The Value Of A (First-Half) First Round Pick

LOS ANGELES, CA - JUNE 25: A view of the draft boards during the 2010 NHL Entry Draft at Staples Center on June 25, 2010 in Los Angeles, California. (Photo by Bruce Bennett/Getty Images)

"If I were a GM, I’d be willing to trade away my [2nd round pick, 3rd round pick, 4th round pick, 5th round pick, 6th round pick and 7th round pick] every year for a top 10 pick"

--Me, In the comments of the Mika Zibanejad article.

In discussing my hypothetical trade with various friends, acquaintances and colleagues, I was struck by how intelligent hockey fans undervalue high draft picks and overvalue lower draft picks.  I posed the following hypothetical trade to 25 SB Nation hockey writers:

I am the GM of the Winnnex Coyotets and hold the 7th, 37th, 67th, 97th, 127th, 157th and 187th picks.

You are the GM of the Winneta Thrashets and hold the 16th, 46th, 76th, 106th, 136th, 166th, and 196th picks.

I am offering you the 7th overall pick for your pick numbers 46, 76, 106, 136, 166 and 196.  All else being equal, do you accept my offer?

9 respondents said yes, 16 respondents said no.  The overriding reason for declining my trade offer was something along the lines of "the odds of getting a good player in those six picks are just too high to trade them all away".  While we can't predict the future, nor the specific odds of finding Lee Stempniak or Joe Pavelski late in the draft, we can look at historical draft and development records to give us some understanding of the value of the draft picks in our hypothetical trade.

Scott did a study on the success rate of players drafted from 1997-2005 grouped by their draft slots.  He defined success in a draft pick by whether the player drafted became a "top player":

So what constitutes a "top" forward in the NHL in terms of drafting? In my view, it's those forwards that are expensive and the most expensive players tend to be those players that produce consistent offence. Any forward with the "checker" label likely isn't going to be making much money and the type is frequently available for a song in free agency. It's obviously better to draft a Dominic Moore than a total bust but he's not the kind of player that should be particularly difficult to replace via free agency. We know that because he see him sign on the cheap almost every year. As such, I've set the criteria for a "successful pick" in these drafts as any player who has played a minimum of 200 NHL games and has scored a minimum of 0.5 points per game.

Defenders are a bit more complicated. The elite defensive defenders make a lot of scratch so it doesn't seem like points is the best measure of ability especially since the power-play specialist type (think Marc-Andre Bergeron) will rack up points but isn't all that expensive to replace. That said, I think a minimum points requirement is necessary; a player with no offence is surely somewhat detrimental. Thus, a 0.15 points per game minimum standard will be used to accompany the 200 GP threshold. In addition, I've decided to use a TOI minimum of 18:30 per game which should eliminate the guys who are just power play specialists.

Combining Scott's study on forwards and defensemen, NHL teams had the following hit rates from each draft slot grouping:

Draft Number  Total  Top Players Percentage
1 7 6 0.857
2-3 17 15 0.882
4-7 32 16 0.500
8-13 51 21 0.412
14-25 99 29 0.293
26-50 202 30 0.149
51-100 405 30 0.074
101-200 771 30 0.039
201+ 572 18 0.031

 

Applying Scott's criteria over the last five years generates an average of 170 forwards per year, or about five and a half per team. The defensive criteria generates an average of 94 defenseman per year, or a shade over three per team. Scott's criteria essentially draw a line between top five forwards and top three defenseman and the rest of the roster, whether he intended this or not. As you read through the rest of the article, consider the "Top Players" to be top five forwards and top three defenseman.

For the purposes of our hypothetical, we can safely assume our colleagues aren't going to trade away a top-three pick for our offer.  However, we might be able to find a general manager who possesses a top ten pick and is willing to deal.  From the above table, the historical odds of drafting a top player from slots 4-13 are 44.5%.  Even if we were only able to trade for a player in the 8-13 grouping, the historical odds are 41.2%

Using the chart above, the odds of drafting a top player with the six picks being offered in our hypothetical trade, 46, 76, 106, 136, 166, and 196, are 32.7% - well below the odds offered to us by a player in the 4-13 grouping, or even the 8-13 grouping.  In fact, the value of those six picks is actually closer to a player drafted from 14-25, not 8-13.  Those players in the 14-25 grouping are more valuable than a package consisting of picks 46, 76, 106, 136, which again shows just how valuable top picks are in the NHL.

I believe a few factors contribute to the inflated valuation of lower-round picks:

  • Quantity over quality - a glance at the trade makes it seem like there is much value to be had in that large number of picks.  Even though the picks are of lower quantity, there are more of them, and added together, the value must be higher, right?
  • Confirmation bias - I've written about confirmation bias previously and bring it up again because it's a powerful psychological bias.  People tend to focus in on Henrik Zetterberg, Patric Hornqvist, Pavelski and Stempniak and think finding players like this is a matter of time.  They will minimize, in their minds, the true chance of drafting a player like this and forget about the 384 players drafted around those four players who didn't become top players.
  • Diamonds in the rough - There exists a tendency in all people, not just sports fans and management types, to believe that they alone have a special capability that enables them to find overlooked talent and develop people that others pass on.
  • The football mentality - American football weighs heavily on general sports thought processes.  Scouting and drafting in the NFL has become an industry unto itself and information, strategy, tactics and value are advanced well beyond those employed in hockey.  Trading up in football is generally discouraged because of the costs involved and some of the greatest GM's in modern football have made a habit of trading down.  However, football enjoys more perfect information in that draft-aged players headed to the NFL are between 20 and 23 years old.  Those players are well-developed physically and athletically.  Draft-eligible players in the NHL are 17 or 18 years old and have a large portion of their development curves ahead and an enormous number of variables can change the course of a career.  
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