FanPost

Wat’s in a Watson: An Economic Analysis

Proposed trade packages for Deshaun Watson currently range from the tough-to-swallow to buffoonery to highway robbery to the downright irrational (I guess, by this logic, the Jet could trade the whole team?). What is Deshaun Watson really worth? It’s all in the numbers. (Spoiler alert: The Jets shouldn’t trade the whole team.)

Let’s start with some basic accounting. In this trade, the Jets would get not only the asset of five years of Deshaun Watson, but also the financial liability of Deshaun Watson’s contract:

Assets

Liabilities

Deshaun Watson, 2021-2025

$129,540,000 (Sportrac)

And the Texans would get:

Assets

Liabilities

Draft pick A, B, C, etc.

Player X, Y, Z

Draft pick A, B, and C’s rookie contracts (Sportrac)

Player X, Y, and Z’s contract

Watson’s value is his production for the next five years minus his contract liability. If Watson outperforms his contract, the Jets must compensate the Texans. If he is overpaid, the Texans should compensate the Jets just to get his contract off their books. If he is appropriately priced, the Jets should acquire him for a cup of coffee and a pork roll-egg-and-cheese.

The tough part is, how do you quantify "value" in the NFL? Fortunately, the football gods (nerds) at Pro Football Reference have given us Career Approximate Value (CAV). Similar to Wins Above Replacement (WAR) in baseball, it measures a player’s production contributions across all positions. Unsurprisingly, Watson’s CAV is high: 55.0 in 54 games, or 16.3 per game. For perspective, Tom Brady’s is 15.7 per game. There is no doubt Watson is good.

To evaluate Watson’s contract, we must ask: How much CAV will $129 million buy in 2021-2025? Not too hard to figure out with a little math. We can estimate the 2021-2025 salary caps by starting with the NFL’s 2021 floor of $175 million and assuming the cap’s 2015-2020 growth rate of 6.71%. We average the caps, divide by 55 players per team to get average salary, multiply by average career length (3.3 years) to get average player contract size, and divide by average player CAV (6.4) to get a dollar-per-CAV figure. It turns out, NFL teams pay $1.88 million for every point of CAV production. Math below:

2021

2022

2023

2024

2025

Average, 2021-2025

Salary cap

$175.0m

$186.7m

$199.3m

$212.6m

$226.9m

$200.1m

YoY cap incr.

6.71%

6.71%

6.71%

6.71%

6.71%

6.71%

Roster size

55

55

55

55

55

55

Avg. yrly sal.

$3.18m

$3.40m

$3.62m

$3.87m

$4.13m

$3.64m

Avg. career

3.3 yrs

Avg. contract

$12.01m

Avg. CAV

6.4

Avg. $/CAV

$1.88m

So how much production does $129m buy? Dividing by our $1.88m gives us 69.0, or the equivalent of 11 players. That’s a lot of dough, and that’s a lot of players. The crazy part? Watson still outperforms his contract. Watson’s CAV extrapolated over five years is 81.5, or the equivalent of having almost 13 additional players on the roster. In a trade, the Jets would therefore get 81.5 CAV in production while losing the opportunity to buy 69.0 CAV. That difference of 12.5 CAV is what the Jets owe the Texans in players and/or picks.

So what are picks worth? Luckily, Chase Stuart has done ample work on computing CAVs for draft picks in a (quite successful) bid to replace the (completely-pulled-out-of-his-ass) Jimmy Johnson draft chart (see here). This draft chart lists rookie CAVs by draft slot without accounting for rookie contract size. As with Watson above, when you sign a rookie, you lose the opportunity to buy CAV on the free agent market, so we must subtract out that CAV opportunity cost. I divided rookie wage scale contracts (Sportrac) – prorated over five years to sync with Stuart’s timeline and Watson’s contract – by $1.88m/CAV, then subtracted that value from the draft chart values to compute "marginal CAV" for each draft pick. This marginal value is the wonderful free lunch teams get from the draft – it is additional CAV they don’t have to pay for. The marginal values for the Jets’ draft picks are given below:

Jets' picks

Chase Stuart draft value (CAV)

5-yr contract value

Marginal value (CAV)

#2

30.2

$43.2m

7.2

#23

14.6

$16.2m

6.0

#34

12.1

$10.8m

6.4

#66

7.9

$6.2m

4.6

#87

6.2

$5.8m

3.1

#98

5.4

$5.6m

2.4

#130

3.6

$5.0m

0.9

#138

3.2

$4.9m

0.6

#162

2.2

$4.5m

-0.2

Total

85.4

$102.1m

31.0


You’ll notice a couple things about this chart. First, it turns out that the #34 pick is more valuable than the #23 pick – that’s correct. The #23 contract is over 50% larger than the #34 pick, more than eating up the better production of the #23 pick. Take a look at the #162 pick: It has negative marginal value. That’s also not a mistake. By the sixth round, you are better off using that salary to buy an average player on the free agent market (except if it’s Quincy Wilson).

So the Jets have to give the Texans 12.5 CAV in draft picks. From the chart above, that means Watson, with his contract in tow, is exactly worth the first-round pick from the Seahawks (#23) plus the Jets’ second-round pick (#34). That’s it.

At the same time, we all know #23 and #34 alone won’t do it. Accounting for those intangible factors (getting all Watson’s production in one player, free agent attractiveness, etc.), I think three firsts is appropriate. As much as possible, I’d like to keep that #2 pick to trade back and replenish the draft coffers. Offering #23 this year, Seattle’s first next year, and the Jets’ 2023 first (when hopefully we are successful enough to pick in the mid-20s) gives the Texans a respectable haul while not bankrupting us. That also might not do it, but that’s my offer. What’s yours?

Epilogue:

This model isn’t the end-all-be-all. In fact, models never are. Often people model something to get precise results, and this is the exact opposite of how they should be used. There are simply too many assumptions baked in (a few of those below). For instance, if the model says Watson is only worth #23 and #34, and the Texans want #23, #34, and #162, do you refuse that offer? No way in hell. For those marginal decisions, a model is no substitute for common sense, instinct, and experience. But models are very useful for getting things directionally correct – getting in the right ballpark. For instance, if the model says Watson is only worth #23 and #34, and the Texans ask for those 2 firsts, 2 seconds, and 2 starters, you know that would be a massive overpay.

I’d be remiss if I didn’t convey some of the assumptions and limitations to this model, so here goes:

- CAV: Foremost, I assume CAV is a perfect measure of player production. It isn’t; that’s why it’s called approximate value. That being said, it’s a better metric than any other we have to evaluate player production.

- Liquidity: Just because you save $129m by not trading for Watson doesn’t mean you can sign those 11 equivalent players. The NFL isn’t Walmart – you can’t buy players off the shelf. And more often than not, you get another team’s trash instead of their treasure (a.k.a. the Mike Maccagnan specialty).

- Roster space: Just because you can buy those 11 players doesn’t mean you can fit them all on the roster. And you certainly can’t fit them all on the field. So think about that: Watson’s production is almost like cramming 13 average Joes into one body on that field.

- Whole vs. Sum of the Parts: Football isn’t additive. A 20.0 CAV/game QB plus a 10.0 CAV/game WR does not 30.0 CAV/game of production make. If the QB-WR combo suck together, you get a helluva lot less than that. And if they are Brady and Moss, you get a helluva more.

- The future: This analysis only looks at a five-year period. Sign Watson to another five-year contract, and that’s another ~12.5 CAV you can afford to send the Texans’ way.

- Off-field production: Sign a player like Watson, and the Jets no longer have to pay their laughingstock premium to lure in free agents. That has financial – and thus, production – value.

That’s my analysis. Any comments on the model, methodology, or assumptions – or just your thoughts on Watson in general – are greatly appreciated.

This is a FanPost written by a registered member of this site. The views expressed here are those of the author alone and not those of anybody affiliated with Gang Green Nation or SB Nation.