Lazy Man and Money

Osama Bin Laden is Dead (and Personal Finance Links)

by 3 Comments

I can’t very well ignore the news about Osama Bin Laden and write about the royal wedding or the NFL draft today. This news has consumed me like few other events in my lifetime. I didn’t even stay as glued to the television during 9/11 – I had to get out and walk around. I didn’t stay glued to the election that went all night – I knew it would be sorted out eventually. This feels differently newsworthy. I think it’s because it’s one of the few pieces of news that everyone seems happy about. There are some folks who are more tempered and reflective and to a large degree I share that. It’s not like this is the end of terrorism. I’m sure that every news and commentary outlet has covered everything that can possible said… I don’t have much more to add.

I made a big deal out of the NFL draft over the weekend. As potentially the only run football activity that may happen for some time, it was a particularly important time for me. The dreams of many men came true that day and football fans everywhere are rejuvenated with hope. The days where I can tease Gen X Finance’s Jeremy Vohwinkle about his Lions likely came to an end.

I made some draft predictions on Thursday before the draft on what my hometown team, the New England Patriots would do. I missed about as badly as every professional prognosticator in thinking that the Patriots would draft someone on defense to boost the front 7. They avoided them like the plague until the 6th round. Coach Bill Belichick suggested that with everyone focused on those players, it freed up top players at the other positions that they took. That makes some sense. Those who wear rose-colored glasses could make an argument that the Patriots got 4 first round quality players in Solder, Dowling, Mallett, and Cannon. Mallett and Cannon were projected to be 2nd rounders, but fell down the draft due to character issues and a (treatable) cancer diagnosis respectively. It has been a polarizing draft for analyst to judge since most agree they got talent, but not necessarily at positions they needed it at. Sporting News gave them an A+ and FoxSports gave them a D. Over the next three years or so, we’ll find out who was right. This is part of the reason the NFL draft is interesting.

Before I get to the links, I suggest you come back later today for a little contest. I’m going to give you a chance to invest some of my money. The person who comes up with the best idea that I actually use, with get $25 in some form (Paypal, Amazon or Ebay gift card, I haven’t decided).

Here are the links:

Money Writers:

Top PF Posts:

Personal Finance and The NFL Draft

by 3 Comments

There are a few big events coming up soon. We’ve all been waiting for them for months, right? As Charles Dickens once wrote, “there’s so much to write about and so little to write about.” Wait, he didn’t write that?

One of the top news stories is a wedding. I’m only going to be writing a paragraph about that. If I’m going to write about someone famous for being a heir and a person famous for knowing that heir, I’m going write about Paris Hilton and Kim Kardashian. They are infinitely more entertaining, right? Well at least they were for a time. Yesterday, I was watching the news and one of the top stories was Kate Middleton driving her own car. I was shocked that this qualified as news. My wife was quick to point out that they are trying to show that they are normal. I couldn’t help but burst out, “They Are Normal!” If the stork delivered William to another chimney, would this wedding be a news story? Of course not.

Another one of the top news stories is the release of a white iPhone. This sounds like Crystal Pepsi to me… though at least Crystal Pepsi was a very different product. Perhaps a better analogy is Sprite with green food coloring. I have picked on fashion before, so I don’t want to discount that factor. However, phones from 15 years ago had detachable nameplates and none of them made news. This reminds me of Apple making a big deal out of getting The Beatles in iTunes. They are trying to market a collosal failure of theirs as a success. Shame on all news outlets that are reporting this without calling it out.

Hmmm, maybe The Digerati Life is onto something when calls me a curmudgeon.

The big event of the day for me is the NFL Draft. I’ve spent more time reading about it than I like to admit. The NFL Draft combines two of my interests: football and personal finance. The football part is obvious. The personal finance aspect is not as obvious.

Four years ago, I wrote about compound interest in the NFL When you watch the draft, you’ll often hear coaches describe draft picks as “currency.” That’s exactly what they are. They are assets that can used or traded to acquire talent. If we are to call draft picks currency, there must be a system to value them, right? It turns out that is the case. While not all teams go by this system, it is widely used. ESPN has a draft pick chart that shows the value of each pick. In theory the #1 overall pick, 3000 points is worth the 15th (1050 points), 16th (1000 points), and 17th (950 points) picks. Here’s a graph of the chart of the value of a NFL draft pick:

NFL Draft Pick Value
The value of a draft pick drops off quick.

At the time of my previous article, my favorite team, the New England Patriots, traded their #28 pick to San Francisco for their first round pick in 2008 as well as the #110 in that current draft. The Patriots ended up trading that #110 pick for Randy Moss, a Hall of Famer who would go on to have his best season. The San Francisco pick in 2008 was the #7 overall in the draft, which allowed them to get Jerod Mayo, one of the best players on the team today.

How does that look in terms of value? The Patriots traded 660 points (#28) for 74 points (#110) and what turned out to be 1500 points (#7) the following year. They essentially put 586 points (660-74) in the bank and watched it grow to 1500 in a year. It’s good to triple your money in a year. While the Patriots got lucky that San Francisco didn’t have a good season, they set themselves up for a situation where the odds were great that they’d make out. There are only four picks worse than what they were offering.

Last year, the Patriots made a similar trade. They traded #89 for the Carolina Panther’s 2nd round pick. Carolina was the worst team last year, so the Patriots got #33 in return. In this case they banked 145 points for a year for 580 points, exactly 4 times the value. The rumor is that tomorrow the Patriots will trade that #33 for a 2012 first round pick and a 2011 4th round pick. That would likely turn those 580 points into 1200. This is one of the reasons why the Patriots are so good.

Conversely, you could look at the trades from the perspective of Carolina or San Francisco. They essentially took out a loan with a 300% or 400% yearly interest rate. That’s not a good thing.

This begs the question, “Why would these teams make such bad trades?” I can’t say that I know the answer, but I can guess. Many teams have coaches on the hot seat. They need to bring in talent or the team owner will fire them. They also need to keep fans happy. Nothing does that like making a trade to grab a player. It shows that the team has a lot of confidence in the player.

In a word where billions of dollars are at stake, it seems odd to me that teams are pressured into making such terrible financial decisions. However, I’m happy that my favorite team is the beneficiary.

I’ll be back in about an hour with analysis of what I’d do if I were the New England Patriots in this draft.

Personal Finance Links (2010 NFL Draft Edition)

by Leave a Comment

I’ve been a little wrapped up in the NFL Draft over the last week. I always take this time after getting taxes done to throw my thoughts about finances aside for a little bit and focus and my other true love – football. Having grown up in New England, I’m a Patriots fan. If you care to read a little of football, I brought back Lazy Man and Sports to briefly discuss Belichick’s trading and drafting strategy.

Those interested in more of a personal finance article about the NFL Draft could read my previously written article on Compounding Interest in the NFL.

Lastly, check out these personal finance links:

The Money Writers:

Top PF Posts:

Links: Comcast Outage and NFL Draft Edition

by 2 Comments

Yesterday, I woke up excited for the NFL draft. It had been heavily publicized for the last two months. I was disappointed to find that Comcast, my cable television and Internet provider, was experiencing an outage. Right before the draft, they got the television working, but the Internet was down all day. I finally called Comcast late last night to find that when they fixed the outage, the cable modem needed to be recycled. I lost a days worth of work with the Carnival of Personal Finance due out tomorrow because they didn’t tell me to unplug the modem and plug it back in. This solidifies the hate portion of my love-hate relationship with Comcast.

As for the draft itself, it’s been relatively boring. In the past there’s been some drama with a player being stuck in the green room for an excessive amount of time. Yesterday it emptied out in the first hour. As for the Patriots, the team I follow, their draft has been solid, but not the barn-burner that I’ve come to expect the last couple of years. They didn’t trade for an extra first round pick or pick up a Randy Moss/Wes Welker-type star. That said, the Patriots picked up some quality at the positions they needed it. It’s the third round and they traded third round pick for a future 2nd round pick and a fifth round pick. I love when they do this – next year I’ll be very happy when they have two second round picks.

On to the links I liked this week: