Murray State University

Economics of the NFL Draft

Presenter Information

Adam David, Murray State University

Institution

Murray State University

Abstract

The National Football League is a booming business that generates over one billion dollars in revenue every year. It’s no secret that the teams featured in the NFL are very competitive on the field, but few people realize how competitive they are off the field as well. Although the NFL season only runs from September to January, the teams have a full time staff that is working year around trying to improve the team’s players and personnel. The most important three days for any NFL team during the offseason is the annual draft that takes place in April. At the NFL draft teams will take turns selecting the world’s best nonprofessional players in an effort to improve their roster. The draft order is simple, the worst team from the previous year gets the first pick and the best team from the previous year gets the last pick. The tricky question is, what should the worst team do with the number one overall pick? They have the option of selecting potentially the best new professional player, but history has taught us that many times players will be over rated coming out of college and be labeled a “bust”. The number one overall pick in the NFL draft is a very valuable but very risky asset. In this paper I am going to use a production function to decide statistically which decision is better for a team in the long run, use the first pick, or trade it?.

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Economics of the NFL Draft

The National Football League is a booming business that generates over one billion dollars in revenue every year. It’s no secret that the teams featured in the NFL are very competitive on the field, but few people realize how competitive they are off the field as well. Although the NFL season only runs from September to January, the teams have a full time staff that is working year around trying to improve the team’s players and personnel. The most important three days for any NFL team during the offseason is the annual draft that takes place in April. At the NFL draft teams will take turns selecting the world’s best nonprofessional players in an effort to improve their roster. The draft order is simple, the worst team from the previous year gets the first pick and the best team from the previous year gets the last pick. The tricky question is, what should the worst team do with the number one overall pick? They have the option of selecting potentially the best new professional player, but history has taught us that many times players will be over rated coming out of college and be labeled a “bust”. The number one overall pick in the NFL draft is a very valuable but very risky asset. In this paper I am going to use a production function to decide statistically which decision is better for a team in the long run, use the first pick, or trade it?.