Thursday, August 23, 2012

Sportfolio Management: Football Freakonomics

I'm not going to lie; I've had this project in the back of my mind for a couple of years. The past few football seasons, I've dedicated my time to writing at Pats Pulpit, one of the leading Patriots fan blogs on the internet, but now I feel like turning another chapter in my life as a fan of the NFL.

A little bit about myself: I'm born and raised in the Boston area, went to high school at Phillips Exeter Academy in New Hampshire, and went on to graduate college at Boston College while triple majoring in Finance, Operations, and Leadership. I've always been a Patriots fan, but I never felt the bite of the football bug until my sophomore year in college. It was the season that Tom Brady returned from his knee injury and I really started focusing on the team and how the Patriots were able to become such a successful franchise. Additionally, I was smitten with power rankings and started to apply really broad statistics to try and deduce which team had the best chance to win the Super Bowl.

There was no real foundation to my claims. I weighted winning percentage with point differential, while giving bonus points for beating top teams and subtracted points for losing to bottom feeders. At the end of the season, my rankings almost matched reality for playoff seeds and I was inspired to continue my work. Of course, with such a heavy emphasis on winning percentage, the playoff seeds should have definitely aligned with my projections- but don't tell me that three seasons ago.

Over the years, I've developed my knowledge of the game and have created a deep respect for the calculus behind constructing an NFL roster. Clearly I had an advantage as one of the best minds in the NFL- Patriots coach and GM Bill Belichick- was in my headlights, yet my curiosity grew. How are good teams built? Why do bad teams remain bad? I wanted to examine the flesh and bones of rosters to determine the best way to build a team.

As a junior at Boston College, I had the fortune to take a class called "The Business of Sports" with Professor Warren Zola, and our final assignment was to "write about something pertaining to the business of sports." So I decided to write about how to draft an NFL quarterback. We were lucky enough to have the assistant GM of the Boston Celtics come and speak about how and why they drafted and brought in certain players, and I was intrigued by how influenced the decisions were by statistical analysis. Numerous rebounds and free throw attempts meant an active player worth drafting. I was curious about how this method of drafting could be applied to the NFL and I started with the most important position on the team- the quarterback.

The next draft season, I spent a lot of time researching and falling in love with the draft. I learned about the scouting process and how important it was to realize that no method of evaluation is perfect. For all the work I wanted to put in to analyzing football, I needed to realize that I would not hit correctly on every draft evaluation. The goal was just to minimize the impact and frequencies of errors.

So now I'm starting to take up this blog. I want to evaluate teams as if they were financial funds, with each player representing a separate equity stake. I want to apply my financial and forecasting knowledge to try and forge a path in a new style of team development. I was the first to point out the comparison between the Patriots continuous trading down of draft picks essentially represented an annuity, and will continue to work to create new links and ideas. I hope that my work here can eventually supplement the team building process and, who knows, maybe some day I can be there to actually help build teams.

I'm hoping to cover a wide range of topics, from drawing a line between a player's consistency to the VIX to determining trends for what offensive position that might be the next one en vogue. I want to present football in financial terms as teams are first and foremost a business.

I hope you enjoy my writing and please stick around. If not, I'll probably see you on Twitter.

Thanks and let the fun begin!

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