.g. J. Machota, ‘Stephen Jones: Our trade charts say we “won or hit right on it” in trade with 49ers,’ http://cowboysblog.dallasnews.com/2013/04/stephen-jones-our-trade-charts-say-the-cowboys-won-or-hit-right-on-it-in-trade-with-49ers.html/).

⁴ The results are included in an unpublished appendix to their paper, see http://consafo.com/losers_curse_supplemental_analysis.pdf.

⁵ In fact, Massey and Thaler results imply that, from the perspective of the team moving up, there are too many trades. Fear of the winner’s curse itself could be another reason for too few trades occurring.

⁶ Our results are not qualitatively sensitive to a longer (5 years) or shorter (2 years) time frame.

⁷ For details on AV, see http://www.pro-football-reference.com/. The weights used in creating the measure are somewhat subjective.

⁸ If a trade was made prior to the draft, then Trade = 0, since the team moving up was not targeting a specific player as they typically wouldn’t know which players would still be available. Exceptions are made if a team traded up for the first or second overall pick immediately prior to the draft and the media reported the team was targeting the player selected. Traded picks where veteran players were part of the trade deals and observations where trade information was incomplete are excluded.

⁹ In alternative specifications, general managers are substituted for coaches, with virtually similar results.