The NFL playoffs over the weekend were, as they always are, full of drama and hard hits. Any one game (or even one season) can be determined by an odd bounce or ill-timed fumble, or a horrifying twist of your star quarterback’s knee, as Redskins fans were reminded Sunday night.
But the real secret to winning in professional football is in understanding the economics of the game. Football is a game of math. And, unfortunately for the home fans, it is math that helps explain why the Redskins have been a terrible team for most of the last decade, and that gives reason to fear that they haven’t truly turned the corner, despite their exhilarating run to the playoffs this season.
The NFL, unlike Major League Baseball, has a hard salary cap. In 2012, no team could pay its players more than $120.6 million. There are ways to game the system for a year or two through the timing of bonuses, but over time, that is the binding constraint under which every NFL team operates. The goal, then, is to put together the best set of players you can within that constraint. To outperform, management needs to find ways to pay players less than they are worth, so that it can fit more top-quality players on the team’s roster while still fitting under that cap.
There are a few tactics for doing this. One is to hope that you are simply better than all the other teams at picking players, that your judgment of which running back is worth $1 million a year and which is worth $5 million will be keener than that of the other 31 teams in the league. Professional football is a pretty efficient market in this respect, though, and it is hard to see how one team's management can be consistently better over long periods at predicting the “true” value of a player coming out of the draft or onto the free agent market. Those that have great success in this tend to see their key executives picked off to run other teams.
A different route to snagging more great players is to offer something other teams can’t, other than cash. For some of the perennial leaders in the league, like the New England Patriots and the Pittsburgh Steelers, that means a reputation for a high-quality locker room and a sense of being a title contender every year. That has allowed the Patriots to grab players for bargains and get the best use out of them, whether the player has remarkable physical gifts but is a bit of a headcase (like Randy Moss) or whether he's a great player in the twilight of his career chasing a Super Bowl Ring (like Junior Seau). Franchises without those reputations can try other techniques to persuade players to sign, as with Redskins owner Daniel Snyder’s famed efforts to jet around the country and wine and dine free agents. (I didn’t say that the latter strategy works, but it could).
But the most tried and true way to get players for less than they are worth is by drafting them. The college draft each spring is an opportunity to bring young talent onto a team at a bargain price. Not that long ago, it was not entirely clear this was true. A 2005 study by economists Cade Massey and Richard Thaler showed that players picked early in the first round of the NFL draft were overpaid relative to their eventual performance, reflecting teams’ overconfidence in their ability to predict who would be successful in the league; the bargains then were late in the first round and early in the second round. It was called the "Loser's Curse." Bad teams were awarded early draft picks that actually left them in worse shape than if they had drafted players who were nearly as good, but paid dramatically less money, later in the first round.
A lot has changed since the Massey-Thaler paper. The 2011 collective bargaining agreement between the league and the players union put new caps on rookie contracts. Now, the draft truly is a bargain. Trent Williams, the talented offensive tackle the Redskins drafted No. 4 overall in 2010 made $14 million this year. Robert Griffin III, the No. 2 pick in 2012 and perhaps the most electric young quarterback in the league, made $3.8 million. (Those numbers, like all player salary numbers in this article, are the amount the player’s pay counts toward the salary cap, which reflects both 2012 pay and a portion of his signing bonus amortized over the life of his contract. The data is from Spotrac.)
So a draft pick is now essentially a license to get a player for something below his value. RGIII’s $3.8 million price was a steal. Griffin was the sixth-ranked quarterback in the league in the advanced statistics prepared by Football Outsiders; if he were the sixth-highest-paid in the league, his salary cap hit would have been the $11.7 million that Matt Schaub of the Houston Texans made. The gap between those two numbers, about $8 million, is the “surplus value” that Griffin’s lower salary gave the team, helping them be more competitive at filling other positions.
Griffin has serious competition in the contest for “most underpaid Redskins player.” That would be Alfred Morris, the star rookie running back. Morris was the fifth most valuable back in the league this season, by Football Outsiders’ reckoning. But instead of making the $8.1 million of fifth-highest-paid running back Maurice Jones-Drew, Morris, a sixth-round draft pick, made a measly $421,000.
Still, surplus value alone doesn’t tell the full story. The cost of a player is not just what he is paid, but what was given up to hire him. Opportunity cost matters. And Griffin did not just fall into the Redskins’ lap. The team traded not merely its own 2012 first-round draft pick to get him, but its 2012 second-round pick and first-round picks in 2013 and 2014. In other words, three extra opportunities to gain very good players at a below-market price were handed over to the St. Louis Rams in order to get Griffin.
So on one hand, Griffin offers surplus value of around $8 million a year for as long as he stays healthy and remains on his rookie contract. But you also have to subtract the surplus value that the team would have gained from those three other players. As Kevin Meers wrote at the Harvard College Sports Analysis Collective, Griffin will need to have performance on par with sure-fire Hall of Famer Tom Brady, winner of three Super Bowls, to be worth what the Redskins traded away for him.
Contrast that with the winning quarterback in Sunday’s game. Russell Wilson, also a rookie, was the eighth highest performing quarterback this season, which would make him worth something like Ben Roethlisberger’s $9.9 million. Instead, as a third-round draft pick, Wilson cost the Seahawks only $545,0000. That $9.4 million in surplus value is not only higher than Griffin’s, but the Seahawks didn’t have to trade anything away to get him, so you don’t have to subtract any opportunity cost.
For much of the Daniel Snyder era, the Redskins have premised their team building strategy around big, flashy free agent signings. There was at least an interesting case to be made then, at a time that top draft picks were overpaid given the uncertainty around their performance that it was a good strategy. Given the economics of the NFL, the new collective bargaining agreement made draft picks dramatically more valuable. That makes the decision to trade so many of them away seem foolhardy, even as good as Griffin has been.
To become a perennial playoff team like the Patriots, Steelers, Packers, or Ravens, the Redskins will need to find more players who give consistently more performance than their pay would suggest—and it will be hard to get those players without any first-round draft picks. Instead, to strengthen its weak secondary and replace aging stars, Snyder and his crew will have to fire up the jet to hit the free agent market and pay established players their full market value, which doesn’t really solve anything, as it is not a place that bargains are easily found.