Finding Value in NFL Draft Picks

Abstract

This paper analyzes the salaries and performance of the 636 NFL draft picks in the first two round from 2006-2015 during their rookie contracts. We employ a simple metric, average cost per AV, which calculates a player’s salary divided their performance, Approximate Value (AV). Here, we find that 2nd round draft picks are a significantly better value than 1st round picks over the sample period and the cost per AV decreases by approximately $8,000 with each increasing pick. Additionally, we find that the five teams choosing the best value draft picks post a significantly larger winning percentage over the sample period than the five teams with the worst valued draft picks. Finally, we compare the differences of the NFL’s 2001 Collective Bargaining Agreement (CBA) and find that the CBA successfully reduced the cost of AV, but not statistically significantly so.

Keywords: Market Efficiency, NFL Draft, Labor Economics, Sports Economics

JEL Classification: G11; G02; G14