bidding system review - f/s and academy may 2015

Bidding System Review - F/S and Academy

May 2015

2© Australian Football League 2014. This document is confidential and intended solely for the use and information of the addressee.

Background to the existing F/S and Academy Rules

Father / Son rule Club Academy rule

• The F/S Rule originated in 1954. The rule provides Clubs with priority access to the sons of ex-players for the purpose of preserving the important “father-son” tradition in our game.

• The F/S Rule has undergone many changes throughout recent years, some in relation to eligibility criteria and many in relation to the process by which an eligible player becomes listed by a Club.• Prior to 1997: F/S players bypassed draft

• 1997: Clubs used a 2nd round pick for first F/S player and 3rd round pick for second F/S player

• 2001-03: Trialled one F/S player limit per year

• 2003: Clubs used a 3rd round pick for first F/S player and 2nd round pick for a second F/S player

• 2007: Current bidding system

• In 2007, given the increasing importance of the National Draft as a competitive balance measure, it was deemed that the F/S rule was delivering windfalls to clubs out of proportion to the best interests of the competition.

• The current bidding system was introduced to ensure Clubs paid something closer to “fair value” for players selected.

• The F/S Rule is very popular with fans and an important and unique tradition of our game. Despite the fact that it compromises the purity of the draft, the AFL believes the rule should be retained.

Introduced in 2009 for the four Clubs in NSW / QLD. At this time:

o 11% of players on AFL lists came from NSW/ACT and Queensland, though these areas have 54% of Australia’s population;

o the traditional recruitment model for recruitment in other codes was for Clubs to directly recruit children as young as 12;

o this connection with local Clubs was a significant advantage for the other Codes in attracting first choice athletes and was actively promoted by these other Codes as such.

The AFL required an approach that would use the Club brands to enable our code to compete effectively to attract first-choice athletes, coupled with the opportunity for the athletes to then play in their home states.

Under the model, each of the four AFL Clubs would use partner with the AFL to identify, attract and develop players as young as 10 years of age, taking their development through to drafting age and growing the national talent pool in the interests of all AFL Clubs.

In return for their role, and as an important incentive for investing in their Academies. the four partnering AFL Clubs were given the opportunity to list eligible players under the same bidding system that applies to F/S eligible players.

The Club Academies were a key pillar in the AFL’s expansion strategy and. increasing talent outcomes in the NSW and Queensland markets remains a huge challenge and opportunity for growth of the game.


Issues with the existing bidding system

The existing system Issues

A bidding system is in place to determine which Draft pick a Club uses to secure a potential F/S or Academy player.

The aim of the bidding system is to provide Clubs with priority access to players while still ensuring reasonable “value” is paid in terms of the draft pick that is used.

The bidding system was introduced in 2007 following concerns about the fairness of the old F/S Rule which allowed Clubs to recruit eligible players at the fixed cost of a 3rd round draft selection.

The bidding process takes place prior to the trade period as follows:

o Each Club nominates the eligible F/S and Academy players they intend to select prior to the bidding process (“Nominating Club”).

o In reverse ladder order starting with Pick 1, Clubs can bid for nominated players (“Bidding Club”).

o If a bid is made for a player, the Nominating Club can match the bid with its next available selection to secure the player, otherwise the bidding Club will secure the player.

o A Nominating Club can secure multiple players under this process. If its selection in a particular round has already been used, its selection in a subsequent round may be used to secure the player.

The existing bidding system is an improvement on past systems, however, it has become apparent that the system is arbitrary and inconsistent and fails to meet the goal of ensuring “fair” value is paid to secure a F/S or Academy player.

Under the current system after any bid is made, the required “price” for securing a player could fall at any one of the next 17 picks in the draft. Because of this, the Nominating Club may receive far too great an advantage in selecting a player. For example, it is possible for the Club that has won the premiership to receive the number one selection in the draft utilising pick 18. This is an outrageous windfall in itself, but if there was a second player bid for at pick 2, they would also receive that player for just pick 36.

The potential anomalies arising in the existing system were obvious from the outset. However, the view at the time was that this was an improvement on past systems and any luck one team may have would be viewed as part of the “swings and round-abouts” of the AFL competition.

However, the reality has become clear in subsequent years. The competition cannot tolerate a disproportionate advantage being given to one team over the rest: the “swings and round abouts” actually play out in premierships, finals appearances and wooden spoons.

A key issue is that these anomalies are only set to arise more frequently in future years as the Club Academies begin to regularly produce players.


The new system has been finalised by the AFL

Goals in developing a new system The solution

objective and fair;

works consistently across all scenarios including in extreme cases;

flexible enough to encourage and facilitate the listing of F/S and Academy players to Nominating Clubs;

provides a clear and transparent incentive for Clubs to invest in their local academies and to select F/S players.

• AFL, with the aid of the Player Movement Advisory Group examined many differing models for an improved bidding system. Finally, a system was chosen by the AFL that:

Assigns points to value each Draft pick

Updates the draft order when F/S and Academy players are selected

Applies a discount to encourage F/S selections and investment in Academies

• The new system is explained in the following pages


Assigning points to each draft pick

The concept of a Draft Value Index

A key issue with establishing “fair value” in the current system is that there is no objective way to equate the value of one draft selection to another.

We have solved this problem by establishing a Draft Value Index (‘DVI’) which assigns a relative points value for each pick in the National Draft.

The idea for this came from published works on a theoretical mathematical model DVI. We developed this idea further using actual data relevant to the AFL

Points were calculated using statistical analysis of player salary data from 2000-2014 – an indicator of the relative ‘market’ value of players at each draft pick.

The methodology was reviewed in detail and endorsed by Professor Jeff Borland (University of Melbourne, Department of Economics)

In addition to academic sign off, on a practical level the DVI has been heavily “stress tested” by the Player Movement Advisory Group (“PMAG”), consisting of Club List Managers and General Managers of Football. We have found that the DVI is a good indicator of the general value of picks relative to one another and also agrees with trades actually executed by Clubs.

As described in the next section ultimately the points assigned by the DVI are used to create an objective, fair and consistent approach to valuing F/S and Academy selections.

“Overall the construction of a DVI for the AFL National Draft is a high quality piece of work. It compares favourably with similar work that I have seen for international competitions such as the NFL and NBA. The methodology for constructing the DVI displays a solid knowledge of the literature on this topic and good judgment in its choices about the details of application to the AFL. Overall I agree with the main aspects of the methodology. The empirical derivation of the DVI has been done in a careful and highly competently manner, and obviously reflects a huge amount of work. Some aspects of the derivation of the DVI, such as the application of player salary data as a measure of player value, are best-practice and an improvement over methods that are commonly applied in other international sporting competitions.”

Professor Jeff Borland

University of Melbourne , Department of Economics


1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73–

500

1,000

1,500

2,000

2,500

3,000

Draft pick

Poin

tsAFL Draft Value Index graph

Round 1 Round 2 Round 3 Round 4

Raw data (AFL player salaries)

AFL Draft Value Index graph

R2 of raw data = 74.82%


AFL Draft Value Index

Round 1 Round 2 Round 3 Round 4 Round 5

Pick Points Pick Points Pick Points Pick Points Pick Points

1 3,000 19 948 37 483 55 207 73 9

2 2,517 20 912 38 465 56 194 74 –

3 2,234 21 878 39 446 57 182

4 2,034 22 845 40 429 58 170

5 1,878 23 815 41 412 59 158

6 1,751 24 785 42 395 60 146

7 1,644 25 756 43 378 61 135

8 1,551 26 729 44 362 62 123

9 1,469 27 703 45 347 63 112

10 1,395 28 677 46 331 64 101

11 1,329 29 653 47 316 65 90

12 1,268 30 629 48 302 66 80

13 1,212 31 606 49 287 67 69

14 1,161 32 584 50 273 68 59

15 1,112 33 563 51 259 69 49

16 1,067 34 542 52 246 70 39

17 1,025 35 522 53 233 71 29

18 985 36 502 54 220 72 19

Examples of actual trades in recent years

• 2014, Geelong and Adelaide:

• Geelong 14 and 35 for

• Adelaide 10 and 47

• 1683 points for 1711

• 2013, St Kilda and Hawthorn:

• St Kilda 24 and 59 for

• Hawthorn 19


• 2013, Collingwood and WCE:

• Collingwood 11, 31, 49

• WCE 6 and 44



Updating draft order and applying a discount

The mechanism for updating the draft order Applying the discount

Under the new system, the existing bidding system is retained whereby Clubs bid for F/S or Academy players in accordance with the reverse draft order. However, this will either occur live on draft night or shortly prior to the draft in order to reflect a far more accurate market value for each player.

The value of the bid determines the points that must be “paid” by the Nominating Club to secure the player.

In order to pay for the player, the Nominating Club’s next available pick move backwards in the draft order to the value of the points required.

If the points required are greater than the value of the next available pick, the remaining points are subtracted from the Nominating Club’s next selection and so on, until all points are paid.

If a Nominating Club does not have enough points to secure a F/S or Academy selection in a given Draft, the points required will carry over to the Club’s first selection the following year.

o In this case, points will be deducted prior to the trade period to ensure the Nominating Club pays it points debt, rather than trades picks away.

o Clubs will not be eligible to participate in the bidding system if they still owe points going into the next draft.

An incentive is required to encourage Clubs to invest in their Academies and select F/S players, however we do not want Clubs to receive too great an advantage for doing so, especially in early rounds.

A Nominating Club will be required to pay an amount of points equal to the discounted value of the Bidding Club’s pick to secure the player.

Developing the discount level has been a key focus. Important feedback in relation to the discount was:

o it must incentivise investment in Academies and selection of F/S players;

o the concept of “fair value” is most important in the early rounds;

o in the later rounds it should be easy for Clubs to take a chance on F/S and Academy players so as to encourage these players being listed by the relevant Clubs.

In the first round, a maximum discount of 20% will be applied

The discount will then be fixed at 197 points (the discount for pick 18).

Structuring the discount in this way ensures:

o “fair value” is paid in the early rounds

o the listing of F/S players and local Academy graduates is facilitated in later rounds because the discount rises steadily from 20% in Round 1 to 100% at pick 56 (if a player is bid from this point, a Nominating Club need only use their last pick in the draft to list the player).


Example: Isaac Heeney – Swans had picks 18, 37, 38, 57 and 70 remaining

Melbourne bids for Isaac Heeney

at Pick 2

Sydney choose to match bid

and select Isaac Heeney using their next pick

20% discount applied to value

of Pick 2 – Sydney owe

2,013pts

Pick 18 moves to back of draft and

Sydney owe further 1,028pts – draft order is updated

Pick 2 = 2,517pts

2,517pts x 80% = 2,013pts


Sydney owe further 545pts – draft order

is updated

Pick 18 = 985pts

985pts – 2,013pts = (1,028pts)

Pick 37 = 483pts

483pts – 1,028pts = (545pts)

Pick 38 = 465pts

465pts – 545pts = (80)pts

Sydney receives Pick 2 which they use on

Isaac Heeney

Explanation

Process

Outcomes

Pick 18 moves to the back of the draft (Pick

88)


88)

Points are subtracted from

Sydney’s next available pick,

Pick 18



Pick 37



Pick 38

Calculations

Existing Bidding System Proposed Additions to Existing Bidding System

Note: Example is based on actual bid for Isaac Heeney, using Sydney’s available selections in the National Draft (rather than at the bidding) to show the outcomes if the bidding was incorporated in the National Draft.

Pick 57 moves to pick 64 and no

more points owed – draft

order is updated

Pick 57 = 182pts

182pts – 80pts = 102pts

Pick 57 moves back to pick 64

Remaining points are

subtracted from Sydney’s next pick, Pick 57


Sydney owe further 80pts – draft order

is updated


88)


Example: Darcy Moore, Collingwood, 2014

Bulldogs bids for Darcy Moore at Pick 5

Collingwood choose to match bid and select Darcy Moore

using their next pick

Maximum of 20% discount could be applied to value of

Pick 5 – Collingwood owe 1,503pts

Collingwood get Pick 5 for Pick 6 and no more points are owed

– draft order is updatedNote: Remaining 249pts are not

used by Collingwood

Pick 5 = 1,878pts

1,878pts x 80% = 1,503pts

Pick 6 = 1,751pts

1,751pts – 1,503pts = 249pts

Collingwood receives Pick 5 which they use on Darcy

Moore

Explanation

Process

Outcomes Collingwood give up Pick 6

Points are subtracted from Collingwood’s next available

pick, Pick 6

Calculations

Existing Bidding SystemProposed Addition to

Existing Bidding System

Note: Example is based on actual bid for Darcy Moore, using Collingwood’s available selections in the National Draft (rather than at the bidding) to show the outcomes if the bidding was incorporated in the National Draft.


Example: Jack Steele, GWS, 2014

North bids for Jack Steele at Pick 15

GWS choose to match bid and select Jack Steele using their next pick

20% discount applied to value of Pick 5 – GWS owe

890pts

Pick 23 moves to back of draft and GWS owe further 75pts – draft

order is updated

Pick 15 = 1,112pts

1,112pts x 80% = 890pts

Pick 24 moves to Pick 27 and no more points owed – draft order is updated

Pick 23 = 815pts

815pts – 890pts = (75pts)

Pick 24 = 785pts

785pts - 75pts= 709pts

GWS receives Pick 15 which they use on Jack

Steele

Explanation

Process

OutcomesPick 23 moves to the

back of the draft (Pick 90)

Pick 24 moves back to pick 27

Points are subtracted from GWS’s next available

pick, Pick 23

Remaining points are subtracted from GWS’s

next pick, Pick 24

Calculations


Notes: Example is based on actual bid for Jack Steele, using GWS’s available selections in the National Draft (rather than at the bidding) to show the outcomes if the bidding was incorporated in the National Draft.


Example: Billy Stretch, Melbourne, 2014

Adelaide bids for Billy Stretch at Pick 30

Melbourne choose to match bid and select Billy Stretch using

their next pick

Given bid is after pick 18, fixed discount of 20% of pick 18 applied – Melbourne owe

456pts

Pick 38 moves back to pick 71 and no more points owed –

draft order is updated

Pick 30 = 629pts

629pts – 197pts = 432pts

Pick 38 = 465pts

465pts – 432pts = 32pts

Melbourne receives Pick 30 which they use on Billy Stretch

Explanation

Process

Outcomes Pick 38 moves back to Pick 71

Points are subtracted from Melbourne’s next available pick,

Pick 38

Calculations



Notes: Example is based on actual bid for Billy Stretch, using Melbourne’s available selections in the National Draft (rather than at the bidding) to show the outcomes if the bidding was incorporated in the National Draft.


Example: Jack Hiscox, Sydney, 2014

Fremantle bids for Jack Hiscox at Pick 33

Sydney choose to match bid and select Jack Hiscox

using their next pick

Given bid is after pick 18, fixed discount of 20% of

pick 18 applied – Sydney owe 366pts

Pick 62 moves to back of draft and Sydney owe further 242pts – draft

order is updated

Pick 33 = 563pts

563pts – 197pts = 366pts

Pick 69 moves to back of draft and Sydney owe

further 194pts to be paid back in 2015 – draft order

is updated

Pick 62 = 123pts

123pts – 366pts = (242pts)

Pick 69 = 49pts

49pts - 242pts= 194pts

Sydney receives Pick 33 which they use on Jack

Hiscox

Explanation

Process

OutcomesPick 62 moves to the

back of the draft (Pick 93)

Pick 69 moves to the back of the draft (Pick 93) and Sydney owes

194pts in 2015

Points are subtracted from Sydney’s next

available pick, Pick 62

Points are subtracted from Sydney’s last

available pick, Pick 69

Calculations


Notes: Example is based on actual bid for Jack Hiscox, using Sydney’s available selections in the National Draft (rather than at the bidding) to show the outcomes if the bidding was incorporated in the National Draft.


Example: Zaine Cordy, Bulldogs, 2014

Fremantle bids for Zaine Cordy at Pick 52

Bulldogs choose to match bid and select Zaine Cordy using

their next pick

Given bid is after pick 18, fixed discount of 20% of pick 18

applied – Bulldogs owe 49pts

Pick 61 moves back to pick 66 and no more points owed –

draft order is updated

Pick 52 = 246pts

246pts – 197pts = 49pts

Pick 61 = 135pts

135pts – 49pts = 86pts

Bulldogs receives Pick 52 which they use on Zaine Cordy

Explanation

Process

Outcomes Pick 61 moves back to Pick 66

Points are subtracted from Bulldogs’ next available pick,

Pick 61

Calculations



Note: Example is based on actual bid for Zaine Cordy, using Bulldogs’ available selections in the National Draft (rather than at the bidding) to show the outcomes if the bidding was incorporated in the National Draft.


Next Steps

bidding system review - f/s and academy may 2015

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