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Why NFL Franchises Fail

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Editor's Message: If you are a fan of personal finance, I ask that you stick with me and read this article. Yes, it is going to focus on the National Football League (or "American" Football for my foreign readers), but many of the concepts can be translated to running any successful business and/or getting top value for your dollar.

This is also a unique article, because I drafted parts of it as long as a year ago. A lot has happened in that time, and I have very mixed feelings knowing that the the commissioner of the league openly lies. At some parts, you may see that I love the game, but at others, it will be a very different picture. Also, I've gotten into a time-crunch with life events and this article isn't nearly as polished as I hoped it would be.

Tonight the New England Patriots open up the NFL season in defense of their world (well USA) championship. I've been following the Patriots since the sexual harassment of a female reporter "marred" their dreadful performance of a 1-15 season. Even before that... more than 30 years now. That's just what you do when you grow up outside of Boston.

I'm a huge fan of the football in general. I think it is unique amongst the four major sports in America. It is a team game where a weak link can end the season (as explained in the beginning of The Blind Side). You have to do a lot more than piece together a "Big Three" and watch them dominate like in basketball. It is a sport where the strategy is always evolving and each game is a unique chess match that had a week of planning put into it. It isn't like baseball where game strategy is very, very basic. It also has free agency and salary caps ensure that a team can't hold a nucleus very long. Typically a team loses half of its players each year... and usually some very good ones.

Under those circumstances, I'm not sure if I am aware of another franchise that has had more success in the history of sports than the New England Patriots. The Celtics won many titles with Bill Russell, but they were able to hold that nucleus without fear of free agency. The San Antonio Spurs are probably the closest, but again they've done it with a nucleus of a few players.

I've put in countless hours into following football and the Patriots. If you have a life you probably have better things to do. I commend you. At the same time, I feel like I've learned so much that I wanted to give a little back.

So I decided to put together a "guide" for fans to help them understand if their favorite football franchise is moving in the right direction.

There Can Only Be One

Football, like many sports is a zero sum game. When one team wins another team loses. There are only so many wins and losses to be handed around the NFL... not everyone can be 12-4.

Success and failure is relative in zero-sum games. If the competition is terrible, you will be successful even if you are just less terrible. This is an important concept to keep in mind as you read this "guide." Not every franchise is going to perfect in all these areas. When a franchise is extremely successful in one area it can even cover up deficiencies in other areas. Put a few successful areas together and it can take you a long way.

(By the way, did you catch the reference for the title of this section?)

Success Starts at the Top

A franchise will fail if ownership, the general manager, and the coach aren't on the same page. Coach Bill Parcels was famous for saying, "If they want you to cook the meal, they ought to let you buy the groceries." At the time, he was referring to how ownership didn't allow him to draft the players he wanted. He was left trying to coach players who he felt weren't a good fit for his system. That's just asking for trouble.

The Patriots have had the same owner and general manager/coach for the entire millennium thus far. The level of trust there is unparalleled. This continuity allows them to make trades for the future in mind. It allows them to structure contracts for the future. Coach Bill Belichick can make unconventional draft picks without fear that it is going to cost him to lose his job.

This continuity is very important. It leads us to the next point:

Successful Franchises Avoid Buying on Credit

We live in a world where we demand success right away. A new coach feels the pressure to produce positive results immediately. This can lead to trades that may look good today, but hurt you down the road. It's like buying a top of the line suit for a specific job interview on credit. In some world, that may make sense, but if you don't get the job, you are left paying credit card bill for something that's hanging in your closet.

Pressure can cause NFL franchises to buy on credit. They pay interest on that credit. It mortgages their future for success today.

Teams buy on credit when they trade a future draft pick for a player today. They buy on credit when they sign a player to a contract that likely leads to dead money in the salary cap in the future, when that player is no longer on the team.

New coaches aren't the only ones getting pressured to succeed. Two of the most successful franchises in recent years, the Patriots and Broncos, have had pressure to add talent at any cost due to the "closing window" of their aging superstar quarterbacks. The two franchises got into "arms race" with all the moves they were making to get better.

I believe that the Broncos bought on credit for their run and have lost a couple of their best players (Julius Thomas and Terrance Knighton) because of limited salary cap space. The Patriots almost never buy on credit, but they did to sign Darrelle Revis one of the best players in the game. It didn't disrupt the core salary structure of the team and the players they lost were ones they deemed were no longer a good value for their talent.

The turnover of coaches in some unsuccessful franchises has been so extensive that they've been buying on credit for more than a few seasons. Oakland is one franchise that comes to mind. They seem to have been digging themselves out of hole for years now.

The Patriots have been very successful in lending their draft currency to other franchises. I wrote about draft picks as currency back in 2007 and again in 2011. The Patriots traded #28 to the 49ers for their first round pick next year. The worst case scenario was that they'd get #32 then. However, the 49ers weren't very good (as the Patriots suspected) and the pick turned out to be #7.

A #7 pick was very valuable and actually worth more than 2.25 #28 picks (there are mathematical charts for this stuff). Essentially the Patriots got over 125% interest in waiting a year. Patriots fans were very unhappy at the time to not have the asset right away. However, it was a great long-term move for the future success of the franchise.

Successful Franchises Find Diamonds in the Rough

Back in 2007, the Patriots traded a 4th round draft pick for Randy Moss, a superbly talented player. He had been on that Oakland franchise that floundered at the bottom of the standings year after year. He was labeled as a "malcontent", which is natural if you are competitive and go home as a loser each week.

Randy Moss went on to score more touchdowns than any receiver in the history of the game that year. Presumably 30 other teams could have traded a 3rd round pick for Moss, which would have been tremendous value. To be fair to those teams, the Moss-Patriots break-up was ugly, probably what they feared. However, it was quick and the Patriots moved on without missing a beat.

Randy Moss wasn't an isolated case for the Patriots. They routinely found value in other team's cast-offs. They were able to win the 2001 Super Bowl, with a bunch of free agents that that were signed to very small contracts.

No one has played more defensive snaps in the last three years than Rob Ninkovich, who had been bounced around a few teams before becoming a core Patriot.

Last year the Patriots won The Super Bowl on the memorable play by Malcolm Butler, an undrafted free-agent rookie without any other offers. Butler's agent tells the story, "[Patriots cornerbacks coach Josh Boyer called] and he said, 'Is Malcolm still available? I can bring in one player in the country for a tryout and I picked Malcolm. I believe Malcolm can play in the NFL.'"

Every NFL team can point to successful diamonds they've mined. I don't know of any way to quantify which ones are more successful than others. I can't say that Patriots found more than other teams, but from my biased view it feels like it. (Though I tip my hat to Seattle on their diamond-finding ability). However, an important ingredient to success is finding value where others don't.

I believe the best way to do that is to have a well-funded scouting department. Just like continuity of management is important, it is important to continuity of scouting, so you are comparing apples to apples year after year.

Successful Franchises Work Hard

This should go without saying, but let's just say it. I love this quote:

"Welcome to the NFL. That will start Thursday. They'll get a big dose of New England Patriots football over the next whatever we've got, six weeks -- however long it is. We'll give them everything we can in heavy doses, try to get them ready for training camp and they'll get even more then... The strong will survive. The other ones will fall off. And we'll keep going...

We've got 31 other teams competing just as hard as we are to do the same things. Yeah, we're going to have to outwork people, out-hustle them and just do a better job. That's what our business is.

Successful Franchises Maximize the Quarterback Position

The importance of the quarterback in football is crucial. He's the leader. He touches the ball on every play. It's become a passing league and they are the ones doing the passing.

There are arguably 5 elite QBs in the NFL (Brady, Manning, Rodgers, Brees, and Luck). Having one of these 5 players is almost a guarantee your franchise is going to win at least 10 of the 16 games and make the playoffs.

After the elite group there is another tier of very good QBs. That tier includes players like Ben Roethlisberger, Eli Manning, Russell Wilson, Joe Flacco, etc. You could have some losing seasons with these players. However, if a franchise surrounds these players with a good (or great) defense and they get hot at the right time, it can win a Super Bowl with them.

So realistically, the franchises with a top 12 QB are the ones that are successful. That may sound obvious, but it is interesting to note that 20 teams start the season in a difficult position.

There's another level of this when it comes to the salary cap. Because QB is the most important decision, they command the most money on the market. A team putting a lot of money into a QB will naturally have less money to spend on the other players on the team. This gives an enormous advantage to teams with a QB in their rookie contract such as Russell Wilson (until recently) and Andrew Luck.

Taking that point from a Patriots point of view, they are fortunate that Tom Brady doesn't demand top dollar. In fact, Over the Cap says, "Tier 1 [of salary caps] for ESPN is hampered because of Tom Brady’s incredibly ridiculous team friendly contract. It is almost unfair to include that." They also show that his salary cap number is 19th among 22 non-rookie contract QBs, which is an extraordinary value.

These low numbers allow Seattle, Indianapolis, and New England to add a couple of extra stars that other teams simply can't fit into the cap. Seattle is now paying top dollar for Russell Wilson, which may make them have to make tough decisions down the road on some players. Thus far, they've been very, very good at managing the salary cap, a credit to their planning.

If you can't get one of these elite quarterbacks, perhaps the best plan is try to get one who doesn't make mistakes. Alex Smith comes to mind. I believe a strong defensive team with a few other pieces could do very well with him. As a Patriots fan, I would be scared to see him on the Bills. Fortunately for Patriots fans, it seems like Rex Ryan is always going to be cursed with a bottom of the barrel quarterback.

Successful Franchises Build a "Complete" Team

When you think of the Patriots, you probably think about Brady, Belichick, and maybe Gronk. You probably don't think of anyone on defense (unless you are a Patriots fan). Vince Wilfork and Darrelle Revis may have been the most obvious stars, but they aren't with the team any more.

However, the Patriots have used 6 of their last 7 first round draft picks on defensive players. Four of the 6 are highly-ranked veterans. The other two are essentially having their rookie year this year (one was injured last year). It might not seem like it, but the Patriots defense compares to the Ravens and Texans, which is very good.

Patriots fans know that Father Time is undefeated and Tom Brady's skills will lose to him at some point. I believe the Patriots are trying to put together a defense that can compete if Tom Brady's performance becomes more like Joe Flacco's.

The Patriots also happen to have one of the most accurate kickers in the NFL. Typically fans don't think about the position much. Long-time fans of the Patriots know the value of this position as they went from Missin' Sisson to Adam Vinatieri.

Successful Franchises Manage the Salary Cap

I touched on this a bit in the quarterback section. You have to know when you commit to a player and when you can't... and you have to know how long you can. For the most part the Patriots have been very, very good at this*. They've moved on fan favorites such as Lawyer Milloy, Wes Welker, Randy Moss, Logan Mankins, Vince Wilfork, Richard Seymour, Asante Samuel, Deion Branch, Adam Vinatieri (before he came back), and more.

In just about every case, Patriots fans went nuts. They screamed that Bill Belichick had finally lost it. Then a funny thing happened. In almost every case, the players vastly under-performed on their new teams. (The exception being Vinatieri, but the Patriots replaced him with an equally good, younger, cheaper model.) Fans reluctantly had to develop an "In Bill We Trust" attitude.

Moving on from such players saved them a lot of salary cap money that could be used to retain younger talent. Sometimes they were able to trade them for additional draft picks.

Draft picks are an important part of managing salary cap. Players on their rookie contracts can be paid less than veterans and often perform as well as some stars. The Patriots like to draft and develop a quarterback to be the back-up, because it is cheaper on the salary cap than many veterans. I'm sure they've done the math and figured that over a 4-year deal they can save somewhere around $8 million in cap space vs. paying the market rate for a veteran. It all adds up.

The Patriots may have reputation for heartless when it comes to player contracts, but this frugality helps them get more their salary cap dollar. That translates to wins.

* This excludes the tight end who is rotting in prison for murdering someone. Whoops.

Successful Franchises Cheat

Just kidding, all NFL Franchises cheat.

Taping Opposing Teams Practices

This never happened and the source, the Boston Herald printed a retraction. Media outlets, specifically ESPN, reported it as truth recently as a few weeks ago. When it was brought to their attention that it never happened they issued an apology to the Patriots past midnight when no one was watching.

Still when reporters report false incidents, a perception is created that the Patriots have a "culture of cheating."

SpyGate

This actually did happen, but here's what it amounts to:

"Spying" is perfectly legal. As John Madden said on live TV, it's common place in the NFL. Jimmy Johnson admitted it as well.

It is exactly like going 66mph in a 65mph zone. It's wrong and you shouldn't do it. Everyone does it anyway. If a police officer wants to target you and let everyone else go 80mph, that's an unfortunate part of life. You may be able to appeal it to neutral judge, but as we've found out with DeflateGate that process doesn't exist in the NFL.

Worse, the NFL doles out punishment without any understandable logic. The Patriots got the equivalent penalty to a life sentence in prison for what was clearly a misdemeanor. The next time you break the speed limit, imagine being thrown in jail for life and having others say, "Well, you shouldn't have committed the crime."

DeflateGate

As Patriot-hater and New York Law School Professor on Robert Blecker points out DeflateGate never happened and the NFL cheated:

If you think it happened, you probably read the media headlines that were generated by the NFL leaking false information to media outlets such as ESPN. When you take the time to read analysis of the Brady's appeal and the Judge Berman's questioning, you'll have a better understanding of what really went on.

Summary of cheating

So we have one event that clearly never happened (taping practices). One event that is widely considered to never have happened (DeflateGate)... and one minor misdemeanor (SpyGate). Lazy people group all three together ignore the real reasons for success above. They then jump to the false conclusion that their team was ripped off.

The Aaron Hernandez and Lisa Olson scandals were a thousand times worse than all of this combined. If you want to attack the Patriots, at least go after real events with real victims suffering real consequences.

Of course if you are going to do that, let's credit the Patriots Vince Wilfork helping pull a car crash victim to safety on the way home from the AFC Championship game. That is a little more meaningful than air pressure in footballs, right?

Final Thoughts

If you got this far, congratulations... this was certainly a long read. I actually had more information in my notes (such as successful franchises don't go "all-in" for a chance to win one Super Bowl), but at some point I simply need to stop writing and publish this thing.

I had hoped to tie in more of life lessons, but since this is the equivalent length of a week's worth of writing, that will also be saved for an update down the road. Maybe some of those lessons are obvious in how I structured the article.

If you are a football fan, good luck to your team this year.

Posted on September 10, 2015.

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2 Responses to “Why NFL Franchises Fail”

  1. Money Beagle says:

    Sitting down and developing a plan that guides your team is key. As a Lions fan, I had to live through the Millen era, and the biggest reason that they completely failed is because he never had a plan on how he wanted to build his team. There’s a story where the Lions came on the board and they had no idea on who to draft. Someone shouted out a name from the back of the room…and that’s who he drafted. Needless to say, that pick and so many others like it completely busted, and we ended up a laughingstock for the better part of a decade.

    • Lazy Man says:

      I’m sure I don’t follow the Lions as much as you, but I’d say the biggest thing is that they didn’t try to have a complete team. It was kind of the Oakland Raiders’ plan towards the end of the Al Davis reign… get a bunch of receivers and go with that.

      Drafting is so important in the NFL… and it’s so difficult.

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