The Oakland Raiders received the Best Transaction award by MIT for the Khalil Mack, which was explained by Richard Thaler.
Thaler won the 2017 Nobel Prize for Economics and has consulted with an NFL team about the value of draft choices and how to build a team.
Oakland received two first round picks, a third round pick and a fifth round pick for Mack and a second round pick.
“Here’s the argument,” Thaler said. “The Raiders are down, and they will be getting these [four] picks to help them rebuild their team. I believe the only way to win in football is to have players who play better than their salaries. Let’s stipulate that Mack is getting top-of-market value for his services, so it will be hard for him to play better than his salary. Let’s also stipulate Mack is worth the money. But is Mack worth all that money plus four good draft choices?
“Now Jon Gruden can build through these multiple high picks on rookie contracts instead of just having one great player being paid at a market rate. In fact, if Gruden were talking to me, I’d tell him to trade the number four pick for multiple picks. I’d trade down every year. If I had a pick in the top 10, and I wasn’t drafting a quarterback, I’d want to trade down every year. There is value in multiple high picks versus one pick in the top 10.”
Thaler believes the draft-trade value chart devised by Jimmy Johnson overvalues high picks.
“Teams still use that stupid chart,” he said. “That chart overvalues high picks. It’s a joke. High picks, to me, are over-valued stocks. Smart teams should have a portfolio manager, to basically analyze every draft decision or trade.”
Thaler also believes NFL teams need to expand their analytics departments.
“Football,” Thaler said, “is way behind baseball and basketball. [Houston Rockets GM] Daryl Morey has a staff of I think 15 full-time analytics guys. Why wouldn’t you want to give yourself every edge when you’re building a team?”