Return on Investment: Free Agency

The latest newsletter from KCSN Sports Data Scientist, Joseph Hefner

I was talking with my wife this week about the topic for this weeks article, and was struggling to communicate exactly what I am trying to show with my past two articles on Approximate Value and the draft. Finally, my mind had a eureka moment, and grabbed the phrase return on investment (ROI). That is exactly what I am trying to show.

Teams make investments in players, via the draft, free agency, trades, etc. They expect those investments to pay off. I am trying to show what the expected ROI is for a player drafted at a specific draft slot, or this week, the expected ROI for a player brought in as a free agent. For a draft, the team investment is the draft slot. For a free agent, the investment is the contract value.

I pulled data on every player who joined a different team than the one they were on the previous year. I only looked at the initial contract for the new team, so if a team brought in a free agent, then they liked him and extended him, only the first contract with the team is considered. I excluded a players first three years in the league, even if they were traded or cut, because the evaluation of those players is more likely to be their draft evaluations than their NFL career evaluation.