Does Draft Currency Promote Competitive Balance? An Empirical Investigation of the National Football League 2002

Does Draft Currency Promote Competitive Balance? An Empirical Investigation of the National Football League 2002–2021

Published:2024-08-01 Issue:7 Volume:25 Page:779-801
ISSN:1527-0025
Container-title:Journal of Sports Economics
language:en
Short-container-title:Journal of Sports Economics

Author:

Lapré Michael A.¹^ORCID,Palazzolo Elizabeth M.²

Affiliation:

1. Owen Graduate School of Management, Vanderbilt University, Nashville, TN, USA

2. Lazard, New York, NY, USA

Abstract

In the National Football League (NFL) annual draft, teams take turns selecting entering players. The draft is a market mechanism designed to promote competitive balance as the NFL assigns draft positions to teams in reverse order relative to last season's performance. Teams frequently trade draft picks for other picks and/or players. We use several market valuations of draft picks to define original draft currency as the total value of draft picks available before any trades and final draft currency as the total value of picks used after all trades. For the 2002–2021 period, we find that original draft currency does not affect the probability of reaching the playoffs, but final draft currency does. Usage of outdated market valuations of draft picks by most teams can help explain how the best team has used draft-pick trades to remain among the strongest teams over two decades thereby perpetuating competitive imbalance.

Publisher

SAGE Publications

Link

https://journals.sagepub.com/doi/pdf/10.1177/15270025241264238

Reference27 articles.

1. Handbook of Statistical Methods and Analyses in Sports

2. Are We Getting Better or Are They Getting Worse? Draft Position, Strength of Schedule, and Competitive Balance in the National Football League

3. Corry J. (2019, April 24). Agent’s take: Fixing the rookie wage scale, plus a look at its history and how it works. Retrieved from https://www.cbssports.com/nfl/news/agents-take-fixing-the-rookie-wage-scale-plus-a-look-at-its-history-and-how-it-works/ (accessed February 1, 2024).

4. The Effects of Managerial Turnover

5. ESPN Insider. (2004, March 1). NFL draft-pick value chart. Retrieved from https://www.espn.com/nfl/draft06/news/story?id=2410670 (accessed June 15, 2022).