What’s the cash value of a draft pick?

In the NFL, there are two primary forms of currency used to build and maintain teams, salary cap space and draft picks. And, at first blush, the two currencies appear almost unexchangeable on a common market. For instance, how do you value draft picks in terms of dollars?

After all, it wasn’t until the early 1990s - just before the advent of the salary cap - that Jimmy Johnson and his colleagues in Dallas took a crack at developing a draft pick trade value chart, in order to create some semblance of a common currency for draft picks alone. And, even that system has been refined over the years.

Salary cap seems much more straightforward, given that it’s measured in dollars and cents, but even that can be complicated by “time value of money” calculations when looking at salary costs over a multi-year horizon.

For years now, I’ve been thinking about how to create a common draft pick/salary cap exchange, while simultaneously hoping someone more steeped in this world would undertake the exercise. I’ve come across some helpful resources, which I’ll describe and incorporate below, and then take a crack at an integrated solution.

OvertheCap

In 2019, Overthcap.com’s Jason Fitzgerald made a run at this exercise, which can be found here. He used the Jimmy Johnson trade value chart to assign the relative value of each draft pick, and looked at the salary “value” of players taken at each draft position over a 5-year period, from 2011 to 2015, the period after the introduction of the rookie wage scale.

In his exercise, one Jimmy Johnson draft point was effectively worth around $5,000 in salary cap space, in 2019 dollars.

The analysis was interesting, but static, and my goal is really to find a draft pick to salary cap conversion metric that is flexible with the inevitable, annual growth of the cap. Inspired by Jason’s work, I’ve attempted to pursue my own solution.

My Methodology

Unable to find what I was looking for on the vast internets, I decided to take a run at crafting a conversion myself. The place that I decided to start was with the Rich Hill draft trade value chart. That chart, which can be found here, was developed by Rich Hill of the SB Nation site Pats Pulpit, based on his analyses of several years of recent draft trades. It’s certainly not the only draft chart this exercise could be run with, but it’s the one I happen to like best, so I’ve settled on it here.

In the Rich Hill chart, picks are valued from 1000 points (#1 overall) all the way down to 1 point (the picks in the last third of the 7th round). Again, for the purposes of this exercise, I have assumed that these values - in the aggregate - accurately reflect the performance values of the players that tend to be taken at these positions in the draft. More on why that matters later.

As a rule, each team starts the draft with seven draft picks, awarded to them in the reverse order of their league wide finish at the end of the season. For this exercise, though, I wanted to look at the point value of the “average” draft, so I summed the value of those picks in the middle of each round, arriving at a Rich Hill point value of approximately 519 points.

The real value of draft picks to an NFL team is being able to chase the performance they would get in a veteran at a reduced price for several years, so next I wanted to pull the approximate cap value of 7 players (13%) of an overall NFL roster. In 2023, the full salary cap is approximately $225,000,000. Thirteen percent of that value is $29,700,000.

But the financial value of players on rookie deals is not that full amount, after all, even players on rookie deals get paid a decent sum of money. And fortunately for us, those sums are quite specific and assigned to each draft slot. It turns out that the rookie deal salaries for players taken at those 7 average slots sum to about $11,500,000 per year. Subtract out that $11.5M from the overall cap value of those players ($29.7M), and you arrive at $18.2M.

Again, for the purposes of this exercise, we’re going to use that $18.2M (about 8% of the cap) to represent a “draft bonus” cash addition to the salary cap. If you have the right mix of more than seven picks, or seven better than average picks, it could end up being more, but here we will continue to work with averages.

Now that we have this “draft bonus” number, $18.2M, determining the cash value of each pick is a fairly simple formula. Divide that $18.2M by 519 draft points, to arrive at around $35,000 per draft point, with a mid-first round value being around $10.7M and a mid-seventh round draft pick being about $70,000.

The formula looks something like this:

((Full salary cap * .13) - (Sum of annual rookie salaries at middle positions in all 7 rounds))/Sum of Rich Hill pick points values in the middle positions in all 7 rounds = Added value per pick point

At first blush, it’s a little hard to determine if this number is in the ballpark or reasonable, but upon reflection, I think it’s pretty close. Let’s look at the added cash value of the number one overall pick using this formula. Number one overall is 1000 draft points, an added value of around $35M per year above the $10M per so paid to that player on his rookie deal. To the extent the number one overall pick is, ideally, used on a high-end, starting caliber QB, that $45M per year slots in at #6 in current QB salaries, just about exactly where you would expect it to be.

From there, values drop fairly quickly though, with the number two pick (717 pts) having a value of $25M and the number three pick (514 pts) having a value of $18M. For those curious, Washington’s pick at #16 has an added value of $6.4M. As the draft progresses, and the risk of a playing busting - generally - increases, that risk is built into their value through the connection to the trade value chart. Sixth and seventh rounders have almost no added value, $140,000 and $70,000, respectively, because their odds are so long, but obviously, if they do hit (like Kam Curl and Darrick Forrest), that represents a windfall to their teams.

So What’s the Utility?

Other than being an interesting thought exercise, what’s the practical value of this sort of conversion? Well, in the first place, I think there’s a tremendous value in a “common currency” when teams are trying to make determinations about saving cap room, or acquiring picks in a trade.

For instance, if Daron Payne is going to cost you $22M to resign, but you could get a draft pick, like #32 overall, worth $6.4M (about 3% of cap over each of 4 years) in return for him, is that worth it? Does that give you better information than saying, “is Daron Payne worth pick #32?”

At this point, Payne is a known quantity, with relatively little risk about his likely performance - assuming he’s injury free - whereas a rookie, even one taken high in the second round, has significant risk. But, we also need to remember that that rookie risk is, to an extent, baked into the draft trade chart.

Regardless, from a performance perspective, the odds are that if we take Payne’s replacement with that pick, we will not be getting a player of his caliber. One expectation might be that the $10M equivalent or so ($6.4M in added value + ~$3.1M in actual salary) would bring us a player in the range of BJ Hill, Folorunso Fatukasi, or DJ Jones, if we were to deploy it on another interior defensive lineman. Of course, there’s no guarantee of that outcome, and the player could be anything from a future All Pro to a total bust. This is ultimately about better being able to get our arms around probabilities.

So, the odds of the Payne trade above delivering us another Payne are fairly low. What’s the upside then? The guaranteed upside is that we wouldn’t be paying Payne ~$22M per year for the next 3 or 4 years and could use that money elsewhere. Additionally, in this hypothetical, we would also likely be getting a $6.4M “cap bonus” in added rookie value for those four years as well. Is that worth the likely loss in performance? That’s a decision each front office will have to make for itself (in the coming months, I expect to run through several scenarios in independent articles).

This approach also provides a very stark picture of the utility of those first several picks. Essentially, if you’re not using them on a quarterback, should you really be using them at all?

Let’s take, for example, the selection by Jacksonville of EDGE rusher Travon Walker number one overall in the 2022 draft. As stated above, the “added value” of that pick is around $35M (with his actual salary adding $10M per year to his “full cost”), yet the top paid EDGE rusher in the game, TJ Watt, was “only” paid $28M last year. Effectively, under the best case scenario for Walker, the Jaguars left around $17M in value on the table with his selection.

By this analysis, no non-QB draft pick is even close to worth the value of the first overall pick. As it turns out, that’s true for number two overall as well. This kind of evaluation can be done at every draft position, and cross-checked with actual position salaries as well. If an above average - but not great - linebacker is getting paid $10M in the league, and the total draft pick value of a pick doesn’t drop below $10M until around pick #17, it would probably be imprudent to take a guy you think will be an above average linebacker before that point in the draft. This exercise can be played out in a variety of different ways (a full value chart is available at the end of this article).

A “common currency” also allows teams to plan better into the future as well. If it appears that in future years your actual cap space consumption is going to be pushing against the cap ceiling, it’s an exceedingly poor idea to be trading away high draft picks (ala the Rams), because that’s the one place you can reliably achieve value outside the cap.

I’m sure this will spur lots of interesting conversations - it’s by no means a finished product - and I look forward to having those in the comments below.

I’d like to thank Bill-in-Bangkok for his editorial assistance with this piece.