Trade Cost-Benefit Analysis
by Andrew Healy
Imagine if the Bills had traded more than Kiko Alonso to get LeSean McCoy. What if, instead, they had added a late first-round pick to get Chip Kelly to pull the trigger? Bills fans would probably like that trade much less than the real one. Maybe this Eagles fan would feel more positively about Chip Kelly.
Well, if we think about the cap space that they gave up, the Bills actually made that hypothetical trade last week. In terms of the lost opportunity to sign additional players, the Bills gave up the equivalent of the 29th pick in addition to Alonso.
Let's check out some recent trades, with a complete accounting for everything, including cap space. We can measure draft picks and cap space in the same terms by the on-field value that those assets usually create. The unknown is the future performance of the traded players. By accounting for everything else, we can see how well McCoy will need to perform to make the trade a winner for the Bills.
We'll get to Shady, but let's start with the trade that actually should be causing that Eagles' fan to tear his hair out.
Chip Kelly, Ay Caramba
|2015 Fifth-Round Pick (Est. No. 148)||2.80|
|2015 Fourth-Round Pick (Est. No. 119)||4.20|
|2016 Second-Round Pick (Est. No. 52)||9.40|
|2015 Cap Space of $11.6 million||9.18|
The Eagles-Rams trade, while complicated in some ways, is simple in terms of the cap implications. So I am going to use this as the opportunity to explain the math. You can just skip the next paragraph if you want to jump straight to the results.
To assign a value to cap space, I am building on some excellent work done by Chase Stuart at Football Perspective. Using Pro-Football-Reference's Approximate Value (AV), Stuart defined Marginal AV to be the value that cap dollars provide in terms of better players than the replacement-level types earning the veteran's minimum. For draft picks, Stuart calculated something similar, estimating the value that draft picks provided above replacement rookies in their first five years. Since I wanted to put draft picks and cap space on the same scale, I used replacement rookies as the baseline for both. I calculated Marginal AV for 2015 cap space by extrapolating Stuart's estimates. For draft picks, I utilized the values from Stuart's Draft Pick Calculator. To keep things simple, I did not adjust those values for salary, which would tend to value high picks (whose salaries are further above replacement level) a little too much relative to cap space. I used the current draft pick slots to assign values, estimating three compensatory picks at the end of the third round and eight at the end of the fourth.
Even before accounting for cap space, Sam Bradford would need to far outperform Nick Foles to make this trade an even swap. The exchange of draft picks meant that the Eagles were netting about a loss of a middle-second-round selection. If we do not discount the second-round pick for being in 2016, the Eagles gave up 10.8 points of value relative to a replacement player (Marginal AV), a value about equivalent to the 13th pick of the second round.
But the loss of cap space makes the deal so much worse for the Eagles. They gave up $11.63 million in 2015 space in the deal, the equivalent of 9.2 points in Marginal AV. That loss is about equal in value to the second-round pick they gave up. The value of that pick would be spread out over time while the cap space loss hits entirely this year, but the total pain is about the same. Overall, the Eagles gave up 20.0 points of Marginal AV in draft picks and salary cap space to exchange Foles for Bradford. To put that in perspective, Aaron Rodgers had the highest value of any quarterback last year with a Marginal AV of 19 (using a baseline of two AV as replacement level). Bradford cannot make this trade a winner for the Eagles in 2015. He will be hard-pressed to make up 20 points of value even over five years.
Stars and Scrubs
|2015 Fourth-Round Pick (Est. No. 112)||4.60|
|2015 First-Round Pick (No. 31)||12.70|
|2015 Cap Space of $3.5 million||3.71|
|2016 Cap Space of $4.5 million||4.39|
The Jimmy Graham trade gives Seattle the one thing they needed the most: an elite target for Russell Wilson. While it's hard to argue with a move that made Seattle the favorite to win Super Bowl L, the trade brings Seattle one step closer to its day of reckoning with the cap gods. Over the next two years, the Graham trade adds $8 million total to the Seahawks' salary cap. Graham is on the books at $10 million for 2017, too. Since Unger's contract expires after 2016, I looked at just the next two years.
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The cap space that Seattle loses in the next two seasons has a Marginal AV of about 8.1, or about equal to the last pick of the second round. Since that's about where Seattle picks, the right way to think about this trade in terms of value is that Seattle gave up Max Unger's on-field contributions, a first-round pick, and a second-round pick for Jimmy Graham's on-field contributions and the Saints' fourth-round pick.
To make the trade a winner for Seattle, Graham has to provide 16.2 more Marginal AV than Unger. That is not impossible, but it is a pretty tall order. In Graham's best season with the Saints, he provided 13 points of AV. In this trade, Seattle also acquired their seventh player with a cap hit of more than $7 million. With Russell Wilson still needing to be extended, the opportunity cost of acquiring Graham might be the loss of Bobby Wagner or above-replacement-level players in key spots on the roster. Graham fills the Seahawks' on-field need, but he is a poor match for their impending salary cap situation.
Ground and Pound the Cap
|2015 Cap Space of $9.5 million||7.72|
|2016 Cap Space of $6.2 million||5.53|
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It was a trade that only analytics guys could love. But, man, was there a lot to love, giving up an expensive player at the sport's most replaceable non-kicking position and getting a good player along with a big pile of cap space. From the Bills' perspective, they managed to give up not only Alonso, but also 13.3 points of Marginal AV, about equal to the 29th pick in the first round of the draft. The Bills have since restructured McCoy's contract, but they have made a bad situation worse by stretching the cap pain out until 2019. I don't think the Bills created value with McCoy's extension. So the simplest thing is to take McCoy's original contract and ignore 2017. Then we can compare McCoy to Alonso and the cap space for just 2015 and 2016.
For this trade to be a winner for the Bills, McCoy needs to generate 13.3 more points of AV than Alonso in the next two years. That's not impossible, but it's also not likely, especially given the surrounding talent in Buffalo. Alonso and a first-round pick is one way of thinking about what the Bills gave up in value for McCoy. Another way is Alonso and an elite center or right tackle to improve their abysmal offensive line.