How can the Bears draft for the best value?
How did the Chicago Bears do in the 2015 NFL Draft? After the Bulls and Blackhawks playoff performances, it is the topic that is on top of Chicago sports fans’ minds. Many analysts have concluded that the Bears had a solid, if not very good, draft. However, many people are solely focused how these players can help a team. Is picking players based solely on their on-field contributions the right question to ask?
NFL teams are businesses that rely primarily on ticket, media rights, merchandise, and sponsorship revenues to make money. While winning does help expand these revenue streams, it is not the only factor that makes each team successful from a business perspective.
Rather than relying solely on winning to characterize value, I created a new metric that incorporates the ways that sports organizations earn money into valuing a player’s worth called Revenue Above Replacement (RAR). RAR examines a player’s economic contributions to his or her franchise as compared to the minimum performing player that could play the same position. I found that winning does have a significant positive correlation for each of these revenue streams. However, winning was not the only factor that increased revenue. For example, an NFL team could still expect 88% of its seating capacity to be filled and a 17.5 local television rating even if the team performed at the minimum level.
Last fall, I used RAR to evaluate the performance of NFL quarterbacks during the 2013 season to see which quarterbacks had added the most value to their teams. After the 2014 season, I expanded the analysis to include more revenue streams and more NFL players. I now examine how individual players help generate revenue in four revenue streams – ticket sales, television ratings, jersey sales, and sponsorship/other revenue. RAR also addresses how an athlete’s ability to help a team win impacts the organization’s revenue. In addition, RAR calculations were done for non-quarterbacks who have a similar degree of on and off-field impact as quarterbacks.
Why is a RAR analysis so important for the draft? Because winning is not everything or the only thing when it comes to evaluating a player’s economic value. In fact, a quarterback’s ability to help his team win only contributed an average of 31% of his overall value. For non-quarterbacks, this was only 25%. That means a majority of a player’s economic value comes from how he can help sell tickets, generate television ratings, sell jerseys and attract sponsors.
The Bears are in a unique position when it comes to RAR. The Bears had two players on their 2014 roster that generated significant negative values for their teams – Jay Cutler and Brandon Marshall. Both Cutler and Marshall received over $15 million in cash payments from the Bears but neither generated more than $8.5 million in value for the team. In fact, Cutler cost the team $9.0 million in value while Marshall cost the team $6.5 million team in value last season.
Cutler and Marshall both have been valuable performers in the past but it is hard for them to maintain their values in the future given their large contracts. Marshall is a great example. His $8.5 million in value added during the 2014 season solely comes from his off-field contributions. In fact, his on-field performance in 2014 was not that much different from the fifth-round pick the Bears received from the Jets for Marshall back in March. However, a fifth round pick would make less than $636,000 in cash payouts per year. In 2013, however, Marshall was one of the best wide receivers in the NFL, made similar off-field contributions while receiving $9.3 million in cash payouts. Therefore, Marshall added close to $16 million value for the Bears in 2013. Keeping Marshall for the 2014 season (and trading him prior to the 2015 season) makes sense from the Bears perspective given this type of analysis.
Where the Bears have found valuable players is in the draft. In fact, the Bears have done a good job in identifying valuable RAR players in the past three drafts. For example, Kyle Long and Alshon Jeffrey both received under $1 million in cash payments but were some of the highest performers at their position. In addition, Kyle Fuller was rated as the third best cornerback in the NFL last year. While his cash payout was $5.9 million in 2014 (he received much of his total bonus payment in the first year of his contract), Fuller will receive an estimated $860,000 this season. Each of these players should deliver a minimum of $7.1 million in value to the Bears in the 2015 season while none will make over $1.3 million dollars. With these three picks alone, the Bears have added substantial value to their team through the draft.
This is also why Bears appeared to have had successful draft this year. For example, first round pick wide receiver Kevin White plays a non-quarterback position that tends to attract of fan, media, and sponsor engagement. In fact, seven of the top-12 players that do not play quarterback with the highest RAR are wide receivers or tight ends known for their pass catching abilities. Both Marshall and Jeffrey show that Bears have the ability to produce valuable WRs that can play with Cutler while adding value to the team. The selection of Jeremy Langford in the fourth round and Adrian Amos in the fifth round are other good examples of why the team had a successful draft. The Bears picked players who can help the team on the field at positions where the organization has successfully developed players off the field in the past.
Clearly, not every pick for the Bears has been or is going to be successful from a RAR perspective. In addition, there is no question that the Bears should be looking at a player’s ability to help the team win games. However, this should be part of a larger question about how to have a successful draft (or a draft where the players add overall positive value to the team). The Bears have likely found at least one or two players per who can generate significant value for the team in the short and long-term by asking the right questions about the players’ future performances.