Could Bill Belichick's Grasp Of Economics Be The Key To The Patriots' Success?

Authored by Paul Solman via PBS.org,

The summer after the New England Patriots won their first Super Bowl, I visited their training camp for a PBS NewsHour story on their — and the NFL’s — success, from the point of view of economics. (That’s what economics really is, by the way: not a science but a point of view, an angle on how the world works.)

I confess that I went not just as an economics reporter but as a Patriots fan, a status now akin to “Trump supporter” in the eyes of those revolted by both the team and the president (no offense meant to either.) But in the summer of 2002, Spygate, Deflategate, the murders attributed to tight end Aaron Hernandez, and Donald Trump the Pats-Fan President were all to come. There was no Patriots dynasty, no Tom Brady-v.-Time health regimen, and no stigma whatsoever.

When I interviewed Coach Bill Belichick, then beginning only his third year with the Patriots, he gave no inkling of the Lord Voldemort he would become for so many. He was gracious, moderately expansive, and responsive. (He even thanked me at the end of half-an-hour, saying “that was very interesting” with a handshake.)

He: I majored in economics.

Me: So what have you applied from economics, if anything, to your coaching career?

He: Well, not a whole lot.

Me: Anything?

He: I think some of the economic concepts have been helpful in dealing with the salary cap but for the most part, probably one percent.

One percent? This was either disingenuous, or maybe he had just never much thought about it. But in either case, the coach was dead wrong. Because in fact, a substantial part of “Patriot Way” is the practical application of the economic concepts of opportunity cost and, as I learned at this year’s annual economics convention, convex preferences.

 

The relevance of both concepts is a function of the NFL salary cap Belichick underplayed, which, for you non-football fanatics, forces every team to work with the same finite budget, $71 million dollars back in 2002; $167 million this year.

Scott Pioli, the coach’s then-director of player personnel and the coach’s right-hand man in the front office, accorded cap management pride of place in explaining the Patriots’ unimagined 2001 success.

“Our 45th through the 53rd players on our roster were probably better than many of the other teams’ backup players,” Pioli said.

Managing the cap meant not overpaying for “marquee” players in order to afford average ones at positions for which other teams can only pay bottom dollar, and as a result wind up with bottom-tier talent. This is “opportunity cost,” arguably the most important practical idea in economics. The opportunity cost in football? Overpaying a star, and thus losing the opportunity of signing a player for worse money who isn’t that much worse a performer but, due to the mayhem of the game, may well have to play due to injury.

As Pioli put it back then, “We have only a certain amount of dollars to spend, and we have to build a team. And if we overspend in one area, we’re not going to be able to fill in certain other areas where it’s going to affect the team.”

In the 16 years since, the Patriots have become famous for jettisoning stars who, the team feels, command more on the open market than they’re worth. For the NFL buffs reading this, the opportunity cost of Lawyer Milloy, Richard Seymour, Asante Samuel, Logan Mankins, Vince Wilfork — lustrous names in Pats history all — had become too high.

Bill Belichick learned the concept of opportunity cost at Wesleyan, and maybe even earlier at Phillips Academy Andover, the prep school he attended. But what about “convex preferences”?

This idea is based on another deep truth in economics: diminishing returns. We’ve all experienced them. First ice cream cone — great; sixth — nauseating. First $100 million — “I’m rich.” Sixth $100 million — still rich.

Diminishing returns has been documented for almost any human activity (except love and sex, perhaps), and it also holds more broadly in the world around us. As in the pay scale for football players. You’re buying a team with a fixed budget. Are you better off allocating the great bulk of it to “the best” players. Oh, maybe for the quarterback, whose quality determines such a disproportionate share of the team’s success. But after him? The returns on what you spend tend to diminish.

 

So you want a mix: fewer stars; more what you might call “average” players. Which is what the concept of convex preferences connotes: that if you’re buying a basket of goods, you don’t load up on just one thing but a mix. In the ever-edited words of Wikipedia, “convex preferences are an individual’s ordering of various outcomes, typically with regard to the amounts of various goods consumed, with the property that, roughly speaking, ‘averages are better than the extremes.’”

And finally, why are they “convex”? Because economics just loves graphs and if you got as much value-per-dollar for every star as you did for every under-the-radar player, the trade-off would be one-for-one: a straight line in the graph below. So the curve is “convex” to bottom of the graph, where the horizontal and vertical axes meet.

The point is that since buying stars is subject to diminishing returns (and so is buying too many “average” players), then you’re better off with fewer of both — not loading up with 100 average players of whom only the best 53 make the cut, say, and not, of course, shooting your wad on 10 stars and bringing 43 guys in off the street at minimum wage. (Though admittedly, “minimum wage” in the NFL is $6,300 a week for the 10-man reserve known as the practice squad.)

Where NFL teams typically go wrong is falling for the stars and overpaying them, often because of public and media pressure, leaving too little money to optimally fill out their roster. Director of Player Personnel Scott Pioli said as much to me in 2002. The Patriots didn’t overpay “because there’s not always a direct correlation between marquee names, marquee salaries, and good football players.”

Pioli was a football groupie college student who drove daily to training camps in New York on his own from college in Connecticut in the mid-‘80s. Belichick, then an assistant coach with the New York Giants, noticed Pioli’s dedication and gave him an office to sleep in instead of commuting. Pioli went on to work for Belichick in Cleveland and Boston. It’s safe to say he learned pretty much everything he knew about football management from Belichick. So when he explained the economic strategy that built the improbable winner of the Super Bowl at the end of the 2001 season in which the Patriots were given a less than 8 percent chance of winning, that strategy was Bill Belichick’s, economics major. The key to the game and season for the Patriots and ever since: quarterback Tom Brady, paid $310,000 in 2001 to back up a star named Drew Bledsoe, who had signed a 10-year, $103 million-dollar contract before the season began (though only $14 million was guaranteed). Bledsoe got hurt; the bargain-basement backup took over; and with Brady at the helm and Bledsoe soon traded, the rest is a history as unexpected as it is unprecedented.

All because the Patriots applied the concept of opportunity cost, which has since become a standard metric of quantitative analysis in many sports. And because the team understood, at least intuitively, the notion of convex preferences. (The Patriots also have a different utility curve, but that’s for another column.)

Super Bowl coverage this week suggests the Philadelphia Eagles have, on average, the better roster for the game on Sunday. Advanced analytics like those at Pro Football Focus agree. What that suggests to me is that they too have learned to apply the key lessons of economics.

Outcome? The betting public thinks the Patriots will win by more than four points, which translates into a roughly two-thirds likelihood of success. But hey, it’s a probabilistic universe. The Patriots won their first Super Bowl with the odds more than 10-1 against them. And Donald Trump’s price on the prediction markets, as late as Election Day evening, was one chance in nine.

But yes, we will share the winner with you…on Monday.

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Comments

Mr. Universe Sun, 02/04/2018 - 14:18 Permalink

Should be an easy win considering the Eagles owner and coach died today at the stadium, according to Wikipedia and Infowars.

Though anybody can edit a Wikipedia page, it’s nevertheless unusual, especially when the Super Bowl hasn’t even started.

In addition, an event like the Super Bowl is at higher risk for a false flag attack given the bombshell revelations from the recently declassified FISA memo which the Deep State is desperate to distract from, as suggested by intel insider Zach last week.

Nah, nothing could possibly go wrong.

Cognitive Dissonance DownWithYogaPants Sun, 02/04/2018 - 14:43 Permalink

You might very well be correct. I honestly don't know.

But a serious question. The NFL deliberately instituted a team salary cap and unrestricted free agency in order to (attempt to) create parity and to diminish the likelihood old school dynasties would reign supreme. Previously players could be locked in (owned) and a team could have an unlimited budget to pay players and coaches.

Now no team can spend more than any other team and players are 'free' 5 years after the draft. A winning team's top players are valuable, so the other teams have incentive to poach them from the winning team.

So in that light, why would the NFL then 'cheat' to move one team above everyone else...particularly when nearly everyone loves an underdog winner and hates the consistent winner?

In reply to by DownWithYogaPants

DownWithYogaPants Cognitive Dissonance Sun, 02/04/2018 - 14:44 Permalink

Ever hear of a guy named DeBartolo?  Started off in Youngstown Ohio and was known mafia in the 60s.  Later he turns up owning the 49ers and magically they win the super bowl first year.  

Come on.  This is too much money for anything left to chance.  Where is the normal Zh skepticism.  Football is all tomfoolery with Niggerians involved.

In reply to by Cognitive Dissonance

Mr. Universe robertsgt40 Sun, 02/04/2018 - 15:54 Permalink

This is right in my wheelhouse.

Ever hear of a guy named DeBartolo?

Indeed. I apprenticed as a chef under the caterer for the 49'ers in their glory days. I carved potatoes into little footballs for Ray Wersching's wedding rehearsal dinner. Whatever they wanted, they got. Bill Walsh, grilled boneless, skinless chicken breast, every time. The suits came in all the time while some of the players used the Canyon Inn as their hangout. Did I mention my boss was Sicilian? His best bud was another Pisano, who was a made man. He was executive chef for UA and they all flew on the Niner's plane.  He also owned an estate in Tuscany and sported a pinky fingernail over an inch long. These folks were wading knee deep in COCAINE. I showed up @5:30Am for work one Monday morning after a big game. There they were, all passed out in the banquet room, coke all over the place, half dressed whores, booze, you name it. When it came time for Eddie's 40th birthday his wife bought out the Hard Rock Cafe and we catered as well. Lots of other weird goings on, but we learned quickly to not ask any embarrassing questions.

In reply to by robertsgt40

Lumberjack eclectic syncretist Sun, 02/04/2018 - 15:10 Permalink

Agreed...

Here's a first look at the New England Patriots' Boeing 767 private jet

https://www.google.com/amp/s/amp.businessinsider.com/new-england-patriots-reveal-new-boeing-767-private-jet-pictures-2017-10

there is no fucking way the Patriots are rigged. Hard work, persistence and well versed in game theory.

That may change a bit next year with the folks who will be leaving the organization, but only time will tell.

 

In reply to by eclectic syncretist

Cognitive Dissonance arby63 Sun, 02/04/2018 - 15:19 Permalink

Plenty of big East (and West) Coast cities that are much bigger markets than New England. The Giants-Eagles-Cowboys-Redskins are a huge rivalry and market. How have they done over the last 20 years?

For thirty years New England was the laughing stock of the NFL behind the New Orleans Saints aka the Aint's. Why NE and not the NFC East teams?

In reply to by arby63

insanelysane Cognitive Dissonance Sun, 02/04/2018 - 15:35 Permalink

The Patriots were a good team in the 70's and 80's but not great.  I live close to the stadium and in those days I could leave my house at noon, drive to the stadium, park my car, buy a ticket to the game, and be seated before kickoff and it cost maybe $40.  Of course in those days the Town of Foxboro wouldn't allow the team to play in Foxboro on a Monday night because the fans were extremely unruly.  Kraft was in the stands in those days.  He bought the team and cleaned up the entire experience and now charges (and deserves) top dollar for the experience.

In reply to by Cognitive Dissonance

DaiRR Mr. Universe Sun, 02/04/2018 - 23:25 Permalink

Eagle’s ballsy play calling and awesome execution won it !  So happy for the Eagles and their fans.  Nick Foles got the win he earned and so deserved.  Al Michaels needs to be put out to pasture.  His announcing was aggravating in the extreme.  Is he blind?  Off by a yard or more on 90 percent of his after-play summaries, and not interesting either.  Maybe it’s because it was broadcast on MSM fake media NBC, where lying is their hallmark.  Ridiculously poor announcing by Al Michaels.

Immensely enjoyable game, especially as I switched to InfoWars on YouTube every single commercial and at halftime.

In reply to by Mr. Universe

chunga hoist the bs flag Sun, 02/04/2018 - 15:14 Permalink

My ditto-head fox news parents have thrown a ban on NFL. (and love to brag about it at every opportunity) They freely admit they know nothing about Ukraine, Syria, Libya, Saudi Arabia, Russia, Seth Rich, Vicky Nudelman, etc. and further, they don't care. Nevertheless, they apparently support mandatory national anthems.

You patriotic junkers can junk away. We've got an off the charts snack menu* all set and we're ready to party and watch the game in super HD.

Funny it doesn't look like this author mentions Ernie Adams, a long time big shot on NE's staff, former municipal bond trader, integral in selecting players.

*spicy meatball sliders, crab tart pastries, coconut shrimp, terriyaki wings, chowda

** 32 - 16 NE

In reply to by hoist the bs flag

VideoEng_NC Sun, 02/04/2018 - 14:22 Permalink

Putting returns aside, Belichick needs to once again come up with another defensive blitzing scheme to diminish one Nick Foles or Brady may not get the opportunity to be very terrific.

 

Edit: I'll always be a fan, Goddell can't take that away from me even though he's absolutely 110% responsible for ruining the league.

pigpen Sun, 02/04/2018 - 14:22 Permalink

Bill likely uses brave browser to protect himself from advertising, malware and tracking. Nobody wants to be tracked around the internet.

Brave blocks everything by DEFAULT rendering the digital advertising model moot.

Download brave browser to watch Superbowl online.

Go brave.

Cheers,

Pigpen

Ricki13th Sun, 02/04/2018 - 14:24 Permalink

How many football distraction articles is Zh going to put out. Remember the whole boycott the NFL movement because players were disrespecting the flag. 

Ricki13th Sun, 02/04/2018 - 14:24 Permalink

How many football distraction articles is Zh going to put out. Remember the whole boycott the NFL movement because players were disrespecting the flag. 

BennyBoy Ricki13th Sun, 02/04/2018 - 15:33 Permalink

 

Idiot assholes have co opted what the sitting/kneeling during the national anthem is about. 

Here's why it was done for asshole dumbfucks to read:

Kaepernick: "I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color. To me, this is bigger than football and it would be selfish on my part to look the other way. There are bodies in the street and people getting paid leave and getting away with murder."

Go ahead turn it into something else you shitbags who cant face reality.

In reply to by Ricki13th

Catullus Sun, 02/04/2018 - 14:25 Permalink

I think baseball is figuring this out now: free agency for the owners is a rip-off. You’re paying for past performance. And once you give the guy a fat paycheck, he doesn’t perform as well. 

Youre not paying for labor. You’re buying wins. Pay them when they win. 

Heterodox economics Sun, 02/04/2018 - 14:41 Permalink

Another aspect of the Patriot's success is that they analyze football in a statistical, even in a scientific way.

To give an example, there are analysts online who analyze football in a statistical way, like sabermetriics is to baseball. These football analysts point out that its not worth it for a team to draft a wide receiver in the first round. They have pointed out that teams that have done so have had so-so seasons and worse. Superior teams such as Green Bay and the Patriots get their wide receivers from trade, signing unrestricted feee agents, or a lower round draft pick.

The Patriot's drafting also exhibits the economic concepts presented in the article.

arby63 Heterodox economics Sun, 02/04/2018 - 14:54 Permalink

To some degree, I submit that these methods have also changed the game---for the worse. Teams view running backs much like wide receivers these days. Unfortunately, a "great" running back used to be the representation of the NFL in general. Not so much anymore.

The NFL has turned into a halfway house for former (and future) thugs drug out of the ghetto and overpaid for the purposes of enriching the owners---and not the game. 

In reply to by Heterodox economics

gearjammers1 Sun, 02/04/2018 - 14:46 Permalink

Graph is of a curve that is "concave up" with no local max or minimum. Meaning that the first derivative has no zero roots, and the second derivative is greater than zero. Also, the first derivative is less than zero, because the curve is decreasing.

. . . _ _ _ . . . Sun, 02/04/2018 - 15:09 Permalink

One percent? This was either disingenuous, or maybe he had just never much thought about it.

Of course he just hadn't ever much thought about it.
It means that your article is just a way to capitalize on current events.
It is neither about football, nor economics.

This has become a trend, of late.
If there's something you want to say, say it. Stop convoluting the message in order to increase your market. When articles are diluted in this way, it turns off both sides. Neither will take you seriously.

It's just like juice at the grocery store. It's hard to find juice made from one fruit. Now everything has to be strawberry-kiwi or apple-grape-pear or passionfruit-lemongrass-watermelon-blueberry or ... ugh, now you've got me doing it.

Mr_Potatohead Sun, 02/04/2018 - 15:09 Permalink

What does Bill think about Bitcoin, which is threatening to head south again just before the game?  We just bounced off the low from Groundhog Day.  If this doesn't hold as support, the BTC chart could be very interesting by the time the game is over.