by Richard Hill for TheFootballEducator.com
While macroeconomics focuses on the economy as a whole, microeconomics looks at the impact trends have on individual firms that combine to make the overall economy. In the NFL, each team can be considered a firm in the same sector, as each team competes for the same “profits” (on field success) while utilizing the same input materials.
The differing demands of the same thing
What differs from team to team is the firm’s demand for each input material or service. In this exercise, we consider each player group as its own type of service, or good, as teams must try to take advantage of market inefficiencies to stay ahead of the competition. Inefficiencies can come from schematic or personnel changes in order to capitalize on supply and demand levels.
For example, tight end utilization was low until the Patriots and the Saints drafted Rob Gronkowski, Aaron Hernandez, and Jimmy Graham. There were players like Tony Gonzalez, Jason Witten, and Antonio Gates, but the level of demand was at a low enough level that the supply was abundant- as such, tight ends were obtained for cheap. As we move forward, look for tight ends to not only be drafted earlier, but for their second contracts to be of much greater value than they’ve been in the past.
While the tight end position has been the most recent example of taking advantage of market inefficiencies, there have been plenty of positions to receive past attention- and plenty more yet to rise to prominence. Slot receivers, like Wes Welker and Davone Bess, have been increasing in demand as teams see the quick pass as an easy alternative to running the ball. Versatile hybrid players like Randall Cobb and Percy Harvin, as well as H-backs like the Charles Clay and James Casey could be on the rise.
You must decide the value
It is up to the individual firm to decide how much value to apply to a position and to create its own demand level. The Packers, Saints, and Giants put a premium on a different receiver type than the Steelers and Eagles. The Vikings and Jets lean more heavily on their ground game than other teams. The 49ers and Texans have success with their 3-4 defensive fronts, while the Bears excel in the 4-3.
All are different teams with their unique ways to find their success. Players have different values based upon their supposed scheme- Wes Welker means more to the Patriots than he might in a different offense- and, as such, teams must learn how to compensate accordingly, while still living within their salary cap means.
Getting to the point
And therein lies the core of running an NFL team: how does a team value its players, how does it maximize their value, and how can a team capitalize on the inefficiencies of the open market to get an edge on the competition? It’s clear that one way to gain an advantage is to analyze the league through the economic lens to take advantage of the available, yet untapped, potential in the market.
Like me on Facebook and Follow me on Twitter @Ted_Sundquist.