A question about draft picks

[dudacek]

It seems to be commonly accepted in the football world that a draft pick this year is significantly more valuable than a draft pick next year.

 

It’s not talked about nearly as much in hockey, but I have seen it referenced a few times.

 

Can someone explain why?

[Robviously]

One can help you sooner than the other.  And if you're the GM making those decisions, the clock is always ticking.  You have a finite amount of time to get your team winning.

[dudacek]

One can help you sooner than the other. And if you're the GM making those decisions, the clock is always ticking. You have a finite amount of time to get your team winning.

So it’s only more valuable in a selfish “save my job” sense, not a value-to-my-team sense?

Edited January 13, 2018 by Mick O’Manly

[Robviously]

So it’s only more valuable in a selfish “save my job” sense, not a value-to-my-team sense?

Pretty much.  I mean, fans are impatient too but we aren't really going anywhere.  You could try to stockpile picks for a draft the next year out if you think it's going to be significantly stronger than the upcoming one, but I don't think teams really do that.  (I *thought* the Sabres were doing that for 2015 somewhat but then they moved most of the picks they'd stockpiled by draft day -- and for basically the same selfish reason the GM wants fast results.)

[dudacek]

One can help you sooner than the other.

And in the world of 18-year-old picks, this isn’t true. Scouts always talk about projecting players five years down the road.

Joel Armia and Nik Ehlers were both selected in the mid-first. Ehlers arrived two years before Armia despite being taken two years later.

And that’s not unusual.

[inkman]

It seems to be commonly accepted in the football world that a draft pick this year is significantly more valuable than a draft pick next year.

 

It’s not talked about nearly as much in hockey, but I have seen it referenced a few times.

 

Can someone explain why?

Great question. I think it's mostly hogwash and just statistician mumbo jumbo. The only difference in draft year is the quality of players selected. Even that is difficult to gage until years after the draft. Hogwash I tell ya.

[Weave]

It seems to be commonly accepted in the football world that a draft pick this year is significantly more valuable than a draft pick next year.

 

It’s not talked about nearly as much in hockey, but I have seen it referenced a few times.

 

Can someone explain why?

 

A couple of reasons of the top of my head...

 

One is the expected timetable for the pick to be helpful

 

Another is the uncertainty that occurs due to time, ie. a bad team now might turn around before the season of the draft in question.

 

And I'm sure each age class is constantly being evaluated and as time to draft increases, uncertainty regarding the evaluation increases.

 

It is very much akin to the time value of money.  At its root, every decision is an economic one, and the time value of money is a very basic part of the foundation of economics.

[Radar]

Comparing football drafting the age group college graduates and hockey draft of eighteen and younger is not comparable. Football players are more ready day one.

[Weave]

Comparing football drafting the age group college graduates and hockey draft of eighteen and younger is not comparable. Football players are more ready day one.

 

Noone is comparing the actual drafting though, they are comparing the time value of picks.  The concept is the same regardless of the sport.

[Robviously]

And in the world of 18-year-old picks, this isn’t true. Scouts always talk about projecting players five years down the road.

Joel Armia and Nik Ehlers were both selected in the mid-first. Ehlers arrived two years before Armia despite being taken two years later.

And that’s not unusual.

Well, that's what I was getting at in terms of stronger draft years but, like I said, I don't think teams actually think that way. It also speaks to how random the draft can be and it's probably another reason teams don't try to get picks for specific years since neither guy was taken in a year that was supposed to be special.

[dudacek]

When the mediocre Leafs traded a next-year first for Phil Kessel, it ended up being second overall.

When the mediocre Sharks did ithe same, it ended up being 29th, so there is a crapshoot aspect to the futures part.

 

I’d like a deeper explanation of how the economics angle applies to draft picks; I see why a particular physical asset depreciates over time, and I understand the concept of opportunity cost, but I’m not sure how it applies in this instance.

 

Noone is comparing the actual drafting though, they are comparing the time value of picks. The concept is the same regardless of the sport.

It’s not though, because NFL picks either make the team the next season or they get cut.

NHL picks are with you for a minimum of two years and more typically five, whether they play for you or not.

 

And how quickly they play for you does not necessarily correlate with how valuable they will be.

Edited January 13, 2018 by Mick O’Manly

[Weave]

When the mediocre Leafs traded a next-year first for Phil Kessel, it ended up being second overall.

When the mediocre Sharks did ithe same, it ended up being 29th, so there is a crapshoot aspect to the futures part.

 

I’d like a deeper explanation of how the economics angle applies to draft picks; I see why a particular physical asset depreciates over time, and I understand the concept of opportunity cost, but I’m not sure how it applies in this instance.

 

 

It’s not though, because NFL picks either make the team the next season or they get cut.

NHL picks are with you for a minimum of two years and more typically five, whether they play for you or not.

 

And how quickly they play for you does not necessarily correlate with how valuable they will be.

 

The idea of time value of currency is that having the currency now gives you more opportunity for it to project value than if you got it at some future date.  Draft picks are currency.  We hear that said every year. 

[dudacek]

The idea of time value of currency is that having the currency now gives you more opportunity for it to project value than if you got it at some future date.  Draft picks are currency.  We hear that said every year.

 

Can you tell me what that means in NHL terms? Some kind of transaction that illustrates it?

 

If a team is trending down, their future picks should be worth more, shouldn’t they?

I would think it was obvious to anyone in 2013 that our 2015 pick would be more valuable than our 2013 pick.

[Weave]

Can you tell me what that means in NHL terms? Some kind of transaction that illustrates it?

 

If a team is trending down, their future picks should be worth more, shouldn’t they?

I would think it was obvious to anyone in 2013 that our 2015 pick would be more valuable than our 2013 pick.

 

Part of the value is uncertainty.  The further out in time you go, the more uncertainty there is in draft position and draft class strength for starters.  Buffalo's 2015 pick may have been more valuable than their 2013 pick at the 2013 trade deadline, but could you say that with as much certainty at the deadline in 2012?

 

And being Buffalo's pick, would you call that pick value-less or priceless, as Buffalo wasn't trading the pick at any price considered rational.  You have to be in the market to have value.

Edited January 13, 2018 by We've

[Weave]

Lets use a more middle-of-the road example, say Dallas.  At the deadline teams will have a pretty good read on where about Dallas is going to finish this season, so trade partners have an idea of where Dallas' 1st round pick will be.  How about Dallas' 2019 pick?  More uncertainty.  How about there 2020 pick?  OK, same with Philly, or Toronto, or Columbus?

 

2018 value is fairly predictable.  2019, not so much. 

 

And we all know that NHL picks drop in liklihood of becoming impact players quite quickly as draft position progresses.

Edited January 13, 2018 by We've

[Formerly Allan in MD]

Top football picks can help you immediately.  High hockey picks are usually development projects.  One reason is because the former are usually older and more experienced than hockey picks.

[North Buffalo]

Which is probably why JBOT has had sucess developing and likes college players.

[GoPuckYourself]

The NHL Draft in itself is strange, the lottery picks are done behind closed doors (Shady imo), then you have 18 year olds who are most likely not going to be playing for 3-4 years down the road, that being said I'm not sure that holds the same weight as the NFL. The kids coming up in the NFL are young adults (in their 20's), in the NHL it's teenagers who have a ton of growing up to do which should prompt the NHL to draft these kids when they're at least 20 so they can develop properly before being drafted and I'm sure the bust rate wouldn't be as high as it is.

Edited January 14, 2018 by GoPuckYourself

[French Collection]

The other angle from the GM's perspectitive may be to make picks for "his" team, not stockpile picks for his successor.

 

GM's have more job security than coaches, but they have an expiry date as well.

[Thorner]

So it’s only more valuable in a selfish “save my job” sense, not a value-to-my-team sense?

It depends on how much value one puts on winning sooner.

 

Picks don’t always arrive on schedule, but a one year/two year head start can’t hurt.

[MattPie]

I think it's been summed up, but two more examples: if XGMTM had traded the Sabres' 2018 1st for (I don't know, say) Duchene last year what would the reaction be at the time? Probably good; we all thought/hoped they'd be on the playoff bubble this year or better, but from the looks of it, that's going to be no worse than 5th overall. Similar with Edmonton. On the flip side, Toronto's 2017 1st would have had a ton of value in 2016 (the year they tanked), but ends up being around 20th pick because of their great year.

[GASabresIUFAN]

I think of it this way.

 

A draft pick for the upcoming draft (2018) is much more of a certainty then one for a future draft, especially when acquired at the deadline.  At that time playoff positions are pretty clear and therefore the draft slot is relatively clear.  Also the prospect rankings are much closer to being finalized and the quality of the prospect pool is a known. 

 

On the other hand, there is no certainty of results down the line, no certainty as to the rankings of the prospects or the quality of the prospects pool as you move further away.  In addition, a prospect draft in subsequent years is another year or more from making an impact on your NHL roster.

 

Think of this way.  If you were a food broker.  How much would you offer for a farmers near harvest acreage of corn, vs his harvest two years from now.  Today you have a pretty good idea of how many bushels of corn you'll receive because of the known weather conditions during the growing season.  Crop yields for next year or subsequent years are a complete unknown.  Now add in the time value of money and you have a pretty good idea of why future draft picks beyond this coming year are valued less.  To much uncertainty.

 

Understanding draft pick value is why I love the research done by Scott Cullen at TSN and love the chart done by broadstreethockey.

https://www.tsn.ca/statistically-speaking-nhl-draft-pick-value-1.786131

https://www.broadstreethockey.com/2013/4/25/4262594/nhl-draft-pick-value-trading-up

 

This one from NHL numbers is also pretty good

http://nhlnumbers.com/2016/5/1/is-it-worth-it-to-trade-up-in-the-nhl-draft

 

One other note, go back and look at all the draft picks swapped prior to recent drafts.  What percentage where for the upcoming drafts and how many the subsequent drafts.   I looked at last season and the trades involving certain draft picks broke down as follows 2017: 28 picks trades; 2018: 18 picks; 2019: 2 picks.  

Edited January 14, 2018 by Georgia Flakt

[Weave]

If a team is trending down, their future picks should be worth more, shouldn’t they?

 

 

Mick, Not to harp, but i did want to answer this, but I am going to use your own words to provide the answer.  This is from the "Can This Franchise be Saved" thread.  see below.

 

The cap era and parity and loser points allows for some pretty big swings in points without dramatic talent upgrades.

In my view, the difference between an 85-point team and a 95-point team is usually negligible.

 

 

And E5's reply that supports your point.

 

 

Look how fast the Devils rebounded. And teams also nosedive quick too (Ottawa). Toronto jumped up quick. Yes, there are holes on this roster, but since the cap era produces a product where a lot of teams have a hole here and there, I do think the Sabres can rebound a lot quicker then most would expect.

 

 

These support the theory that as you move out in draft years uncertainty increases.  More uncertainty = less value.  This is the primary reason why a pick this year is worth more than the same pick in subsequent years.

[dudacek]

The premium you pay for this year is for certainty.

Make sense. Thanks guys.