Note from the editor: This is a guest post from the great EricT (@BSH_EricT), from Broad Street Hockey.
Dating back to Jimmy Johnson’s original draft pick value chart, a lot of people have looked at the performance of players selected to try to estimate the true value of any given pick. Today at broadstreethockey.com, I took a different angle: instead, I looked at what trades had been made to try to estimate the market value of each pick.
This approach won’t tell us whether teams consistently undervalue or overvalue high draft picks, but it gives a sense of what teams will actually have to pay if they want to move up in the draft.
I had a worry about the NFL data that I didn’t have for the NHL. The recent change in rookie compensation could result in a change in how draft picks are valued, which could mean that collecting several years of data gives us the wrong answer. So to see if things changed, I started off by building a model using the trades made from 2008-2011 and checked to see if it matched the 2012 results.
I wasn’t surprised to see it was a little bit off, but I was surprised by the direction. If we build a model looking at the trades made from 2008-2011, we come to the conclusion that in 2012, 20 of the 22 teams that traded up underpaid.
The common assumption is that the limitations on rookie salaries should increase the value of the top picks, but we actually saw teams paying less to move up than they did in past years. In one particularly clear example, in 2011 Kansas City got picks #27 and #70 in return for pick #21, but in 2012 New England trading away pick #21 was only able to get picks #27 and #93.
Of course, not all drafts are the same. It seems hard to believe that restricting the pay for top draft picks made them less valuable, so the most likely explanation is that scouts were telling their GMs that the drop-off in talent was not particularly steep last year, making trading down more attractive.
Either way, while a systematic skew is a bit of a concern, the differences weren’t very big at all. The model gave nearly identical answers regardless of which years I used, so I went with the full five years of data.
The result does quite well overall. 75 out of 98 trades in the last five years come within 10% of our market estimation, and 94 out of 98 come within 20%. Given the differences between draft classes and individual team needs, this seems very reasonable. So I am content to use the five-year data for now and expect minor revisions as we get more information about how teams value picks under the new CBA.
Without further ado, here is the table estimating market value for draft picks based on 2008-2012 trades.
Some final notes on the data:
I’ve used the 98 trades over this time period which met two criteria: a) the trade involved only draft picks, and b) all of the draft picks were in the current draft. Excluding trades which involve players is necessary because including them would require having a good estimate of the players’ value in comparison to the draft picks. Excluding trades which involve future years’ picks allows us to escape the question of how likely a team’s second round pick is to be #33 or #64.
Those 98 trades don’t include very many trades of the top 5 picks, so the sharp increase at the top of the draft is an extrapolation that probably isn’t very trustworthy — and even if it were, the value of picks that high is probably quite dependent on which specific players available in a given draft. Still, the chart seems to be a reasonable model overall and with the possible exception of the very highest picks, is probably a pretty decent indication of what teams will have to pay to move up.