Economic Analysis of Sports Drafts   (by Dennis Shiraev, Cornell University)  For many, the annual professional NBA, NFL, or in my case NHL draft is an occasion for exciting speculation and entertainment. For sports franchises, it’s an institutionalized procedure for acquiring young talent. The intention is to generate immediate excitement and revenues from the acquisitions of young superstars as well as long term sports and business success through the selection of potential-packed athletes. I’m not sure how much research has been done on this subject, but the professional sports draft system in the U.S. warrants tons of intriguing economic analyses. Here are some thoughts. 
    I tend to believe that the institutionalized draft system accounts for the current business structure of  U.S. professional sports. In many European football leagues, last place teams are relegated to lower leagues and forced to earn their way back up into the top leagues in future seasons. Why don’t we have the same practice here? The draft system ensures cyclical success in American sports. Certainly, there are perennial powerhouses, but can you really think of a team that has been that bad for that long? In hockey, my sport of choice, only my beloved Washington Capitals, as well as the Florida Panthers and Columbus Bluejackets, were consistently bad over the last eight years or so—through draft-building, all three of these teams have built up good squads that are currently either in playoff position or are playoff contenders. 
     Think about it: if we didn’t have this draft system, what would prevent top teams from consistently singing the best young rookies and the worst teams from being consistently unable to sign any top talent? Salary caps would keep some of this under control, but we would still lack this potential for cyclical franchise recovery. 
     Now, I believe the ice hockey draft is the most interesting in professional sports. I don’t have an extensive knowledge of the draft system in baseball or soccer, but in basketball and football, it seems apparent that the draft is about picking players you want to play for your team out of a pool of eligible college athletes. This is not the case for ice hockey. There are competing development systems for ice hockey—college hockey is not even the most propitious path to the NHL, since Canadian and American juniors  leagues offer many much higher levels of play and competition. Because of this, players are drafted at 18 years old, as soon as they are eligible. Yes, the top five or ten picks in the draft are good enough that they are selected with the intention of playing them the first year, but most draftees aren’t ready for another two to three years. So, the NHL draft is not so much of a selection process as it is a betting process. Teams take players with the intention of giving them a shot in several years. This is why sometimes first round picks never make the NHL while plenty of 6th or 7th round picks end up being solid, consistent players!
     If you have any more thoughts on this topic, or feel as though I haven’t done justice to the complexity of other sports’ drafts, please leave your comments below. 

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