Timing value of traded picks

[sfan]

I am interested in people's insights on the relative timing value of tradeable draft picks. Set aside circumstantial interests that are specific to a given team's needs at a specific season. What I am trying to approximate is a logical, generally applicable, means of assessing the worth of picks in future years. For example:
- Is a 2nd round pick for the next draft worth more than (or less/or same) a 2nd next season? By what % would you say its value is more (or less/or same)?
- What % if it is two seasons in the future?
- What % if it is three, four, or more seasons in the future?

I'm assuming there are no right or wrong answers, I'm interested to hear opinions and arguments related to the question.

Has anyone done any prior research into this question?

Thanks!

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[Mr Misty]

Obviously the temporary nature of GM jobs means a pick in year n's draft is worth more than the same pick in year n+1 which is worth more than that pick in year n+2 etc

I usually discount a pick by one round per year. So if you want me to trade you a 3rd in 2017, I'd expect your 2nd in 2018. I may have read that somewhere, but it isn't a topic that comes up much because it's too hard to quantify all these future picks. Also the difference between pick n and pick n+1 shrinks as n increases.

 

[whlscowt]

Mr Misty makes a good point.

I think you also have to take into account the strength of the draft class. 2017 for example is going to be a lot deeper than 2016, especially with the Europe crop. While immediacy definitely will have an effect, I'd almost rather have a 5th in 2017 than a 5th in 2016 just because of how good 2017 is shaking up to be.

 

[sfan]

Thanks very much Craig and Misty. Both of your suggestions are very helpful.

I'll share a bit more context. I'm exploring proof-of-concept quantitative analysis of GM/team operations performance, currently focused on drafting and player trades.

You and others may have noticed an earlier thread and report on a related topic, about the technical value of a pick. I've built a database of OHL drafted players from 2007-2011, including their entire OHL career performance data. From this I have developed an objective insight into the expected performance of drafted players, by round. It is limited to skaters but I have ideas for goaltender draft performance as well.

If you are interested, you can read at the link for more information but essentially it is a methodology to predict the mean and SD PPG for a pick in a given round, adjusted to reflect the probability the picks result in a player with a significant OHL career (I've used >100 games as a threshold).

I am also in the process of building a database of OHL trades. Within limits, it is relatively easy to evaluate (after the fact) the performance of individual players that have been traded. But picks are also an increasingly inflated part of OHL trades, and most acquired picks are used as currency for for future trades. Given that I can value a pick in terms of expected PPG, my next step is to determine the relative value of picks for future years and see if I can develop a useful algorithm.

All questions and suggestions are appreciated.

Thanks again.

 

[Deadly Dogma]

Thanks very much Craig and Misty. Both of your suggestions are very helpful.

I'll share a bit more context. I'm exploring proof-of-concept quantitative analysis of GM/team operations performance, currently focused on drafting and player trades.

You and others may have noticed an earlier thread and report on a related topic, about the technical value of a pick. I've built a database of OHL drafted players from 2007-2011, including their entire OHL career performance data. From this I have developed an objective insight into the expected performance of drafted players, by round. It is limited to skaters but I have ideas for goaltender draft performance as well.

If you are interested, you can read at the link for more information but essentially it is a methodology to predict the mean and SD PPG for a pick in a given round, adjusted to reflect the probability the picks result in a player with a significant OHL career (I've used >100 games as a threshold).

I am also in the process of building a database of OHL trades. Within limits, it is relatively easy to evaluate (after the fact) the performance of individual players that have been traded. But picks are also an increasingly inflated part of OHL trades, and most acquired picks are used as currency for for future trades. Given that I can value a pick in terms of expected PPG, my next step is to determine the relative value of picks for future years and see if I can develop a useful algorithm.

All questions and suggestions are appreciated.

Thanks again.

We also see it throught the year. A draft pick always seems to be worth more closer to the draft.

 

[CraigBillington]

Obviously the temporary nature of GM jobs means a pick in year n's draft is worth more than the same pick in year n+1 which is worth more than that pick in year n+2 etc

I usually discount a pick by one round per year. So if you want me to trade you a 3rd in 2017, I'd expect your 2nd in 2018. I may have read that somewhere, but it isn't a topic that comes up much because it's too hard to quantify all these future picks. Also the difference between pick n and pick n+1 shrinks as n increases.

I get your logic, but a swift GM could then, say, take a 5th in 17, trade it for a 4th/18. Then move that for a 3rd/19 and then for a 2nd/2020. I think this works to an extent, maybe the bottom half of a draft as I can't see 2nd and 1st round picks being a part of this equation.

With that though, the valuation of these picks can be affected by the team and strength of a draft. If I were Kekelainen and Jim Rutherford comes up to me and offered their 2nd for my 3rd (offsetting years), I wouldn't do it. But if Jim Benning comes to me with a similar offer, I run with it. As well, in 2012, I would have traded a 1st for a 1st/13 simply based on the perceived strength of those drafts.

 

[LT]

Some of it depends on how certain the pick is going to be, at what range it will be in.

Trading for a pick before the season its for even begins can be risky, because neither team is quite sure of how they'll finish. The team trading the pick might want more, while the team acquiring the pick might offer less.

 

[Lempo]

We also see it throught the year. A draft pick always seems to be worth more closer to the draft.

The uncertainty discount factored in the price evaporates, as the guesses for what level of player a draft pick will fetch to you get more and more educated the closer the Draft is.

 

[tarheelhockey]

I get your logic, but a swift GM could then, say, take a 5th in 17, trade it for a 4th/18. Then move that for a 3rd/19 and then for a 2nd/2020. I think this works to an extent, maybe the bottom half of a draft as I can't see 2nd and 1st round picks being a part of this equation.

That's precisely what I was going to say -- this scheme works much better as you get into the lower rounds.

By the time you get to the 5th-6th-7th rounds, there really isn't a universal depth chart. Teams are drafting heavily on their own needs, and the GM's trust in his scouts to find a few "diamonds". So if a GM has his eye on a particularly intriguing gamble in the 7th round, the certainty of getting that specific player often has more actual value than a future 6th rounder that could be little more than a flier on an over-ager.

But in the 1st-2nd-3rd are much more defined than that. There is a clear, genuine difference between the 1st overall, the 31st overall, and the 61st overall. The passage of time doesn't mitigate that difference. So unless a GM is just desperate to move up, it usually doesn't make sense for him to give a future 1st in exchange for a present 2nd.

 

[CDN24]

Obviously the temporary nature of GM jobs means a pick in year n's draft is worth more than the same pick in year n+1 which is worth more than that pick in year n+2 etc

I usually discount a pick by one round per year. So if you want me to trade you a 3rd in 2017, I'd expect your 2nd in 2018. I may have read that somewhere, but it isn't a topic that comes up much because it's too hard to quantify all these future picks. Also the difference between pick n and pick n+1 shrinks as n increases.

I'm going to be the contrarian here and say that for early round picks 1 or 2nd, If I am trading a player for that pick I would prefer that I get your 2018 pick over 2017 and even 2019 over 2018.

If that team is acquiring players now for high round picks they think they are an 1/2 decent team - at least a playoff team. More time to the pick means there is more time for them to be a better or worse team than they are today, If we assume it is expected to be around a 15th pick OA pick in the next draft but 2 drafts out there is more chance that it is now a top 5 or 25-30 pick. Even if either scenario is equally likely I am happy as dropping 15th to 25th does not change the type of player I get but if that pick becomes top 5. I am more than willing to wait a year or 2 to increase my odds of landing an impact player with that pick.

October 16 1989 Leafs trade their 1st round pick in the 1991 draft (almost 2 years out) for tom kurvers. Then in 1991 that pick is 3rd overall and devils select Scott Neidermayer.

in the Salary Cap era teams are more likely to lottery protect their draft pick trades but given a choice I want the pick that is further out.