Free Agency Overspending Begets Losing

by Warren Sharp

It is March, so that means 2017 NFL Free Agency is around the corner.  The “Legal Tampering Period” starts tomorrow, on March 7th.  This is when teams are allowed to negotiate with “certified agents” of players about to become free agents, the news cycle will be filled with deals in-the-works, rumors of handshake deals and other player-team marriages. Then on March 9th free agents are officially allowed to sign with teams.  You can guarantee the news will be rife with immediate hot takes and articles on “free agency winners”. The vast majority of takes will be extremely superficial.  “Which team improved the most?” and most likely, it will be the team that spent the most to sign the best splash players.  It’s predictable, it’s inevitable, but there is just one problem:

It’s wrong. “Winning” by overspending in free agency means losing on the football field.  There is an extremely strong negative correlation between spending on free agents and winning football games.  This is not theory or speculation.  It is fact.

Everyone will clamor for the one team it worked for, though.  People will argue the Denver Broncos, forgetting the fact that the team had one of the NFL’s greatest quarterbacks of all time.  Ironically, they won the Super Bowl when he was playing poorly at the end of his career, but he brought much more to the field than just a throwing arm.

But come March 9th, you won’t find such commentary from the mainstream media or the fans of the teams locking up the best available players. You can “win” free agency by utilizing it intelligently – signing undervalued pieces, grabbing a few bad fits from prior teams, and letting your own players walk rather than overpaying them.  That is how you “win” free agency.  But it is not sexy.  It’s not headline material.

But it wins games.  You win in the NFL by having a great General Manager who builds primarily through the draft and employs a coaching staff who develop talent and understand efficient winning in today’s NFL & how to exploit edges. That generally starts with a solid quarterback, and most frequently one that is hitting the salary cap for less than he’s worth to enable you to build out a deeper roster (no team has won a Super Bowl in the salary cap era with a QB taking up more than 13% of their cap, and the avg the last 17 years is just 6.7%).

So back to that nasty negative correlation between spending in free agency and winning.  Below is total spending the last 3 years vs wins.  This analysis looked QUITE similar when I ran it for the 3 year period from 2013-2015 last offseason.

2017free agency 1It really does not get any more clear than that.  The teams who chose to fix themselves overnight with big spending sprees in free agency the last few years have failed.  The teams who took the more long term, patient approach have been rewarded.  To nail the point, take a look at the chart’s extremes.  You will see that of the eight teams which spent the least in free agency, seven produced winning records.  While of the eight teams which spent the most, only one produced a winning record.

2017free agency 2What should also be of note with these eight teams spending the least:  NONE of these teams won by trying to snag a quarterback through free agency.  They ALL drafted a quarterback and took the long road of dealing with his growth and developing him over time.  We’re talking about teams like:

  • Green Bay (Aaron Rodgers)
  • Carolina (Cam Newton)
  • Pittsburgh (Ben Roethlisberger)
  • Cincinnati (Andy Dalton)
  • Seattle (Russell Wilson)
  • Minnesota (Teddy Bridgewater) and
  • Dallas (Tony Romo / Dak Prescott).

The NFL is a process, and those that understand it best can exploit the many clueless franchises out there.  But it’s not just historically bad, losing teams that get caught poorly managing their team and over spending in free agency. Every year, a winning team from the prior season believes they are on the cusp of something special, and over spends with poor results:

  • After winning 10 games in 2012, the Vikings spent over $100M in free agency in 2013, signing 5 players on day one including FB Jerome Felton, LB Erin Henderson, RT Phillip Loadholt, C Joe Berger and SS Jamarca Sanford. They added QB Matt Cassel and WR Greg Jennings in short order, and proceeded to win only 5 games in 2013 and fired their head coach.
  • After winning 11 games in 2013, the Saints spent over $95M in free agency in 2014, headlined by big deals in the secondary, including FS Jarius Byrd and FS Malcom Jenkings, along with multi-year deals for CB Champ Bailey and RT Zach Strief. The Saints won just 7 games each of the last two seasons.
  • After winning 10 games in 2014, the Eagles spent over $122M in free agency in 2015, bringing in big name, big contract players from around the NFL including CB Byron Maxwell, RB DeMarco Murray, RB Ryan Mathews and FS Walter Thurmond. As we know, the Eagles struggled tremendously, winning just 7 games last year. Like the Vikings above, this catastrophe led to firing their head coach, and in 2016, the futures market predicts another losing season.
  • After winning 9 games for the second straight season in 2015, the Texans spent $140M in free agency in 2016, highlighted by day 1 signings of QB Brock Osweiler and RB Lamar Miller to beef up their offense.  Despite playing in the NFL’s easiest division and facing the 2nd easiest schedule of opposing defenses in the NFL, the Texans offenses was one of the worst in the NFL.  Playing in such a poor division against an easy schedule, they were able to make the playoffs but stood no real shot against good offenses, and were blown out by the Patriots.  Now the Texans find themselves with Osweiler hitting the cap for $19M in 2017 more than Ben Roethlisberger and Russell Wilson, and equal to Drew Brees.

Many teams fall victim to the allure of the “quick fix” of free agency, or the prospect that they can add the “missing piece” which would get them from a 10 win team to a Super Bowl team.

To break it down further, I mapped out the teams as data points against free agency dollars and wins the last 3 years, and included the averages for free agency dollars (just over $200M) and wins (a 24-24 cumulative record). Once again, the red trendline indicates the negative correlation between spending in free agency and winning games.

2017free agency 3It’s interesting to note the 2 quadrants that do not hold many teams. The Broncos were the only team to both spend and produce well above average, in quadrant 3 (Q3).  A lot of that had to do with Peyton Manning and without him, even with a great defense, we saw how the Broncos struggled in 2016.  Similarly, Q2 is less inhabited.  This is because many teams that don’t win get desperate and end up spending a lot in free agency.  The 3 teams that were squarely in this quadrant in last year’s model were the Rams, Chargers and Texans.  Two of the three are still here, and I mentioned the Texans spent a lot last year to improve their offense (which ultimately did not happen).  Some of the most mismanaged, unintelligent teams reside in Q4.

Meanwhile, some of the best franchises in the NFL, with the best front offices, reside in Q1. And for these teams, the record is a result of the way the franchise runs and the philosophy they employ from a team building perspective. Chief among them include the Patriots, Packers, Seahawks and Steelers, mainstays from last year’s model run.

For a handful of the best, which I’ll discuss in future articles as part of this NFL offseason series, they build themselves correctly, through the draft. And when their best players make it to free agency, most of them are lost, with teams from Q4 eagerly snapping them up and overpaying them, while the teams from Q1 take their comp picks for the players & reload in the draft.

Looking at the 50 most expensive forays by NFL teams into free agency the last 3 years, only 2 of the 50 moved teams from losing records to winning records for the next two seasons, and only 1 of the 50 saw a team win increase to a double digit-win team in each of the next two seasons. So while occasionally over spending in free agency can work, it’s far more likely to fail miserably.

While all of the above is true, there is a caveat for 2017.  And that is the salary cap is rising yet another $12M, from $155M in 2016 to now $167M in 2017.  Thus, after literally zero salary cap increase from 2009 ($123M) to 2013 ($123M) the cap has increased $44M over the last 4 years.  Teams will spend more in free agency because they can.  So I absolutely won’t be surprised to see plenty of players get massively overpaid in a few days.  The average spending certainly will continue to increase.  But as it always is, it’s the teams which make the most intelligent decisions with their team over the next two months, between free agency and the draft, which will ultimately put themselves in the best position to win not just in 2017, but beyond.

Many NFL front offices of losing teams get scared for their jobs, and view the safest path a free agency spending spree.  If the well known, well paid new players don’t help turn around the franchise, perhaps they can be the scapegoats.  The reality is a more measured approach of focusing on drafting and developing talent, coupled with a few intelligent moves is what can turn a franchise around and save a coach’s job.  The “quick fix” of free agency is a myth.  Very few losing teams actually “fix” themselves in free agency.  If they see a one-season win increase, it most likely is the result of an easier schedule due to their poor record the prior year.  It is never wise to overpay players, and often overpaid players lose an edge they had when they were underpaid.  The best teams refuse to overpay players, and that strict discipline allows them to continue to reload year in and year out.  We will know in a few days how ridiculous some of these new contracts will be.  But when passing out “grades”, keep in mind burdening a team in 2017 and beyond with a massively overpaid contract is not “winning”, and remember that free agency spending and winning games is negatively correlated, and has been for some time now.

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Note that as another free agency “winner” apart from the Broncos, some may want to point to the 2016 Giants.  The Giants spent a massive $214M in free agency last year, primarily building on the defensive side of the ball.  The Giants went from a $50.6M cap hit on defense in 2015 (7th least) to $71.6M in 2016 (9th most).  Their defense certainly got better, but as we saw by looking at the way 2016 played out, offenses ruled the day.  The Giants had a major problem that their all-star defense couldn’t solve: pressuring the opposing QB.  They ranked 23rd in adjusted sack rate and 28th in Pro Football Focus’ pressure rate, and additionally, allowed opposing QBs the longest time in the pocket before pressure of any team in the NFL.  This allowed a huge rate of big pass plays against their defense, which ultimately cost them against the Packers.

On offense, the team had to compensate for the salary allotted to the defense. They moved from spending $23M in cap to their offensive line in 2015 (12th most) to just $13M in 2016 (2nd least).  Combined with just a $3M cap hit to their TEs (3rd least), the Giants had the NFL’s cheapest pass protection in the NFL last year.  They compensated by getting the ball out quickly, which helped Eli’s sack numbers, but it prevented their ability to hit big plays in the pass game (unless Odell Beckham Jr. was taking a slant to the house).  On passes 15+ yards in the air, with deeper drops, more time in the pocket and weaker protection, Eli Manning was a disaster:  his 58.5 rating was 4th worst in the NFL and he completed just 34 out of 111 attempts.  For context, these numbers were worse than Carson Wentz, Ryan Fitzpatrick, Case Keenum and Colin Kaepernick, among many others.

Now, the Giants must deal with a cap hit on the defensive side of the ball of a MASSIVE $94M, the most in the NFL.  When most of the NFL’s very best teams, like the Patriots, Steelers, Cowboys, Packers and Falcons are spending substantially more on offense than defense, the Giants are on the total opposite side of the scales.  Given all the rules which benefit offenses, it is hard to win in 2017 without a strong offense.  Whether the 2017 Giants can get far more out of their offense than they did in 2016 will likely determine whether they can win with such a massive cap hit allocated by their defense.

Who Should Own the 2017 NFL Draft

Until all the final draft-day trades are executed, it’s impossible to know for certain which team ended up with the most total value in the 2017 NFL draft. But what we do know right now is who should own the 2017 NFL draft based on total draft commodity entering the draft.  A few years ago I wrote several stories about valuing the draft, the foundation of which always goes back to the concept of “draft points” which I introduced then, and as mentioned, is based on Football Perspective’s research where they assigned point value to each draft pick.

While the prior year’s finish dictates current year selections, a number of elements cause the distribution to be imbalanced on an annual basis.  For instance, prior year trades (and current year trades) will cause some teams to be better off.  Additionally, the overlooked (by most fans) world of compensatory selections which I discussed last year HERE when writing for Fox Sports, allows some really good teams (Seahawks, Chiefs and Broncos in 2017, for instance) to have even more value than one would expect based on their prior year’s finish.

This year, while the Bengals were one of 4 teams to receive 4 comp picks, their overall value is about half the value of what the Seattle Seahawks received in just 2 comp selections.

The Cleveland Browns should theoretically own this draft, based upon their high number of picks (they also received 4 comp picks) as well as their overall value, thanks to them having the 1st overall pick.  However, we’ve heard this story before when it comes to the Browns.  I will continue to provide additional analysis on the 2017 NFL draft in the days and weeks to come.

2016 NFL Season Recap & 2017 Forecast

The 2016-17 season ended on a high note, hitting the over in dramatic fashion.  I’ll discuss more about the game and my thoughts on it at the very bottom of this post.  I first wanted to thank a few groups of people.

FIRST: To my 2016-17 clients, thank you for being part of yet another winning season, my 11th in 11 years of doing this.  NFL computer totals, my specialty, hit 65% during the regular season, and with the 6-2 (75%) results for totals issued in the postseason (I grade all postseason releases as personal plays, regardless of whether the totals model was the source for them or not) I recorded a 28-14 (67%) final result on totals this year.  This comes after my NFL totals hit 71% in 2015 and 61% in 2014.

Thanks to the success from my NFL computer totals this year and last year, my lifetime record in these has increased from 60% in 718 recommendations to 61% in 752 recommendations.  And those numbers don’t even include the postseason success.

Overall in 2016, we hit 58% in the NFL, for another solid season of results.  But more than just the win percentage, I hope you were able to take advantage of the knowledge I tried to share in the form of my detailed write ups.  I know there are many services who refuse to provide insight into their selections, for fear it will impact their bottom line.  As you can see, it does not impact my bottom line.  What it does is make me work harder and smarter to continue to study the NFL each and every week looking for edges both from a betting, coaching, strategy or match-up perspective on a weekly basis.  And I love doing that.  As a result, there is no doubt in my mind that you guys are easily the most educated group of clients on the planet.  To be able to win on an annual basis as well as share so much innovative information with you guys each week is extremely rewarding to me, and I hope you feel the same.

SECOND:  To those subscribing to the Sharp Football Analysis Podcast, thank you for all of your feedback and positive reviews, both on iTunes and on Twitter.  It has been a blast recording these with Evan Silva of Rotoworld and both he and I are constantly hearing from you guys about how unique and useful these podcasts are, and that is exactly what we’re going for.  There are a lot of DFS specific podcasts out there, which talk about player prices and ownership, etc.  There are a lot of sports betting specific podcasts out there, which talk about ATS win rates and make predictions.  But our podcast talks about football, first and foremost.  The hope is to teach you about the game, playing efficiently, and dissecting match-ups that will matter each week.  Our belief is that by educating you about edges and mismatches, you will be able to use that information to make intelligent decisions whether they are DFS related or sports betting related.  We missed a number of episodes mid-season this year but closed out the year strong and look forward to more in 2017.

THIRD:  To those who checked out Sharp Football Stats.com this year, thank you for getting involved on the ground floor for some of the most enhanced visual statistical innovation the NFL has seen.  The uses of the website are limitless, but the next step is continued innovation on my part.  I plan to spend significant time over the next 6 months further developing, improving and enhancing the website.  I have lofty goals and a long list of new features I want to add.  I’ll be discussing the future of the website with multiple well-known individuals and there could be big changes (for the positive) in store for 2017, so I’m extremely excited for that.  But thank you for checking it out and for spreading the word.  Please continue to do so in order to have more intelligent information widely available for all to enjoy and explore.

LAST BUT NOT LEAST:  For everyone who purchased the 2016 NFL Preview, the first version available in print at Amazon, thank you for helping make the book a best seller on Amazon when it launched!  Along with my extensive work planned for Sharp Football Stats, I plan to start next week on the early work for the 2017 NFL Preview.  I hope you enjoyed last year’s edition.  I hope it was educational and taught you something about the basics of efficient football.  I also hope you learned about the teams and what to expect from them heading into the season.  As good as I felt when I finished last year’s edition, I am fully confident that the 2017 version will be even better.  I have plenty of new ideas I plan to incorporate and while it will be a ton of hard work these next 5 months, I plan to have it ready no later than July 1, 2017.

TO EVERYONE: This season was another extremely successful one.  I feel really satisfied with the content I was able to produce this season.  Whether it was my 2016 NFL Preview magazine, the podcasts, the launch of Sharp Football Stats, the weekly recommendations and detailed write-ups for clients and my in-season articles at ESPN, it was a lot of work but I hope it was well received and was useful for you.  Thank you for checking me out at all of those platforms.  In this space, it does feel like those who approach their work seriously, with honesty, creativity and a ton of effort are noticed, and for that I am thankful.  I wring out every last drop of energy I have on a daily basis during the season, because I love analyzing football.  I hope that is evident.  I enjoy the offseason because I can still entertain my creative football juices with other projects I have lined up, but can also return to a semi-normal sleep schedule and spend more time with my family.  So you won’t find me complaining about the lack of football.  I have so many football analytics related ideas that by the time training camps open, I’m going to wish I had more time to accomplish everything I envisioned.  As you can see, there is a lot to look forward to as it related to the 2017 season!

AS FOR THE SUPER BOWL: The first quarter was all about field position.  The Falcons started drives from their 8 and 12 yard line, while the Patriots started drives from their 10 and 25 yard line.  So while I was concerned for our over, it was not because I thought either defense was better than I anticipated, rather, the field position had both play callers operating on a slightly more conservative note.

The second quarter is where Blitzkrieg! came to fruition.  Atlanta’s two TD drives against the “Number One” defense each took only 5 plays and gained 71 and 62 yards.  Matt Ryan posted a perfect 158.3 first half passer rating and the Falcons rushed all over the #4 run defense, absolutely destroying the Patriots at the edges, as you can see below via Sharp Football Stats.com

ATL 1H rushingMeanwhile, the Patriots were still getting the ball with terrible field position, starting their second quarter drives at their own 16, 18, 25 and 25 yard lines.  But their offense finally came to play against this terrible Falcons defense.  Apart from one 3-and-out, those second quarter drives gained 62, 53 and 37 yards.  Each drive gained multiple first downs and each drive ended well into scoring position:  the Atlanta 23, 23 and 33 yard lines.  But they fumbled on 1st down at the Atlanta 29, and threw an interception on 3rd and 6 on the Atlanta 23.  And the drive where they kicked the FG from the Atlanta 23 saw them drive to a 1st down on the Atlanta 15.  But they had just 23 seconds left in the half, and a pass that took them down to the Atlanta 3 was called back with an offensive holding penalty.  The bottom line was, even with a 21-3 score at halftime, it was evident to me that the Patriots offense could produce against this bad Falcons defense, and the Falcons offense was certainly more than capable of scoring against the Patriots “number one” defense.

The third quarter went just fine for the Falcons offensively overall.  But there were two key changes in the 3rd quarter that ultimately swung the game.  The first was that the Patriots began to bottle up the run.  After averaging 9.6 YPC in the first half, the Falcons averaged only 1.6 YPC in the third quarter.  Despite terrible field position on their two drives (starting at their own 15 and 19) the Falcons were still able to string together a proficient 85 yard TD drive to extend their lead to 28-3.  But that drive was extremely one dimensional:  74 yards were via passing (with 3 via a pass interference penalty).

But the second thing that really changed for the Falcons was the time of possession.  The Falcons defense was on the field the entirety of the final 8:48 of the first half, thanks to two long drives by the Patriots, one of which ended with a pick-6.  And thanks to a nice 6:25 drive by the Patriots in the 3rd quarter, the Falcons defense was on the field a ton and was completely gassed.  What I envisioned happening early, happened much later.  Thanks to the score, the Patriots offense used tempo and kept the Falcons defenders on the field without allowing many substitutions.  And these players got completely worn down.

The Patriots first drive of the second half would be the only drive of the rest of the game that they punted.  They shifted to passing the ball on 79% of their second half plays.  Tom Brady delivered a 105 passer rating in the second half, and,  they scored 24 points on their final 3 drives of the half, completely exploiting the NFL’s worst red zone defense of the Falcons, converting on 4 of 6 trips.

In the 4th quarter, up 28-9, the Falcons should have tried to run the ball more often.  The problem was they became too predictable.  On their 6 first downs, they ran the ball 50% of the time.  They averaged just 3 YPC and found themselves in 2nd and long as a result.  Whereas on the other 50% of first downs when they passed the ball, they were successful 100% of the time.  So obviously Kyle Shanahan felt better about the pass game.  And almost every time something bad happened, it came as a result of the run game:

1) After recovering an onsides kick at the NE 41 at the end of the 3rd quarter, Ryan gained 9 yards on first down via a pass.  Now in FG range at the NE 32, they ran the ball on 2nd and 1.  Not only did they lose 1 yard, they were flagged for holding, putting the ball back on the 42, and they ultimately were forced to punt.

2) After driving down to the NE 22 thanks to an epic catch by Julio Jones with only 4:40 left in the game, they ran the ball on 1st and 10 and lost 1 yard.  Now faced with 2nd and 11, it was an obvious passing situation and the Patriots pressured and sacked Ryan back to fringe FG range at the 35.  They successfully passed for 9 yards to the NE 26, but the play came back due to a holding penalty.  And they were forced to punt.

I completely understand the thought process of fans who wanted the Falcons to run 3 times from the NE 22 and then kick the FG.  It seems like a slam dunk in retrospect.  But as you can see from 1) above, even a run play could have resulted in a holding penalty.  That said, I likely would have advocated runs regardless.  But the story of that second half was the run defense finally shutting down the Falcons run game, coupled with their poor decision making down the stretch.  See the below of the Falcons run game in the second half, and compare the results to the first half:

ATL 2H rushingOverall, I did not expect the Patriots to end the first half with only 3 points, but I don’t believe that point total was indicative of their offensive performance by any means.  I expected the Patriots “number one” defense to fall short of their title, and in most respects they did.  The Falcons offense was successful on a whopping 63% of their offensive plays.  The much lauded red zone defense of the Patriots was eviscerated by the Falcons, as Atlanta ran for 4.2 YPC and Matt Ryan posted a 132 passer rating in the red zone, leading the Falcons to 3 TDs in their 3 trips.  I expected the Patriots offense to produce big numbers against this Falcons defense, and they did.  As mentioned earlier, they started slow and did more in the first half than 3 points would indicate, but the floodgates opened in the second half against a weak (and tired) Falcons defense.

This Super Bowl had just about everything.  And some things we’ve never seen before (like overtime).  Both teams made their share of mistakes from a strategical perspective.  For instance, I believe the Patriots relied too much on LeGarrette Blount to run the ball on 1st down (8 rushes for 2.5 YPC).  The Falcons struggled at the end of the game in situational football.  And the fact is, in a close game against Bill Belichick, you can’t struggle at the end in situational football because his team rarely does and that made the difference.

Kyle Shanahan’s offense was designed incredibly early on.  On first down, Matt Ryan was 10/10 for 17 YPA and a 152 rating.  They did many great things in this game and on the season.  They had a great run and it will be fascinating to try to watch Kyle Shanahan wear multiple hats and see even close to similar success in San Francisco with such little talent.  As for the Patriots, it’s another year and another successful season.  How do they keep it up?  How about the fact that 30 of their 53 man roster is receiving their first ring, even though New England won the Super Bowl in the 2014 season.  They reload and roster build extremely well.  And part of that has to do with Brady’s unnaturally low salary, which should draw more eyeballs than it currently does.  Both of these teams had incredible seasons and were great Super Bowl representatives, and the game was as compelling and thrilling as they come.