How Basic Economics Can Save our Kansas City Chiefs
At the time of this posting my favorite football team has a record of 3 wins and 11 losses following last year's dismal season which was an all time low. By contrast the New England Patriots, who are led by a Master’s level Economist named Bill Belichek, has his team poised for their 7th playoff appearance after 3 World Championships and 4 Super bowl appearances in the last 9 years.
It is my contention that two fundamental rules of micro-economics are ignored by the Chiefs and employed by the Patriots. The irony for us die hard Chiefs fans is that our current General Manager was supposedly schooled by the New England organization. It is ashamed he hasn't been schooled in micro-economics, because if he was, he would know the following two rules.
1. Marginal Product Rule. A firm should use more of a factor as long as the marginal product per dollar spent on it exceeds the marginal product per dollar spent on other factor(s). This equation states that
MPK/PK = MPL/PL
and
MPK/MPL = PK/PL
And
2. Profit Maximization Planning Rule. This rule (which is a logical conclusion of the first rule) states that the last dollar spent on capital brings the same increase in the output as the last dollar spent on labor.
Organizing a team of players is similar (in economic terms) to assembling a production line in manufacturing. In manufacturing, a business manager must employ different machines that contribute different levels of productivity as well as different types of laborers that contribute different levels of productivity. This is a tall order because the mix of inputs determines how much production comes out. That's what separates the good managers from the bad ones.
To be successful in a manufacturing process, at the end of the day, the extra production per dollar for each machine must equal the extra production per dollar for each of the other machines. Similarly, the extra production per laborer per dollar must equal the extra production per dollar for every other laborer. Finally the extra production per machine must equal the extra production per dollar per laborer.
When looking at how substitutable labor and machinery are the concept of input substitutability is used. The basic equations are as follows:
For Perfect substitutes: Q = a L + b K
For Imperfect substitutes: Q = La Kb
And for Perfect complements: Q = min [a L, b K]
How does this relate to football?
Simple. Each player should not be looked at as a component, nor should each player be viewed according to how they play their position. Rather each player should be evaluated on how much productivity they bring for the price they are being paid. During the regular season in the NFL, each team names its 45-man active roster. Thus, each team has 45 players it needs to rate productivity for.
In order to utilize these economic rules, each player needs to be mathematically graded based on their productivity. From that we can generate an equation and using simple calculus we can take the derivative to acquire a rate of change; this measures their marginal productivity. Another way of intuitively doing this is to rate each player’s marginal productivity on an independent scale.
But alas, the guy playing the offensive line has a different role from the guy who holds the ball for the place-kicker. Very true, but different machines have different roles in the manufacturing process also. In short, we find a common measurement that can be used to compare production. Assume for the sake of argument that this can be done by constructing the artificial units called, “Timbo’s” aptly named for myself naturally. Hey, we have to start somewhere!
Each player needs to receive a Timbo number that tells us what their productivity is. So that we don't lose the concepts in the math, let's back up and use some simple averages to illustrate what's going on. Because each play is different from the previous play and because each player has a unique task , I propose we look at productivity on a per game average basis.
Let's Build a Formula.
We need to access the qualities that go into a productive football player. From my very limited experience as a player (in high school and prior) and as a fan that never misses a Chiefs game (much to my wife's chagrin), I have set up five universal qualities: effort, strength, speed, endurance and intelligence (i.e. game smarts). We want something easy to understand, so let's set a per game maximum of 100 per game. In other words, if a player plays a perfect game, they would score 100 Timbos. For each of our five components, let's set those at 20 each. Okay, we have our simple formula set.
(effort) + (strength) + (speed) + (endurance) + (intelligence) = Timbo Total.
A perfect score would be:
20 + 20 + 20 + 20 + 20 = 100
Here is where the subjective part of it comes into play. The first component in our formula is the level of effort. A player’s productivity changes throughout a game depending on their mood, motivation, score, diet and physical abilities. The easiest way to devise such a rating is to simply rate their performance by quarter. In order to rate these effectively, of course, we have to review each game numerous times and draw focus to the particular player we are rating. This is where the subjective factors come in. Hopefully, we can remain unbiased when we make this evaluation. When we are done, each player would get a number of Timbo's per game for effort.
An Example: An Offensive Lineman for Game Three of the 2008 Season
Because when I played, I was always on the Offensive line, lets pick an Offensive Lineman for an example. (Hey, I was a Fattie, where do you think they'd put me). Let's select a player from last year's team, Damion McIntosh. Let's put ourselves in the position of being in front of the TV for the third game of the season. Our job is going to be to come up with a Timbo rating for this player for game three.
Our first component is effort. So let's assume we watched Mr. McIntosh for effort and rated him 5 Timbos for the first quarter, 3 for the second quarter, 4 for the third quarter and 5 for the fourth quarter. So for that game, he would get 17 out of 20 Timbos.
The second component in our formula is strength. Once again we will observe one player at a time for the whole game. We might have to focus on whether they held their ground on a downfield block or whether they were able to wrestle a ball carrier to the ground. The scenarios are endless, fortunately the math is not. When we are done, each player would get a number of Timbo's per game for strength. In our McIntosh example, let's suppose he earned a rating of 15 out of 20.
The third component in our formula is speed & quickness. We again observe each player and grade them on their speed at their particular position. When done, each player would get a number of Timbo's per game for speed. In our McIntosh example, let's suppose he earned 11 out of 20 for this component.
The fourth component in our formula is endurance. We again observe each player and grade them on their ability to play their particular position under duress. For this component we would weigh the Timbo's higher in the fourth quarter. After all, that is when most players would experience fatigue. When done, each player would get a number of Timbo's per game for endurance. In our McIntosh example, let's suppose he earned a rating of 12 out of 20 for endurance.
The fifth and final component is intelligence, also known as game smarts. This one simply rates whether the player does something smart or dumb. If a player jumps off sides or is out of position or doesn't catch a pass that hits him in the hands, that is a lack of mental ability and would result in a low Timbo score for this category. Although dumb plays are much more obvious that smart ones and this category is extremely subjective, we need to do it anyway. When done, each player would get a number of Timbo's per game for game smarts. In our McIntosh example, let's give him a score of 15 out of 20.
Let's Put it Together into a Table
A perfect game would result in a score of 100. In our example, our Offensive lineman scored a 70.
Who's the Most Important Guy on the Field? Position Value Factor Concept
The next element of our analysis is going to be what I will term as the "position value factor" (PVF). In other words, assessing how valuable that particular position is to the team. In reality this would be a coefficient adn we would determine through regression analysis what that coefficient should be, but let's assume we can rely on our intuitive knowledge of football to come up with these approximations.
Obviously the quarterback is the most valuable position and a member of specials teams is probably the least valuable. How do we put a numeric value on each position? Easy, we simply ask, "On a scale of 1 to 10, how important is that position?" This is where coaches will put different values on different position based on their philosophy. For my simple mind, I'll set the quarterback at a PVF of 10 and the special team player at a PVF of 1. I would give each Offensive Lineman a position value of 5 (although you might argue the Left Tackle should get a 6).
The sophisticated economics student will probably surmise that each position should have a seperate unique position value factor weighted for each component rather than the sum applied to the final value. This is because for some positions, strength is more important and for some positions speed is more important. If I were running the statistical scouting department of an NFL team, that is what I'd do, but here I'm trying to keep it simple.
We next need to multiply this position value factor (PVF) by the player's Timbo score. So our Quarterback played a perfect game (thus scoring 100 Timbos out of 100), we would multiply this times the PVF (which I have arbitrarily rated at 10). So a perfect QB would get 100 X 10 = 1,000 total.
Back to Our Example
Our example, Damian McIntosh scored a 70 Timbos. Since I put a 5 on Offensive lineman, that calls for a PVF = 5. So we multiply 70 by 5 to yield 350 Timbos. So we have a rating for this players productivity for one game. In Microeconomics this is the concept we call Average Productivity.
Next we need to divide that player’s wage by the Timbo number to calculate a Timbo per dollar rating.
Last year, the Chiefs had a payroll of $ 83, 623,776 which was the lowest in the league.
The USA Today has this in a chart at http://content.usatoday.com/sports/football/nfl/salaries/playersbyposition.aspx?pos=135
Our example, Damion McIntosh made $ 2,300,000 in 2008. In a 16 game season that breaks down to $143,750 per game. Let’s round that down to $140,000 per game to keep the numbers manageable. (Yes, a players work also includes practices and preseason, but we are calculating productivity on a per regular season game basis, so bear with me.) Thus, that lineman received $140,000 for his work in the third game (yes a mere pittance by today’s standards). So on a per dollar basis, this would mean
$140,000 / 350 Timbos = $400 per Timbo
Obviously, the salary is the same for each game, so the dollar per Timbo rating will change depending on that player's productivity. Of course, eventually we would need to do this for every game to construct a rating for the season. Yikes that would mean a lot of game film watching! Hey that's why those folks in player personnel get paid the big bucks.
The Moral of the Story.
We now return to the profit maximization rule which states that the last dollar spent on capital should brings about the same increase in output as the last dollar spent on labor. However we have to modify this rule a bit so that it fits football. I recommend we call this the this the FOOTBALL PLAYER MAXIMIZATION RULE. Here's what it says.
The last dollar spent on each Offensive Lineman must bring about the same increase in output as the last dollar spent on the Quarterback which also must bring about the same increase in output as the last dollar spent on each Defensive Lineman which must bring about the same increase in output as the last dollar spent on each special teams player and so on for each position on the entire 45-man roster.
Now we have a rule that can apply Microeconomics to our football personnel decisions.
Returning to our example of earlier, we gave one the Offensive Lineman, Damion Mcintosh a rating of $400 per Timbo for game #3. Let's assume that after a complete 16 game season, Mr. McIntosh's rating was identical for each game. In order to apply our Football Player Maximization Rule, every player on the team should rate at $400 per Timbo.
Those players that rate a higher number are producing too little for the money and need to get the boot and be replaced by players that score a lower number (that is, either cost less or produce more).
Now we have a rule that can apply Microeconomics to our football personnel decisions. Where does that leave us as football fans? First, don't yell and cuss so loudly at the low cost players because on a per game dollar basis, they may not be doing so bad. Secondly, if you want to win, you have to find those players (or coach up those players) that will give you more game bang for the game buck. You knew that anyway, right?
Third, the math geeks in the front office of a football operation make or break the team. After all, they decide who the 45 guys are going to be and how much they are going to be paid.
Maybe this approach is mathematically heavy and maybe it demeans the role of players. However, I don’t think my fellow economist Belichick thinks it's demeaning when he hoists a Super Bowl trophy above his head. On the other hand, you can just make decisions based on good old fashioned intuition. Many teams (like the Detroit Lions and St. Louis Rams do this). Unfortunately, that is what my team does also.
In the meantime, I am off to the local shopping mall to buy a new Kansas City Chiefs Sweatshirt. Since the team is now a perennial loser, the demand for Chiefs items has dropped and that means low prices for us die hard fans. The application of Microeconomics never ends.
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