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Andrew Sachais
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Author Bio: Andrew Sachais’ focus is on analyzing markets with global macro-based strategies. He is a former hedge fund trader and has written for TheStreet.com and was an economist for Minyanville. Sachais takes into consideration global equity, commodity, currency and debt markets, and is a... More
My company:
Satch Capital Group
My book:
Robert Griffin III or: How I learned To Love the Backup
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  • Devaluing The Run

    With the 2015 free agent period under way, analysts are rehashing the idea that the running back position has become devalued. While teams are more often opting for running back by committee structures, and balking at large salaries, this in itself does not mean the entire running game has become obsolete.

    Two important events that occurred this off-season that have come across as disrespectful to running backs were Dallas allowing Demarco Murray to walk, and LeSean McCoy being traded equal-value for a young linebacker prospect. While this too may not signal the running game has been devalued, it certainly shows that big name runners mean very little to those in charge.

    In order to quantitatively show the value of the running game, it is first important to measure what the average value of one rushing yard is compared to the average value of one passing yard. This measure is derived by taking each rushing yard compiled by a running back compared to his salary, then finding the average amongst the league. The same is done for passing yards and quarterbacks.

    Below is a list of the derived values. Using the most recent salaries, it is seen that passing attempts are valued more than rushing attempts, as is the case with touchdowns. The interesting finding, however, is that the difference between each yard gained, both passing and running is only a matter of a hundred dollars. By comparison, it is safe to say that passing and rushing yards are valued pretty evenly by current wages.

    The argument can be further fleshed out though. To be safe, let's look at the same metric, only from the year 2000, when running backs still were considered of "high value." Below is the measure of values for attempts, yards, and TD's in 2000, adjusted to the year 2014 dollar amount. As can be seen, in all regards, present day quarterbacks and running backs are paid far more for production than was the case in 2000. The growth in absolute value can be attributed to more media exposure and the overall increase in revenue for NFL franchises.

    Relative comparisons show that the value of running backs was far superior to that of quarterbacks. Each rushing yard was valued at close to 6 times, or 600% more than each passing yard. Compare that to current day values where a passing yard is valued at a mere 3.8% more than each rushing yard. By this comparison, rushing yards were vastly overvalued in the year 2000, and over the last 15 years, things have evened out.

    To put things on an even fairer playing field, the dollar value of each yard per attempt will be taken into consideration. The data were adjusted into 2014 dollar terms to take inflation out of the mix. This measure tells a slightly different story. In the year 2000, each rushing yard per attempt was valued at twice that of each passing yard. Meanwhile, in 2014, the roles have reversed, where passing yards are valued at 250% against each rushing yard. Moreover, each passing yard per attempt grew in value by 300% in the last 15 years, while rushing yards per attempt halved over that same period. This argument goes to show that on a per attempt basis, running backs certainly have been devalued.

    Another factor that must be considered is how big name runners have been so drastically devalued. In 2000, the average running back was making just under $1 million, adjusted for inflation, while the average quarterback was making just over that amount. The positions were valued fairly the same by the base salary measure. In 2014, however, quarterback values have skyrocketed to a median of $16,000,000, while running backs have grown to a meager $3 million. This represents 1500% growth in the value of quarterbacks and 350% growth in running backs.

    Justification for this comes by measuring how much of a physical toll is taken by each attempt. Rushing attempts are more strenuous on the runner's body compared to a passing attempt. A quarterback can easily throw for twice as many passing attempts in a season as the team's leading rusher, with far less physical damage. In 2000, Eddie George went for over 400 attempts, while Demarco Murray almost matched that in 2014. These runners dealt with many ailments, and in Eddie's case, never returned to the same level of production. In contrast. Andrew Luck and Drew Brees are counted on year after year to pass for more than 600 attempts in order to carry their respective teams. The point of this is that passers receive higher salaries because more is thrust upon their shoulders, and they must produce a large number of attempts each game to give their team the best chance of winning.

    In the case of runners, many teams are opting for a running back by committee approach, where teams can remain balanced, running and passing equally, without putting too much strain on one individual runner. This cuts back on attempts, and thus paychecks. For example, in the year 2000, close to 20 running backs averaged 20 rushing attempts per game. While in 2014, less than 10 backs averaged that same amount.

    The conclusion to be drawn is that a good running back was once valued significantly more than a good quarterback. In 2000, rushing yards, attempts, and even touchdowns on the ground were extremely coveted. And considering a bulk of the carriers lie with one runner, he received a hefty salary. The game has changed now, and passers are more coveted. In the same token, management has become more efficient. Rushing attempts are far more strenuous than a single passing attempt, and in an attempt to keep a balanced offense, teams must employ multiple running backs. This cuts down on an individual's production, and thus weighs on the wages of running backs. The league, by many metrics, does not value the running game any less than it once did, it just goes about it in a more efficient way now, limiting the downside risk when a team's "work horse" back goes down due to overuse.

    Apr 01 10:14 PM | Link | 1 Comment
  • Junk Yield Spread Widens On ADP Report

    With a weak ADP employment report on Wednesday, the Junk bond spread widened against Treasury bonds, signaling a more risk averse trading environment, weighing on equity prices. The Junk yield spread is represented by the ratio iShares Barclays 7-10 Year Treasury (NYSEARCA:IEF) over SPDR Barclays High Yield Bond (NYSEARCA:JNK).

    Tags: JNK, IEF
    Apr 01 10:51 AM | Link | Comment!
  • Short MGM On Macau Revenue Slip

    As gambling revenue in Macau plummeted in March, MGM Resorts International (NYSE:MGM) presents an attractive short opportunity.

    "Gambling revenue in the Chinese territory of Macau plummeted 39 percent in March, the 10th consecutive monthly fall, as high rollers steered clear of the world's biggest casino hub where the take is 7 times as much as in Las Vegas.

    The revenue drop is the second worst on record for the country's only legal gaming centre - a playground for government officials and executives of state-owned enterprises before President Xi Jinping last year began a crackdown on corruption," according to Reuters.

    Data provided by Trading View

    Tags: MGM
    Apr 01 10:23 AM | Link | Comment!
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