Is it time to rethink the value of AFL Draft picks?

As AFL clubs prepare for the draft, Victoria University (VU) researchers are proposing a new approach to trading draft picks based on their true value based on teams’ future performance.

Dr. Jemuel Chandrakumaran used his Ph.D. research to find ways to modernize the draft that will benefit both players and clubs. The study, “Delaying Draft Picks: An Empirical Analysis of the AFL Project,” published in PLOS ONEintroduces a new discount rate model based on player performance data, rather than historical trading behavior.

Using data from more than 900 AFL recruits between 2003 and 2016, the study reveals that:

• Discount rates in the first year vary depending on draft number, between 42% and 51%, and decrease over time as underperforming players are cut.
• First-year player contributions are a poor indicator of long-term value, suggesting clubs could benefit from carrying over picks to future drafts.
• Historical trades show a consistent bias toward current-year picks, even when future picks offer greater strategic value.

Dr. Chandrakumaran explains, “Our research shows that if a team is determined to select a certain Rookie of the Current Year, they are generally very quick to offer future picks. Historical trade data shows that advancing teams often discount future picks by as much as 120% in the search for immediate returns. This research makes it possible to assign a more precise value to a future recruit.

To determine a discount approach and how it might work, the researchers applied it to the AFL’s existing Project Value Index (DVI) (below) as a basis for a pick’s value for the current year.

For example, if Team A wants to obtain Team B’s fifth pick in the current year (valued at 1,878 DVI), they will need to release their pick nine in the current year (valued at 1,469) as well as their first-round pick the following year.

At best, if Team A finishes last in the standings this year and gets the top pick next year, Team B will make a significant profit of 1,166 DVI points in the trade (1,575 (pick one next year) + 1,469-1,878) and at worst, break even by a slight margin of 85 (494 (pick 18 next year) + 1 469-1878).

While the proposed metric would not necessarily allow teams to understand the exact value exchanged in each trade at the time of its execution due to the inability to predict next year’s draft order, it would allow them to hedge based on their risk tolerance.

“Our model provides a more objective framework for evaluating draft pick transactions. It allows decision-makers to better understand the long-term value of their selections and potentially exploit market inefficiencies.”

“Achieving a fair distribution of amateur talent is not an easy task, which is why we need to rework the approach. For exchanges to always have parity in the exchange, accurate value denominations are necessary. We hope that this research can support this and in turn strengthen the real objective of the project,” said Dr Chandrakumaran.

This research builds on previous research projects of Dr. Chandrakumaran.