Jauronimo Posted May 20, 2014 Posted May 20, 2014 (edited) I've never heard of discounting by a round. I do remember someone saying that you discount future picks by 50%. Boom thats how you get the break even point at the 20s: Which begs the question, Why would you discount a future pick by a round? Why would you discount a future pick by 50%? GiGo. Edited May 20, 2014 by Jauronimo
1B4IDie Posted May 20, 2014 Author Posted May 20, 2014 This is all Wall Street-style derivatives nonsense. The only value of any pick is in the results: if the Bills become one of the top teams in the league, then Watkins and all the other picks were a bargain; if they continue to struggle to reach 500, then the picks were all over-valued. Had the Bills stayed at 9 and had Watkins still been there and they picked him and he was a bust, then what was the "value?" I'd take about a decade of picking "lower value" players from 28 to 32 in the draft over wringing my hands about moving up or down near the top of the draft. The value of each pick is what each team decides it is worth to them. Period. It is not non-sense. It is classic futures and commodities trading. You have to know the value of anything you trade. The OP has assigned the wrong value to next years picks thus the analysis of an unequal trade is wrong. The only articles I've found which discuss the methodology employed in developing either of the predominant draft trade value charts have nothing to do derivatives, commodities or futures trading. Do either of you have link which delves into how derivative valuation concepts are used to value draft picks? I found this article interesting http://harvardsportsanalysis.wordpress.com/2011/11/30/how-to-value-nfl-draft-picks/ Kevin Meers put together a new chart based on Career Approximate Value over Average by draft position. So if we use those numbers the trade looks even worse. Harvard Chart Cleveland Browns Buffalo Bills 2015 Pick Delta 2014 #9 308 2015 1st 494.6 2015 4th 97.8 Total 900 2014 #4 376.9 1 -524 2014 #9 308 2015 1st 435.7 2015 4th 97.1 Total 841 2014 #4 376.9 2 -464 2014 #9 308 2015 1st 401.3 2015 4th 96.3 Total 806 2014 #4 376.9 3 -429 2014 #9 308 2015 1st 376.9 2015 4th 95.5 Total 780 2014 #4 376.9 4 -404 2014 #9 308 2015 1st 357.9 2015 4th 94.7 Total 761 2014 #4 376.9 5 -384 2014 #9 308 2015 1st 342.4 2015 4th 94 Total 744 2014 #4 376.9 6 -368 2014 #9 308 2015 1st 329.4 2015 4th 93.2 Total 731 2014 #4 376.9 7 -354 2014 #9 308 2015 1st 318 2015 4th 92.5 Total 719 2014 #4 376.9 8 -342 2014 #9 308 2015 1st 308 2015 4th 91.7 Total 708 2014 #4 376.9 9 -331 2014 #9 308 2015 1st 299.1 2015 4th 91 Total 698 2014 #4 376.9 10 -321 2014 #9 308 2015 1st 291 2015 4th 90.3 Total 689 2014 #4 376.9 11 -312 2014 #9 308 2015 1st 283.6 2015 4th 89.5 Total 681 2014 #4 376.9 12 -304 2014 #9 308 2015 1st 276.8 2015 4th 88.88 Total 674 2014 #4 376.9 13 -297 2014 #9 308 2015 1st 270.5 2015 4th 88.1 Total 667 2014 #4 376.9 14 -290 2014 #9 308 2015 1st 264.7 2015 4th 87.4 Total 660 2014 #4 376.9 15 -283 2014 #9 308 2015 1st 259.2 2015 4th 86.7 Total 654 2014 #4 376.9 16 -277 2014 #9 308 2015 1st 254 2015 4th 86 Total 648 2014 #4 376.9 17 -271 2014 #9 308 2015 1st 249.2 2015 4th 85.3 Total 643 2014 #4 376.9 18 -266 2014 #9 308 2015 1st 244.6 2015 4th 84.6 Total 637 2014 #4 376.9 19 -260 2014 #9 308 2015 1st 240.2 2015 4th 84 Total 632 2014 #4 376.9 20 -255 2014 #9 308 2015 1st 236.1 2015 4th 83.3 Total 627 2014 #4 376.9 21 -251 2014 #9 308 2015 1st 232.1 2015 4th 82.6 Total 623 2014 #4 376.9 22 -246 2014 #9 308 2015 1st 228.4 2015 4th 82 Total 618 2014 #4 376.9 23 -242 2014 #9 308 2015 1st 224.7 2015 4th 81.3 Total 614 2014 #4 376.9 24 -237 2014 #9 308 2015 1st 221.3 2015 4th 80.7 Total 610 2014 #4 376.9 25 -233 2014 #9 308 2015 1st 218 2015 4th 80 Total 606 2014 #4 376.9 26 -229 2014 #9 308 2015 1st 214.7 2015 4th 79.4 Total 602 2014 #4 376.9 27 -225 2014 #9 308 2015 1st 211.7 2015 4th 78.7 Total 598 2014 #4 376.9 28 -222 2014 #9 308 2015 1st 208.7 2015 4th 78.1 Total 595 2014 #4 376.9 29 -218 2014 #9 308 2015 1st 205.8 2015 4th 77.5 Total 591 2014 #4 376.9 30 -214 2014 #9 308 2015 1st 203 2015 4th 76.9 Total 588 2014 #4 376.9 31 -211 2014 #9 308 2015 1st 200.3 2015 4th 76.2 Total 585 2014 #4 376.9 32 -208 Ouch a 208 difference if the Bills Win the Super Bowl is like an extra 1st round pick thrown in for fun. The Harvard numbers with the 50% Discount for future picks: Harvard Chart w 50% discount Cleveland Browns Buffalo Bills 2015 Pick Delta 2014 #9 308 2015 1st 247.3 2015 4th 48.9 Total 604 2014 #4 376.9 1 -227 2014 #9 308 2015 1st 217.85 2015 4th 48.55 Total 574 2014 #4 376.9 2 -198 2014 #9 308 2015 1st 200.65 2015 4th 48.15 Total 557 2014 #4 376.9 3 -180 2014 #9 308 2015 1st 188.45 2015 4th 47.75 Total 544 2014 #4 376.9 4 -167 2014 #9 308 2015 1st 178.95 2015 4th 47.35 Total 534 2014 #4 376.9 5 -157 2014 #9 308 2015 1st 171.2 2015 4th 47 Total 526 2014 #4 376.9 6 -149 2014 #9 308 2015 1st 164.7 2015 4th 46.6 Total 519 2014 #4 376.9 7 -142 2014 #9 308 2015 1st 159 2015 4th 46.25 Total 513 2014 #4 376.9 8 -136 2014 #9 308 2015 1st 154 2015 4th 45.85 Total 508 2014 #4 376.9 9 -131 2014 #9 308 2015 1st 149.55 2015 4th 45.5 Total 503 2014 #4 376.9 10 -126 2014 #9 308 2015 1st 145.5 2015 4th 45.15 Total 499 2014 #4 376.9 11 -122 2014 #9 308 2015 1st 141.8 2015 4th 44.75 Total 495 2014 #4 376.9 12 -118 2014 #9 308 2015 1st 138.4 2015 4th 44.44 Total 491 2014 #4 376.9 13 -114 2014 #9 308 2015 1st 135.25 2015 4th 44.05 Total 487 2014 #4 376.9 14 -110 2014 #9 308 2015 1st 132.35 2015 4th 43.7 Total 484 2014 #4 376.9 15 -107 2014 #9 308 2015 1st 129.6 2015 4th 43.35 Total 481 2014 #4 376.9 16 -104 2014 #9 308 2015 1st 127 2015 4th 43 Total 478 2014 #4 376.9 17 -101 2014 #9 308 2015 1st 124.6 2015 4th 42.65 Total 475 2014 #4 376.9 18 -98 2014 #9 308 2015 1st 122.3 2015 4th 42.3 Total 473 2014 #4 376.9 19 -96 2014 #9 308 2015 1st 120.1 2015 4th 42 Total 470 2014 #4 376.9 20 -93 2014 #9 308 2015 1st 118.05 2015 4th 41.65 Total 468 2014 #4 376.9 21 -91 2014 #9 308 2015 1st 116.05 2015 4th 41.3 Total 465 2014 #4 376.9 22 -88 2014 #9 308 2015 1st 114.2 2015 4th 41 Total 463 2014 #4 376.9 23 -86 2014 #9 308 2015 1st 112.35 2015 4th 40.65 Total 461 2014 #4 376.9 24 -84 2014 #9 308 2015 1st 110.65 2015 4th 40.35 Total 459 2014 #4 376.9 25 -82 2014 #9 308 2015 1st 109 2015 4th 40 Total 457 2014 #4 376.9 26 -80 2014 #9 308 2015 1st 107.35 2015 4th 39.7 Total 455 2014 #4 376.9 27 -78 2014 #9 308 2015 1st 105.85 2015 4th 39.35 Total 453 2014 #4 376.9 28 -76 2014 #9 308 2015 1st 104.35 2015 4th 39.05 Total 451 2014 #4 376.9 29 -75 2014 #9 308 2015 1st 102.9 2015 4th 38.75 Total 450 2014 #4 376.9 30 -73 2014 #9 308 2015 1st 101.5 2015 4th 38.45 Total 448 2014 #4 376.9 31 -71 2014 #9 308 2015 1st 100.15 2015 4th 38.1 Total 446 2014 #4 376.9 32 -69 Still no break even, a 69 point difference is like an extra 5th. Well now I know why the National media is saying the Bills gave up a lot to move up for 4 spots, because well, they did. But to everyone's point, it doesn't matter what the point differential was if Sammy Watkins truly becomes a HoFer. Say a 16 year playing career, given improvements in health care. That would make him a first ballot Hall of Famer in the Class of ~2036; from Andre Reed to Sammy Watkins.
BarleyNY Posted May 20, 2014 Posted May 20, 2014 The only articles I've found which discuss the methodology employed in developing either of the predominant draft trade value charts have nothing to do derivatives, commodities or futures trading. Do either of you have link which delves into how derivative valuation concepts are used to value draft picks? I remember hearing this as a rule of thumb when discounting future year's draft picks: Each pick for the following year is devalued one round except that second round picks are divided into two halves and the first round is divided into three thirds. Teams project where they expect their trading partner to finish in the coming season to determine which part of those rounds they are likely to be in. Thus, a very good team's future first round pick is not nearly as valuable as a poor team's.
1B4IDie Posted May 20, 2014 Author Posted May 20, 2014 (edited) Why would you discount a future pick by 50%? GiGo. Exactly. Believe me, I understand how the whole exercise is arbitrary. Someone posted that there was a break even point in the draft value chart and I'm simply trying to determine how they came to that conclusion. I now see that is by discounting future picks. For ***** and Giggles here is the chart using the traditional values with a 1 Round discount; which has a breakeven point at pick 17. Traditional w 1 round Discount Cleveland Browns Buffalo Bills 2015 Pick Delta 2014 #9 1350 2015 1st 580 2015 4th 43 Total 1,973 2014 #4 1800 1 -173 2014 #9 1350 2015 1st 560 2015 4th 42 Total 1,952 2014 #4 1800 2 -152 2014 #9 1350 2015 1st 550 2015 4th 41 Total 1,941 2014 #4 1800 3 -141 2014 #9 1350 2015 1st 540 2015 4th 40 Total 1,930 2014 #4 1800 4 -130 2014 #9 1350 2015 1st 530 2015 4th 39.5 Total 1,920 2014 #4 1800 5 -120 2014 #9 1350 2015 1st 520 2015 4th 39 Total 1,909 2014 #4 1800 6 -109 2014 #9 1350 2015 1st 510 2015 4th 38.5 Total 1,899 2014 #4 1800 7 -99 2014 #9 1350 2015 1st 500 2015 4th 38 Total 1,888 2014 #4 1800 8 -88 2014 #9 1350 2015 1st 490 2015 4th 37.5 Total 1,878 2014 #4 1800 9 -78 2014 #9 1350 2015 1st 480 2015 4th 37 Total 1,867 2014 #4 1800 10 -67 2014 #9 1350 2015 1st 470 2015 4th 36.5 Total 1,857 2014 #4 1800 11 -57 2014 #9 1350 2015 1st 460 2015 4th 36 Total 1,846 2014 #4 1800 12 -46 2014 #9 1350 2015 1st 450 2015 4th 35.5 Total 1,836 2014 #4 1800 13 -36 2014 #9 1350 2015 1st 440 2015 4th 35 Total 1,825 2014 #4 1800 14 -25 2014 #9 1350 2015 1st 430 2015 4th 34.5 Total 1,815 2014 #4 1800 15 -15 2014 #9 1350 2015 1st 420 2015 4th 34 Total 1,804 2014 #4 1800 16 -4 2014 #9 1350 2015 1st 410 2015 4th 33.5 Total 1,794 2014 #4 1800 17 7 2014 #9 1350 2015 1st 400 2015 4th 33 Total 1,783 2014 #4 1800 18 17 2014 #9 1350 2015 1st 390 2015 4th 32.6 Total 1,773 2014 #4 1800 19 27 2014 #9 1350 2015 1st 380 2015 4th 32.2 Total 1,762 2014 #4 1800 20 38 2014 #9 1350 2015 1st 370 2015 4th 31.8 Total 1,752 2014 #4 1800 21 48 2014 #9 1350 2015 1st 360 2015 4th 31.4 Total 1,741 2014 #4 1800 22 59 2014 #9 1350 2015 1st 350 2015 4th 31 Total 1,731 2014 #4 1800 23 69 2014 #9 1350 2015 1st 340 2015 4th 31.8 Total 1,722 2014 #4 1800 24 78 2014 #9 1350 2015 1st 330 2015 4th 31.2 Total 1,711 2014 #4 1800 25 89 2014 #9 1350 2015 1st 320 2015 4th 30.8 Total 1,701 2014 #4 1800 26 99 2014 #9 1350 2015 1st 310 2015 4th 30.4 Total 1,690 2014 #4 1800 27 110 2014 #9 1350 2015 1st 300 2015 4th 30 Total 1,680 2014 #4 1800 28 120 2014 #9 1350 2015 1st 292 2015 4th 29.6 Total 1,672 2014 #4 1800 29 128 2014 #9 1350 2015 1st 284 2015 4th 29.2 Total 1,663 2014 #4 1800 30 137 2014 #9 1350 2015 1st 276 2015 4th 28.8 Total 1,655 2014 #4 1800 31 145 2014 #9 1350 2015 1st 270 2015 4th 28.4 Total 1,648 2014 #4 1800 32 152 I found this article interesting http://harvardsports...fl-draft-picks/ Kevin Meers put together a new chart based on Career Approximate Value over Average by draft position. So if we use those numbers the trade looks even worse. Ouch a 208 difference if the Bills Win the Super Bowl is like an extra 1st round pick thrown in for fun. The Harvard numbers with the 50% Discount for future picks: Still no break even, a 69 point difference is like an extra 5th. Well now I know why the National media is saying the Bills gave up a lot to move up for 4 spots, because well, they did. But to everyone's point, it doesn't matter what the point differential was if Sammy Watkins truly becomes a HoFer. Say a 16 year playing career, given improvements in health care. That would make him a first ballot Hall of Famer in the Class of ~2036; from Andre Reed to Sammy Watkins. The Interesting piece about the "Meers" values is that there is a significantly lower delta between picks. I personally believe that value is closer to reality if you're trying to give an empirical value to draft position. I mean the difference in potential of a player picked at #29 or #25 is pretty minimal. The traditional value chart has a 12% delta where the "Meers" system gives a 6% delta. Edited May 20, 2014 by Why So Serious?
Peter Posted May 20, 2014 Posted May 20, 2014 (edited) This is an interesting take on the draft value chart using what the author refers to as career approximate value ("CAV"). http://harvardsports...fl-draft-picks/ These are some interesting takes on discount rates and future picks: http://www.footballp...fl-draft-picks/ http://www.pro-footb...com/blog/?p=297 As for me, I love that we have Sammy - and I am loving it more and more each day the more I learn about him. I do feel that the Bills gave up too much. They reminded me of me when I bought my first car -- including the bit about how Farmer took another call (I think Farmer played us). In placing a value on property, you look at other "sales." I knew that the Bills wanted to trade up and the rumors were that the Bills and Lions were looking for reasonable deals in trading up. I thought that the model for that was what the Dolphins did last year to move up more spots. Notwithstanding the above, it is great that we have Sammy and were able to pick Cyrus Kouandjio -- another kid with whom I am more and more impressed as time goes by (if you have not heard the interview with Murph last night, you may want to check it out). I guess the way I will choose to look at it is the same way that I look at the purchase of our house 12 years ago. We probably paid more than we should have because my wife loved the house and she was pregnant with our first born. Yet, we love the house, our kids and I love living there and in the neighborhood, and the house is worth a lot more than we paid for it. I hope that Sammy is that kind of player. We have both Sammy and Cyrus (presuming another iteration of the trade included giving up this year's second round pick) for a year more than whoever we would pick next year, and there will be no temptation for anyone to want us to lose some games at the end of the year to improve our pick. If it works out the way the Bills and we hope it does, we will be fighting for a playoff spot this year, attendance will be way up, and the viability of the Bills in Buffalo will be further supported. Just my two cents. Edited May 21, 2014 by Peter
Jauronimo Posted May 20, 2014 Posted May 20, 2014 The Career Average methodology looks to me to be much more valid given its based on at least some kind of empirical evidence of the value, in terms of starts, of drafting in a specific position. Not all starts are created equal, however. I can't find anything which supports the Johnson chart which I suspect is based on historical precedent. Discussion of discounts based on a time value concept are pretty interesting. What is the value of one season of (projected) play and how is it measured (wins, revenue, cost)? Using the rookie wage scale to do a quick PV of future salaries/signing bonuses is the only way I can come up with off the top of my head to arrive at an apples to apples comparison, which has many glaring flaws.
MVJim Posted May 21, 2014 Posted May 21, 2014 I have also heard from many analysts that a future year pick needs to be discounted by a round. Some reasons given is you can have a player now rather than what the unknown future holds plus future picks will generally be more costly. I believe discounting them a complete round is too much since the rookie contracts are now slotted. Thus, valueing the #9 pick this year to equate to the #9 pick in the 2nd round next year would represent a factor of 36.3% (490/1350) of the current year pick value based upon devaluing of a full round. I believe the pick should be discounted not at 36.3 % or 50% but more like 60%. Thus, the future 2015 1st round pick (assuming the 9th position) would be 1350 X .60 = 810; the 4th round pick would be 84 X .60 = 50. Thus, the total value given (assuming staying at the 9th spot) would be 1350+810+50 or 2,210 which emans we overpaid by a potential 2nd round pick. Based upon this 60% valuation, the breakeven point would need to be if we picked 26th in the 1st round which means we made the playoffs with an exceptional record. The 26th pick for the first & 4th round would be 700 (1st round)+50(4ht round)=750 x .60 = 450; the difference between the 2014 first round picks trade (1,800-1,350). With this all stated, the draft is not an exact science. If Watkins turns out as most believe he will and we are able to retain him when his 1st contract expires, what we gave up for him will be meaningless. Remember, what have we drafted in past years that were busts. We drafted Aaron Maybin at #11 in 2009; J.P. Losman at #22 in 2004; Mike Williams at #4 in 2002; Eric Flowers at #26 in 2000; Tony Hunter at #12 (ahead of Jim Kelly who was picked at #14) in 1983; Perry Tuttle at #19 in 1982; Booker Moore at #28 in 1981 and, finally, Phil Dokes at #12 in 1977. Thus, first round picks are not always sure things. Only time will tell. But, I am excited that we decided to be bold and not just settle for the status quo since we have not been to the playoffs in 14 years. Go Sammy & Go Bills!!
Awwufelloff Posted May 21, 2014 Posted May 21, 2014 Also consider that the Bills had Sammy as #1 on there board, and considered going to #1 to get him. For argument purposes you could say the bills valued him at 3,000 points. Looks like that would make it worth it to them if the pick 7th or later next year. Again, just throwing that out there, not really taking a side on this one until I see some action! My 3 Clemson Alum Co-Workers seem to think it's worth it ha! Pretty much how I see it. I would of taken Watkins over anyone else in this draft.
Dibs Posted May 21, 2014 Posted May 21, 2014 Though it appears clear that the trade was pretty much by the numbers(of the chart.....yes, next years picks are traditionally counted one round lower), the chart tends to get thrown away when dealing with extraordinary talent.....the Skins' RG3 deal for example. If Watkins is assumed to be of #1 overall talent level then he would likely be worthy of more than the chart suggests(which didn't happen, but the Bills were likely willing to do so to trade to the #1 spot). Of course this is all in order to try and figure if the GM overpaid.....which is sort of irrelevant. He possibly could have paid less.....and certainly could have paid more. In the end, it will be judged on how successful Watkins becomes as a pro. Legit #1 WR(or better) will mean the trade will be looked back on as a good one......anything lesser would mean a bad trade.
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