Saturday, January 5, 2013

The Warren Buffett Phenomenon

Is Warren Buffett the best investor of all time? Available evidence certainly says yes. If you needed to entrust your money, is he definitely the best guy for the job? Maybe. There are probably numerous others who are very good at managing and growing your money. Every decision they make is based on incomplete data; every choice has an actual and perceived chance of success and actual and perceived probably payoff. The good ones minimize the difference between perceived and actual risks and payoffs, then make the moves that actually have the least risk or the best expected growth.

Even so, no move is 100% and Buffett probably benefits in the pantheon of great investors from some additional good fortune. This is why we think he's the best. His record is the only thing we can measure, but he benefited from his plays actually working out the way they were 'supposed to'. In a similar vein, the good poker player who gets sucked out on the river never gets to show us how good he really is. The winner of the WSOP Main Event is likely a very good player, but they are rarely one of the consensus "best" because a great deal of fortune also goes into winning over such a long stretch of decisions.

Why am I talking about this on a football blog? Because football teams, operations and coaches are all subject to this same phenomenon. For example, if a new coach/GM misses on replacing their aging quarterback, they're likely doomed to a few bad years, thus a bad record, thus a perception they are a bad coach, thus getting fired. But, replacing a quarterback is tough. They are hard to scout, hard to map their skills to NFL defenses, hard to project to an existing offensive system. Even 1st round draft choices are equally likely to be stars, be busts, or wander the league. Staff choices are similar. Some coaches are established commodities: for example by now we can be sure that Wade Phillips is a fantastic defensive coordinator and Bill Belichick is probably the best head coach in the league. However, Phillips did not achieve success as a head coach, and Belichick was sub-500 in a 5-year stint in Cleveland. The point is, there are a lot of variables outside the coach's control, and a lot within. It's hard to separate them all, but we can use the Buffett phenomenon as a more insightful way to think about a coach than just their win-loss record.

Andy Reid is this off-season's hottest available coach. He has a great record in Philadelphia, but made some questionable moves in the last few years. He invested heavily in an aging and fragile Michael Vick. He promoted former offensive line coach Juan Castillo to defensive coordinator. He has not built well through the draft in recent years. Is he slipping? What's going on? Is he good and just having moves not work out? Or was he mediocre but hit on a couple big ones that anyone should be able to prosper with?

Reid started with the Eagles in 1999, and brought Jim Johnson with him to be the defensive coordinator. This was clearly a great move, Johnson was a fantastic coach. In that year, the Eagles also hit the quarterback lottery and drafted Donovan McNabb, who was a great player for 10 years. With these 2 vital pieces in place, Reid performed very well. 2009 was a pivotal year. McNabb was deemed too old and was traded away while they could still get value for him. It was the right move, and the combination of Kolb/Vick looked positive going forwards. Let's keep in mind that there was no guarantee either way: we couldn't know that Vick would have one great season and no more, or that Kolb would keep getting hurt. In this case, the decision to go with Kolb/Vick did not work out the way Reid hoped. Was he wrong to hope that Kolb would build on his promising showings? Probably not. Was he wrong to think Vick would continue to perform well after his miracle comeback? Probably not. In addition to the quarterback situation, longtime defensive coordinator Jim Johnson died. Reid made a curious choice to replace him. Again there was no guarantee it would succeed or fail, but this one didn't have "high probability" written all over it. In the last couple years, the Eagles made some splashy free agent acquisitions. Since Reid had major say in the roster, this one is on him as well. Those moves didn't work out, either due to chemistry or lack of performance from the defensive coordinator spot. Again, since that staffing was Reid's call, it's ultimately a move of his that didn't work out.

Hiring Johnson was a good move, though Johnson had not been a coordinator before. Thus there was less track record by which his success could be known than if Reid had hired a known commodity. This doesn't mean Johnson was a weak candidate, some guys clearly have tremendous upside. However, it's unlikely that the expected odds of success were super high. Even if we give Reid credit for selecting McNabb, history says there was no more than about a one-third chance he was making the right call at the time. Looking back at draft performance over the last 5 years, we see the Eagles doing significantly less than average with their 1st and 2nd round picks. Since Reid had personnel control, this fault falls on him. He's a chronically awful late-game manager. He definitely did well to get value for his own players and/or move on from them before the rest of the league realized they were, in fact, declining. He took the Eagles to numerous NFC Championship games, suggesting he made good use of the roster he'd assembled. Critics will point out he never won the Super Bowl, and perhaps this is an indication of inconsistency. To win the Super Bowl, a team has to maintain a high level of play against good opponents. Perhaps the Eagles never achieved that, perhaps they were outperforming their roster, who knows. Very few teams enjoyed the level of success the Eagles had from about 2000-2008, which suggests that Reid was doing many things well with the guys he did have.

My take is that Reid is great at evaluating and using the guys he has, but is not good at evaluating unknown quantities. Thus, the Eagles didn't draft well and flopped on key staff decisions. Eventually the halo of the McNabb and Johnson decisions would wear off, and here we are. Perhaps Andy Reid is really ideally suited to be an offensive coordinator, or perhaps he needs to be a head coach with less personnel say.

Kansas City needs a quarterback, so we'll get to see how Reid does in identifying their next one.

Preliminary Mock Draft

The regular season has ended, and 20 teams know their exact draft position. Various talking heads have created big boards of various college prospects, and it's time to match them all up. The Chiefs have the top pick, a new coach, and have released their GM. A number of other teams in the top 10 have made organizational changes as well. It'd be great to figure in these effects, but that might be a pipe dream. 

We learned last year that trades for specific players are more and more likely. While draft capital is considered about the same as before, the rookie wage scale makes the financial commitment given to a player a couple spots ahead negligible. In the old days, moving up a few spots not only cost draft picks, it cost millions a year. This was not a risk most teams were willing to take. Now, we need to figure possible trades into the mock draft since they have not only become possible, they have become likely. Since the top of the draft often features multiple players at the same positions, it's unlikely we'll see a trade into the top 5. 

Kansas City is on the clock. They have a clear need at QB, however there's no consensus top-notch prospect. Geno Smith and Matt Barkley are the only 1st-round prospects per current analysis, and both are terrible fits for blustery, cold winters. Neither is considered a sure-fire top pick. However, both are good fits for a west coast scheme that Andy Reid is likely to bring with him. The draft is loaded with pass rushers and defensive linemen, and there are two very good offensive tackles who could merit a top pick. 

1. Kansas City Chiefs - Star Lotulelei, DT, Utah
Teams want to capitalize on high picks and fill positions where prime talent is taken early. There's no such QB here, and the Chiefs are already set on their offensive line and pass rushers. Lotulelei has a chance to be a Haloti Ngata-type impact player on the line, and Glenn Dorsey and Tyson Jackson never quite reached expectations. Their rookie contracts are coming to a close, and it's probably time to upgrade on the defensive line. 

2a. Jacksonville Jaguars - Damontre Moore, DE, Texas A&M
2b. Jacksonville Jaguars - Luke Joeckel, OT, Texas A&M
The Jaguars would also love to solve their quarterback woes, but their high pick also comes a year late. The Jaguars have a ton of problems, but Chad Henne is decent stopgap. Their leading sack producer was DT Tyson Alualu, and their top defensive end had 3. This is simply unacceptable, so they pick between the top 2 prospects Moore and Jarvis Jones. Moore profiles better as a 4-3 DE. The Jaguars also gave up 50 sacks over the season and Maurice Jones-Drew's 2 backups combined for 2 games with over 50 yards rushing after he was injured. Both issues could be addressed by taking Joeckel. 

3a. Oakland Raiders - Jarvis Jones, OLB, Georiga
3b. Oakland Raiders - Luke Joeckel, OT, Texas A&M
3c. Oakland Raiders - Sheldon Richardson, DT, Missouri
The Raiders lack an impact pass rusher as well, and Jones is the other elite prospect. This pick could go several ways. Richard Seymour is getting old, but he should be replaceable next year with a mid-1st pick. There's an outside chance they'll pick a disruptive 4-3 DT like Richardson to groom behind him (or pair with him). Their running game wasn't great, but everyone not named Darren McFadden ran fairly effectively. Their offense threw for a lot of yards, gave up about an average number of sacks, but scored few touchdowns. There isn't a game-changing wide receiver to select from, Carson Palmer is still their guy and their offensive line seems adequate but an infusion of top talent would likely boost their offense. The Raiders are in a good spot: between Moore, Jones and Joeckel they are guaranteed to get an impact player. Given the level to which their previous regime depleted their draft capital, they may want to trade back, though I don't think any team that could afford to trade up to this spot needs to do so. The Eagles may consider picking up Jones and using him like Denver uses Von Miller, but they should also be happy to land a replacement for the likely-done Jason Peters, and at least one of these guys should still be on the board at 4. 

4a. Philadelphia Eagles - Luke Joeckel, OT, Texas A&M
4b. Philadelphia Eagles - Jarvis Jones, OLB, Georgia
4c. Philapdelphia Eagles - Johnathan Hankins, DT, Ohio St
The Eagles need to shore up their line. The loss of Jason Peters was a huge blow to the team and given his injury and subsequent reinjury, I don't think they can count on him coming back at full capacity. If Joeckel is gone, they can consider Tyler Lewan from Michigan, the next best tackle. The Eagles also took a huge step down in sack production, which Jones would help with. If both are off the board, they could pair a big body like Hankins with Fletcher Cox and copy the Williams wall from the Vikings' days as a dominant run defense.  Foles is probably their man going forwards, so QB is not interesting here. 

5a. Detroit Lions - Chance Warmack, G, Alabama
5b. Detroit Lions - Barkevious Mingo, DE, LSU
5c. Detroit Lions - Bjoern Werner, DE, FSU
The Lions are a statistical enigma. They threw for over 5000 yards, didn't take a ton of sacks, yet only converted that into 22 touchdowns. Their defense was mid-pack in yards, yet they gave up huge points. Their running game stands out for its lack of production. This is partly a result of their almost 2:1 pass:run ratio, but they also didn't run for good average when they did hand the ball off. Chance Warmack will instantly make their line a force and bring balance to the offense, though picking a guard at 5 is unprecedented (the Cardinals took Leonard Davis at 2, but played him at tackle). Cliff Avril, Ndamokung Suh and Nick Fairley are all productive players, but Kyle VandenBosch is getting old. A replacement for him could be prudent as well. Mingo has the higher physical upside, Werner has the better build for a 4-3 and a good body of college production. 

6a. Cleveland Browns - Geno Smith, QB, West Virginia
6b. Cleveland Browns - Chance Warmack, G, Alabama
6c. Cleveland Browns - Sheldon Richardson, DT, Missouri
6d. New York Jets - Geno Smith, QB, West Virginia
6e. New York Jets - Bjoern Werner, DE, FSU
The Browns cleaned house in the front office, so loyalty to Brandon Weeden is gone. While he flashed some good play, he's nowhere near solidifying his status as the quarterback of the future. Chip Kelly is rumored to be the front-runner for the new coaching job, and his system requires a mobile quarterback. Concerns over Geno Smith's bad-weather performance remain, but the temptation might be too high. They could also give Weeden and Trent Richardson help by improving the run game. Warmack would be a big upgrade to the line and could help create holes for Richardson. The Browns could also invest in a disruptive lineman to pair with big Phil Taylor. Sheldon Richardson should fit this bill perfectly and should improve both their pass and run defense. The Jets are looking to move on from Mark Sanchez, and there's no way they can think Greg McElroy is their future. It would only cost them about a 3rd rounder to move up here from 9, and the Jets have shown they are willing to make big moves. The Jets also need another impact pass rusher to match with Quinton Coples (who seemed to come on at the end of the season), and they could pre-emptively move up to pick Werner. 

7a. Arizona Cardinals - Taylor Lewan, OT, Michigan
7b. Arizona Cardinals - Bjoern Werner, DE, FSU
7c. Arizona Cardinals - Chance Warmack, G, Alabama
7d. New York Jets - Geno Smith, QB, West Virginia
The Cardinals can go a lot of different ways with this pick. Conventional wisdom says they need a quarterback, but I think the organization and coaching front-runner Ray Horton both believe in Kolb. Furthermore, their defense is good enough that they just need to score 20 a game to be competitive. The Cardinals got a lot of sacks as a team, but their top pass rusher was a blitzing Darryl Washington. None of their outside linebackers provided a consistent pass rush, and Werner would likely be a force for the team. The team could also look at replacements for Darnell Dockett who was limited this year with lingering injuries and is definitely getting older and not as good a fit for the Cardinals' 3-4. Sheldon Richardson is potentially interesting if he's still on the board, but I think the team feels ok with Dave Carter in the lineup if Dockett is gone or loses effectiveness. The absolutely clearest hole is the play of the offensive line. The big question is how the team feels about Levi Brown. He'll likely be back at full strength, but his new contract suggests no one thinks he's an upper echelon pass protector. Lewan is almost certainly a big upgrade. The team should also look at Chance Warmack (and rely on Brown/Nate Potter who played solidly down the stretch) to boost their woeful run game. Since Arizona has multiple options, a trade back to 9 would be attractive for them since one of their good options would still be on the board. Moving up to 7 to ensure they get Smith would only cost the Jets a 3rd/4th swap. 

8a. Buffalo Bills - Manti T'eo, ILB, Notre Dame
8b. Minnesota Vikings - Geno Smith, QB, West Virginia
The Bills have a lot of money invested in their defensive line. They are producing sacks, but not stopping the run well. They need a great linebacker to clean up running plays. T'eo appears to be in the Brian Urlacher mold and could be a cornerstone of this defense for a decade. I'm not sure they should be looking at anyone else. I don't really think the Vikings would move up from the low 20s to 8 for Smith, but they are the one other team left who might be interested. Christian Ponder appears to be plateauing and playing in a dome alleviates Smith's bad weather concerns. It's more likely that they'd be equally interested in Barkley though, and would wait until one of the two top quarterbacks is off the board, then jump up to grab the other. The only other interested teams have already picked and wouldn't have the draft capital to trade back up this high. They're more likely to target a move from the early 2nd into the mid-late 1st round, much like what the Browns did for Brady Quinn in 2007. 

9a. New York Jets - Barkevious Mingo, DE, LSU
9b. New York Jets - Johnathan Hankins, DT, Ohio St
9c. Cleveland Browns - Chance Warmack, G, Alabama
9d. Arizona Cardinals - Chance Warmack, G, Alabama
Assuming the Jets elect to address their quarterback issues in free agency, they would not trade up for Geno Smith. They need more pass rush production to maximize the impact their excellent secondary can make. They were also pretty bad against the run this year, which a big run-stuffer like Hankins should help with. If the Bills don't take T'eo, the Jets should snatch him up. He's versatile and both Bart Scott and Calvin Pace are winding their careers down. The Jets need to get some marquee guys in the front seven. The Jets actually need playmakers on offense (Jeremy Kerley was their top receiver and Shonn Greene failed to hit 4.0 yards per carry), but there aren't any worth taking this early. If he's on the board, Warmack could be interesting to help their ground game and get them back to what they did so well just a couple years ago. Trades up are hard to evaluate since the pool of possibilities grows so rapidly once we get out of the blue chip range. 

10. Tennessee Titans - Dee Milliner, CB, Alabama
The Titans have problems all around. The finished outside the top 20 in both passing and running defense AND offense. Jake Locker is still their guy for now. They can go in almost any direction here. They have a number of solid pass rushers that would be hard to upgrade with the top prospects off the board. The could look at T'eo or Alec Ogletree to add some playmaking in their linebacker corps. But, they would probably benefit the most from a playmaker in the secondary since they gave up 31 passing touchdowns. 

Obviously lots will change between now and April. The draftniks are going to be hard at work after bowl season and I'll probably look at this list again if there are any big changes. Of course the scouting combine plays heavily into the evaluation as well and could provide another big flux. Finally, I'll need to re-evaluate needs after free agency plays out.