How do you blow a No. 2 draft pick?
For the New York Giants, it was a combination of bad math and overconfidence. But at least Big Blue can take comfort in having plenty of company: investors, particularly high-yield bond investors, are prone to similar mistakes.
On April 26, the Giants drafted Saquon Barkley, a star running back who everyone seems to agree is the kind of phenom any team might covet. So far, so good, right? Not exactly.
Betting Big Against the Odds
With some clever number crunching, ESPN figured out that the Giants had much better odds of getting the highest possible value for their money by drafting a quarterback.
Why? Because Barkley will cost the Giants as much as $45 million over the life of his five-year contract, which is not a bargain considering how NFL teams value top-flight running backs. The top players command about $7.5 million as free agents, meaning that Barkley will start out as one of the top-earning RBs in the league. Assuming the value of a great running back rises $500,000 in 2019 and $1 million a year for the next four years, Barkley’s value to the Giants over his contract is $45.5 million—if he performs at an extremely high level and doesn’t get hurt.
Put another way, the Giants would have to be 99% sure that Barkley is going to be a best-in-league running back for the next half-decade to justify his contract. Doing the same math—we’ll spare you the details—the team would only have to be 40% sure that a rookie quarterback would enjoy the same performance to come out ahead economically. That’s because the market holds top quarterbacks a lot more dear than top running backs.
Did we mention that running backs are far more likely to get injured than quarterbacks, making those 99% odds even longer? Or that Giants QB Eli Manning is 37? How about that the Giants had a shot at a few elite quarterbacks with their pick?
The longer you look, the more apparent it is that the New York team had a shaky grasp of both probability and expected value. Placing all hopes on any one pick wasn’t the best move for the Giants. Football is a rough game in which any prospective star can flame out, get injured or have off-field troubles.
If the Giants decided that none of the QBs in the draft were worth the No. 2 pick, they should have traded that pick to a team willing to pay a very high price for it—likely numerous first- and second-round picks. This would have diversified their draft investments, and increased the odds of picking an undervalued player, thus boosting the expected value of their draft.