April
NFL Draft Economics: Draft Trading and the Rookie Wage Scale
Ted Thompson and the Green Bay Packers have a lot of options in the 2012 NFL Draft with 12 overall selections, and they are probably going to need them with some of the defensive holes they need to fill.
Our own “Jersey” Al Bracco spent time presenting some First and Second Round trade-up scenarios that could possibly occur, and Thomas Hobbes looked into Thompson’s trading history in relationship to the Trade Value Chart (TVC).
A lot of people are wondering, though, does the old TVC still apply?
This will be the first draft under the latest Collective Bargaining Agreement (CBA) between the NFL and NFLPA, and it comes with a shiny new set of rules for a rookie wage scale. Though we haven’t had a draft under these restrictions on pay, the 2011 rookie class did feel the effects of it when they were finally signed.
Below is a comparison of the contracted salaries of the top 10 picks in the 2010 and 2011 NFL Drafts. The numbers shown are in millions of dollars, and for simplicity in numbers, only the guaranteed amount has been recorded. It’s not a perfect barometer of the wage scale’s effects, but it should give you a general idea of what has happened:



Let’s play devil’s advocate one more time and look at why the Packers should trade up in the NFL draft. This time I will be looking purely at the economics of the draft. The classic example that Packer fans love in the 2005 NFL draft where Alex Smith was given the biggest rookie contract of all time at that point with $45.9 million deal with $24 million guaranteed while Aaron Rodgers only commanded a $7.7 million deal (less than Smith’s guaranteed contract) with $5.4 million guaranteed. I’m not going to go in the relative value of Smith vs. Rodgers as players (as countless writers including myself have beaten the topic to death) but the take home message is that the Packers couldn’t lose economically: if Rodgers is the next Bart Starr, then they’ve got him at a discount for the first 5 years, if he’s decent the Packers paid a fair market value for him and if he’s a bust they can cut Rodgers without much penalty. Smith on the other hand had to succeed; it was the only way to justify his massive contract. 













