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Wednesday, June 22, 2011

Today's Business & Economics Chapter

 
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Business & Investing
Thursday June 23, 2011
Scorecasting: The Hidden Influences Behind How Sports Are Played and Games Are Won
by Tobias J. Moskowitz
 

THE CURSE OF THE NO. 1 DRAFT PICK

In 2004 Richard Thaler, a professor of behavioral economics at the University of Chicago, and Cade Massey at Yale were watching the NFL draft. With the first pick, the Chargers chose quarterback Eli Manning, the brother of perhaps the best quarterback in the league, Peyton Manning, and the son of longtime NFL quarterback Archie Manning. The Giants held the number four pick and were in the market for a premier quarterback as well. It was no secret they coveted Manning.

During the 15 minutes the Giants had to make their selection, they were ambushed with two very different options. Option 1 was to make a trade with San Diego in which the Giants would first draft Philip Rivers — considered the second best quarterback in the draft — and then swap him for Manning plus give up their third-round pick (number 65) that year as well as their first- and fifth-round picks in the 2005 draft. Option 2 was to trade down with the Cleveland Browns, who held the seventh pick and also wanted a quarterback. At number seven, the Giants probably would draft the consensus third best quarterback in the draft, Ben Roethlisberger. In exchange for moving down, the Giants would also receive from Cleveland their second round pick (number 37) that year.

The Giants chose the first option, which meant they effectively considered Manning to be worth more than Roethlisberger and four additional players.

To the two economists, however, this seemed like an extraordinarily steep price. But after collecting data from the NFL draft over the previous 13 years and looking at trades made on draft day as well as the compensation — salaries plus bonuses — paid to top picks, they found that the Manning trade was anything but unusual. As a matter of routine, if not rule, teams paid huge prices in terms of current and future picks to move up in the draft. They also paid dearly for contracts with those players.

Not only did Manning cost the Giants four other players — one of whom turned out to be All Pro linebacker Shawne Merriman — but he was also given a six-year, $54-million contract. Compare this to Roethlisberger’s compensation. Ultimately drafted 11th by the Steelers, he received $22.26 million over six years.

Thaler and Massey found that historically, the number one pick in the draft is paid about 80% — 80%! — more than the 11th pick on the initial contract. The economists also found that the inflated values teams were assigning to high picks were remarkably, if not unbelievably, consistent. No matter the circumstances or a team’s needs, teams routinely assigned the same value to the same pick.

Thaler and Massey compared the values teams placed on picks — either in terms of the picks and players they gave up or in terms of compensation — with the actual performance of the players. They then compared those numbers with the performance of the players given up to get those picks. For example, in the case of Manning, how did his performance over the next five years compare with that of Rivers plus the performances of the players chosen with the picks the Giants gave San Diego? Likewise, how did those numbers stack up against Ben Roethlisberger’s stats and those of the players the Giants could have had with the additional picks they would have received from Cleveland?

The economists looked at each player’s probability of making the roster, his number of starts, and his likelihood of making the Pro Bowl. They found that higher picks were better than lower picks on average and that first rounders on average post better numbers than second rounders, who in turn post better stats than third-round draft picks, and so on.

The problem was that they weren’t that much better. Even looking position by position, the top draft picks are overvalued. How much better is the first quarterback or receiver taken than the second or third quarterback or receiver? Not much. The researchers concluded the following:

   • The probability that the first player drafted at a given position is better than the second player drafted at the same position is only 53%, that is, slightly better than a tie.    • The probability that the first player drafted at a position is better than the third player drafted at the same position is only 55%.    • The probability that the first player drafted at a position is better than the fourth player drafted at the same position is only 56%.

In other words, selecting the consensus top player at a specific position versus the consensus fourth best player at that position increases performance, measured by the number of starts, by only 6%. And even this is understating the case, since the number one pick is afforded more chances/more starts simply because the team has invested so much money in him. Yet teams will end up paying, in terms of both players and dollars, as much as four or five times more to get that first player relative to the fourth player. Was Manning really 50% better than Rivers and twice as good as Roethlisberger? You’d be hard put to convince anyone that Manning is appreciably more valuable than Rivers or Roethlisberger; in any event, he’s certainly not twice as valuable.

Yet this pattern persists year after year. Is having the top pick in the NFL draft such a stroke of good fortune? It’s essentially a coin flip, but not in the traditional sense. Heads, you win a dime; tails, you lose a quarter. Massey and Thaler go so far as to contend that once you factor in salary, the first pick in the entire draft is worth less than the first pick in the second round.

(Continues...)

 
 
 
 
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BookDaily Update

 
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Thursday June 23, 2011

A Dance with Dragons: A Song of Ice and Fire: Book Five

By George R.R. Martin
ISBN: 9780553801477
 

Tyrion

He drank his way across the narrow sea. The ship was small and his cabin smaller, and the captain would not allow him abovedecks. The rocking of the deck beneath his feet made his stomach heave, and the wretched food they served him tasted even worse when retched back up. Besides, why did he need salt beef, hard cheese, and bread crawling with worms when he had wine to nourish him? It was red and sour, very strong. He sometimes heaved the wine up too, but there was always more. "The world is full of wine," he muttered in the dankness of his cabin. His father had never had any use for drunkards, but what did that matter? His father was dead. He ought ...

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Crossed Out

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ISBN: 9781897562680
 

I couldn‘t deal with Mom and her holier-than-thou attitude about decorating crosses. If she had any clue why I needed to do this, maybe she‘d back off.

I pushed my hair aside and looked down at the wooden beams. My box of paints and Sharpie pens lay close to my side. I had to get the design just right. Roses, or something plainer? It didn‘t help that it was so cold in the garage.

Why was it so hard to help the dead go to the other side? It‘d be a whole lot easier if they told me what they wanted on their crosses. Dead girl comes, asks for help, and tells me she’s into pink roses. Yes, that would make my job a lot easier.

But one thing I‘ve ...

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How to Get the Entrepreneurial Author’s Edge

 
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Author Update
Thursday June 23, 2011
 

Get Your Entrepreneurial Author's Edge Today

David L Hancock, Jay Conrad Levinson, Rick Frishman

Editor's Note: Today's Author Update is excerpted from "The Entrepreneurial Author: Achieving Success and Balance as a Writer in the 21st Century"

The Entrepreneurial Author’s Edge

Fortunately, as an Entrepreneurial Author, you’ve got an edge. This edge keeps the fires of your passion burning brightly. It gives you a decided advantage over the authors who preceded you, because it helps you avoid their mistakes and built upon their successes. It is, without question, the way of The Entrepreneurial Author.

You have The Entrepreneurial Author’s edge in insight. You’ve given thought to your priorities. You aren’t going to be misled by the entrepreneurial myths involving overwork, overgrowth, and overextending your reach. You realize that your journey is your destination and that your plan is your road map. This insight will help you maintain your passion.

You have The Entrepreneurial Author’s edge in relationships. Every sale you make leads to a lasting relationship. Every reader you get is going to be a customer for life. Your sales and even profits will probably go up and down, but your number of relationships will constantly go up, and your sales and profits will eventually follow.

You have The Entrepreneurial Author’s edge in service. You see your service from your customer’s point of view, not merely from your own. You realize that your service gives you an enormous competitive advantage over those who may be larger but less devoted to making and keeping customers delighted with your business. You know well the power of word-of-mouth marketing and how it derives from excellent service.

You have The Entrepreneurial Author’s edge in flexibility. You are not enslaved by policies and by precedent. Instead, you are fast on your feet, sensitive to customer needs, and aware that flexibility is a tool for building relationships, profits, and your overall business. You are guided by the situation at hand and not by the way things were done in the past. Your flexibility adds to the passion that others feel about your company.

You have The Entrepreneurial Author’s edge in follow-up. You don’t have to be reminded about the number of potential relationships that are destroyed when customers are ignored after they make a purchase. Rather than ignoring them, you pay attention to them, remind them of how glad you are that they’re customers, and pepper them with special offers, inside information, and care. They never feel ignored by you and reciprocate by never ignoring your business when it comes to repeat purchases or referrals.

You have The Entrepreneurial Author’s edge in cooperation. You see other businesses as potential partners of yours, as firms that can help you as you help them. You don’t keep your eyes peeled for competitors to annihilate, but for businesses to team up with to form networks. Your attitude will help you prosper in an era when people are forming small businesses in droves.

You have The Entrepreneurial Author’s edge in patience. As an Entrepreneurial Author, you are not in a hurry and never in a rush. You know how important time is, but you also know how too much speed results in diminished quality. Because of your planning, you avoid emergencies and high-pressure situations. Patience is one of your staunchest allies.

You have The Entrepreneurial Author’s edge in economy. You know how to market without investing a bundle of hard-earned money. You have learned that time and energy are valuable substitutes for large budgets. You realize that in most business activity, you have a choice of any two of these three factors: speed, economy, and quality. You always opt for economy and quality. Your patience helps you economize.

You have The Entrepreneurial Author’s edge in timeliness. You run a streamlined operation, devoid of fluff or unnecessary work. Your comfort with technology allows you to operate at maximum effectiveness. Your business is a state-of-the-art enterprise because it operates in the environment of today rather than that of ten years ago. Although you focus on your plan, you know the magic of proper timing and can make adjustments so that you are available just when customers need you.

You have The Entrepreneurial Author’s edge in commitment. This commitment will set you apart from many other authors. It will help you achieve your aims with confidence. It is so powerful that you feel passion toward the commitment, and the commitment to power your passion. Without this inner commitment, even the best plans may go awry. With it, plans turn into a bright reality.

Get to Know David Hancock

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New ways to name the Internet | Network radios' new frontier

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6/22/2011
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About Small Business Information: How-To's and Tutorials

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How to Get Value from Small Business Conferences
There are a number of benefits available to business owners who attend small business conferences and live events. Follow these tips to make the most out of the next conference you attend. Read the tips.
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A new customer welcome letter is a valuable part of acquiring new clients, especially if your business is one that focuses on personal relationships. This step-by-step tutorial will walk you through a new customer welcome letter format. See the format.

How to Name a Business
A collection of articles that will help you name your business, discover important considerations and explore tools to help you overcome your business-naming challenges. Learn more.

How to Delegate Effectively
There are a lot of decisions and processes to consider when it comes time to build a team and delegate, and there are steps to be taken early on in the process to make it more effective. Here are the top seven tips for effective delegation to get you on the right track. Learn how to delegate.
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