Picking Undervalued Stocks, NFL style

Six outstanding players have been inducted into the Pro Football Hall of Fame. There is a stark division within the class.

Deion Sanders, Marshall Faulk, and Les Richter were all forecast accurately for pro stardom as college players. Sanders was the 8th player chosen in the draft, Faulk and Richter were both 2nd in their years.

The other three inductees were grossly undervalued. Shannon Sharpe was the 192nd player chosen, Richard Dent was the 203rd and Chris Hanburger was the 245th (in 1965 no less!). Clearly, a talent scout who could identify these guys as destined for greatness has more value than the countless ones who recognized the first three players as future stars. But how does a scout do that?

At least part of the explanation may be where one looks for talent. Sharpe played at Savannah State, Dent at Tennessee State and Hanburger at North Carolina (great in basketball, but a winner of only one bowl game in the 1950s and 1960s). It is probably easier to be overlooked when you play at a small school or one with a weak football program or both. Yet that can’t be all of the explanation because Faulk played for San Diego State, whose win in the vaunted Poinsetta Bowl last year was its first in almost 40 years.

A challenge to those RBCers who are pigskin aficionados: What strategic advice would you offer on how to pick “undervalued stocks” in the pro football draft?

Author: Keith Humphreys

Keith Humphreys is the Esther Ting Memorial Professor of Psychiatry at Stanford University and an Honorary Professor of Psychiatry at Kings College London. His research, teaching and writing have focused on addictive disorders, self-help organizations (e.g., breast cancer support groups, Alcoholics Anonymous), evaluation research methods, and public policy related to health care, mental illness, veterans, drugs, crime and correctional systems. Professor Humphreys' over 300 scholarly articles, monographs and books have been cited over thirteen thousand times by scientific colleagues. He is a regular contributor to Washington Post and has also written for the New York Times, Wall Street Journal, Washington Monthly, San Francisco Chronicle, The Guardian (UK), The Telegraph (UK), Times Higher Education (UK), Crossbow (UK) and other media outlets.

8 thoughts on “Picking Undervalued Stocks, NFL style”

  1. In general I’d stick with visibility-of-program as an explanation for the high-value draft picks. San Diego State may not have won many bowls, but it’s been closely watched since at least the days of “Air Coryell” going back to, I think, the late 60s. If memory serves, they were really the first to introduce the spread-style, pass-first offense that came to define the West Coast game. So Faulk probably isn’t the counter-argument he might seem to be.

  2. Tom Brady offers another good example. I think the best way to end up with those players is to focus on the skills that are easy to overlook but translate highly into success. Brady had a good but not great arm, but he was quite accurate in college. Jerry Rice was drafted 16th from a dinky school, but went on to be the best player ever because he ran routes perfectly, always. Teams would be wise to start trying to measure skills that clearly impact games but aren’t as easily measured as 40-yard dash times.

  3. Altoid: I had wondered about the Coryell angle, but was not sure how much it mattered because San Diego State was a Division II school for most of his tenure. On that other hand, if he was as you say closely watched and was teaching pro offense that may account for why he got unusually talented players (e.g., Fouts and Faulk) to attend college there. And, being in the LA media market probably didn’t hurt anything either.

  4. Keith,

    Bart Starr was taken in the 17th round (199th) in 1956. He had a sprained back for his junior year at U of Alabama and a new coach arrived for his senior year and instituted a “youth” program so Starr spent his senior year healthy, on the bench. This suggests two places to look – places that have a coaching change and looking at players who were (are) being carried on a football scholarship, but are recovering from an injury. It also suggests that backups at key positions may be better than their numbers would suggest.

    Emlin Tunel,l the first black player for New York Giants, and the first black player for Green Bay (and the first Black man to reside in Green Bay) scouted for Lombardi. He was known for his network of coaches at smaller schools (black and otherwise) who let him know about exceptional players who weren’t likely to get the attention they deserved. Tunel was known for his excellent judgement regarding football and excellent judgement as to whether or not a player could play for Lombardi and live in Green Bay’s very white environment. So, another source, the coaches of lesser colleges and universities.

  5. Any analysis of picking “undervalued stocks would have to include picking “overvalued stocks” as well. If you include the Ryan Leaf like failures, are NFL scouts statistically better than random chance?

    “…that may account for why he got unusually talented players (e.g., Fouts and Faulk) to attend college there.”

    Except that Fouts played college ball for Oregon, not SDSU. Coryell coached Fouts when he played for the San Diego Charges. And connecting Coryell to Faulk is rather big stretch, considering Coryell had left the Aztecs to coach the St Louis Cardinals before Faulk was even born.

  6. Slight addendum: while Coryell didn’t recruit Fouts or Faulk, I think Coryell made SDSU one of the programs to watch. I seem to remember that Sports Illustrated paid him a lot of attention when he was there, and I think that set the pattern and gave scouts and reporters a nice excuse to fly out there come November and December. Plus, as Keith points out, being in the SoCal media market couldn’t have hurt.

  7. One thing that often works is to find players who are great fits for the team in question. In most drafts, teams pick the best players available or fill the most urgent needs in the early rounds, but later just look for guys who are tailor-made for their offensive or defensive schemes.

    A great example is Terrell Davis, who I believe was a 6th round pick and was perfect for the Broncos running game. Quarterbacks are a little harder, a lot of guys without the tools but who are proven winners with intelligence and determination are drafted, but a lot of them still don’t pan out. I think what happens is that guys with B-level tools and an A-class brain will often turn into a Tom Brady, but B-level tools with only a B-level brain equals Danny Wuerffel. Then there’s A+-class tools and a D- brain, Ryan Leaf.

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