The NFL Draft, which begins tonight, is televised monopsony (the market power obtained by being the single buyer of a commodity). The best college football players are selected by a team that will own their exclusive bargaining rights. If an agreement is not reached the player can’t return to play college football or play for another NFL team that year. The draft provides an advantage to teams in negotiations with players who are expected to be superstars. The draft also reveals the expected relative value of players entering the NFL. A draft pick is a valuable traded asset because it confers monopsony power to the team that owns the pick. Higher picks are worth more because they represent the rights to exclusively bargain with the very best players. If players could negotiate with any team in the NFL, draft picks would be worthless.
The Dallas Cowboys established a relative valuation of draft selections, in order to better evaluate possible trades for “moving up” or “moving down” in the draft. According to the Cowboys’ chart , the top pick in the draft is worth more than five times as much as the first pick in the second round (the 33rd pick) and ten times as much as the first pick in the 3rd round (the 65th selection). The value of players declines exponentially because there are more substitutes for less skilled players and the NFL imposes a minimum salary schedule. The Indianapolis Colts and Washington Redskins expect to earn substantial profit from future superstars Oliver Luck and Robert Griffin III, who will be paid much less than they would earn as free agents, because of the salary cap. It is this expected future profit from top selections that makes high draft picks so valuable.
The draft valuations established by the Cowboys can be used to determine which universities have supplied the NFL with the most valuable talent since the current seven round draft system began in 1994. In the charts below the top pick is normalized to have a value of 100. Each college team/year is evaluated by the sum of the value of the players drafted in that year and the next three years. For example, the value of a team’s players in 2000 equals the value of players drafted from that university between April 2000 and April 2003. In other words the player quality indexed is summed across four consecutive recruiting /draft classes.
Miami, USC, Ohio State and Florida State have provided the most valuable talent to the NFL since 1994. The most valuable group of players on campus at the same time was the University of Miami football team in the fall of 2000 (with the first players drafted in April 2001). Miami had a total player quality index in excess of 650.
There are substantial differences in the sources of talent by year and major conference. The following chart shows the parity in talent in the Southeastern Conference, where five different teams have had the most valuable talent since 1994.
Florida State and the University of Miami had the most valuable football talent in the Atlantic Coast Conference until 2005. Since then there has been parity in talent among the top four teams.
Texas and Oklahoma have been the dominant teams in the Big 12 since 1994. The quality of the football talent at Oklahoma surpassed Texas in 2007.
The PAC-12 had the most unequal distribution of football talent of any major conference in the past 18 years. The University of Southern California had dominant player talent relative to the other schools in their conference.
Ohio State has been the dominant team in the Big Ten since 1994, followed by Penn State. The talent at Notre Dame is far below the talent at other major football powers in the Big Ten.
Major college football programs have provided the NFL with valuable talent for decades. The universities illustrated in the charts above serve as the “minor league” for professional football. Many of the players drafted from these universities earned substantial salaries from the NFL. Many of their teammates, however, helped their universities generate millions of dollars in football revenue, but never played football professionally.