The Los Angeles Rams obtained the No. 1 pick in the 2016 NFL draft from the Tennessee Titans in the following deal:
No matter how you break it down, the Titans appear to be the clear winner in this trade. Why?
Before dissecting the trade with some analytical tools, let’s point out several observations associated with trades involving draft picks:
Every draft pick has an expected value, but the top player at a certain position is on average only marginally more valuable than the second-best player at that position.
Team decision-makers are generally overconfident in their ability to identify players who will turn out well, and they often overvalue the top picks in the draft.
Late-round picks provide value because of their potential production and price tag. If the position were filled with a replacement-level free agent with the same on-field production as a late-round pick would provide, a team is likely to pay a far higher price.
ESPN Analytics Specialist Brian Burke has helped to outline three ways to evaluate the Titans-Rams trade. We will break down this trade with all three models, beginning with the least advanced and least accurate of the three: Jimmy Johnson’s trade value chart.
1. Jimmy Johnson chart: The most well-known and widely used trade evaluation by teams, the JJ draft chart provides a numeric value to every pick in the draft, with the top pick worth 3,000 points. Based on this model, the Titans come out on top in this trade -– receiving about 9 percent more value.
2. Approximate value: This is a more advanced way of looking at the trade than the JJ chart. Pro Football Reference’s approximate value assigns one all-encompassing number to each player's season or career based on a formula outlined here.
AV allows players from different positions to be compared, and it can be used as an overall measure of player value.
Each draft slot has an expected AV for a player over the term of his rookie contract. Based on the picks traded, the Titans acquired a total AV of 23 over those players’ rookie deals, and the Rams acquired a total AV of 13.1. In context, that is equivalent to the difference between offensive linemen Russell Okung and Gabe Carimi in their first four years in the league.
The real value for the Titans comes in Year 2, when they acquire the additional first-round and third-round picks.
3. Massey-Thaler value (updated by Brian Burke): The most complex of the three trade evaluators, the Massey-Thaler, accounts for the value of the pick and the price tag of each draft slot above or below what a team would pay for a similarly valuable player in free agency.
If a draft pick costs $1 million per year but a free agent with the same on-field value costs $3 million, the draft pick provides $2 million in surplus value. Generally, if draft picks (particularly in late rounds) are cheap labor when comparing their price and production with free agents, the money saved can be spent in other places.
Based on this model, the Rams got $3.6 million in surplus value and the Titans received a total of $13.1 million in surplus. With the $9.5 million in additional surplus, they can spend that money in free agency or elsewhere.
This also accounts for the interest rate the buying team (Rams) is paying to borrow from future draft picks for draft value this year. In this case, the interest rate is infinite -- meaning there is no interest rate high enough to justify trading away their first- and third-round picks next year.
The Rams might be a quarterback away from competing for an NFC West title, but unless the No. 1 pick becomes a superstar, we might look back on this trade as one of the most lopsided deals in NFL history. No matter which of the three methods you choose, the Titans came out on top.