Bidding System Review -‐ F/S and Academy

Bidding System Review - F/S and Academy

May 2015 Background to the exisng F/S and Academy Rules

Father / Son rule Club Academy rule

• The F/S Rule originated in 1954. The rule provides Clubs with priority • Introduced in 2009 for the four Clubs in NSW / QLD. At this me: access to the sons of ex-players for the purpose of preserving the o 11% of players on AFL lists came from NSW/ACT and Queensland, important “father-son” tradion in our game. though these areas have 54% of Australia’s populaon; • The F/S Rule has undergone many changes throughout recent years, o the tradional recruitment model for recruitment in other codes some in relaon to eligibility criteria and many in relaon to the was for Clubs to directly recruit children as young as 12; process by which an eligible player becomes listed by a Club. • Prior to 1997: F/S players bypassed dra o this connecon with local Clubs was a significant advantage for the other Codes in aracng first choice athletes and was acvely • 1997: Clubs used a 2nd round pick for first F/S player and 3rd promoted by these other Codes as such. round pick for second F/S player • The AFL required an approach that would use the Club brands to enable • 2001-03: Trialled one F/S player limit per year our code to compete effecvely to aract first-choice athletes, coupled • 2003: Clubs used a 3rd round pick for first F/S player and 2nd with the opportunity for the athletes to then play in their home states. round pick for a second F/S player • Under the model, each of the four AFL Clubs would use partner with the • 2007: Current bidding system AFL to idenfy, aract and develop players as young as 10 years of age, • In 2007, given the increasing importance of the Naonal Dra as a taking their development through to draing age and growing the

compeve balance measure, it was deemed that the F/S rule was naonal talent pool in the interests of all AFL Clubs. delivering windfalls to clubs out of proporon to the best interests of • In return for their role, and as an important incenve for invesng in their the compeon. Academies. the four partnering AFL Clubs were given the opportunity to • The current bidding system was introduced to ensure Clubs paid list eligible players under the same bidding system that applies to F/S something closer to “fair value” for players selected. eligible players. • The F/S Rule is very popular with fans and an important and unique • The Club Academies were a key pillar in the AFL’s expansion strategy and. tradion of our game. Despite the fact that it compromises the purity increasing talent outcomes in the NSW and Queensland markets remains of the dra, the AFL believes the rule should be retained. a huge challenge and opportunity for growth of the game.

The exisng system Issues

• A bidding system is in place to determine which Dra pick a Club uses • The exisng bidding system is an improvement on past systems, to secure a potenal F/S or Academy player. however, it has become apparent that the system is arbitrary and inconsistent and fails to meet the goal of ensuring “fair” value is paid • The aim of the bidding system is to provide Clubs with priority access to secure a F/S or Academy player. to players while sll ensuring reasonable “value” is paid in terms of the dra pick that is used. • Under the current system aer any bid is made, the required “price” for securing a player could fall at any one of the next 17 picks in the • The bidding system was introduced in 2007 following concerns about dra. Because of this, the Nominang Club may receive far too great the fairness of the old F/S Rule which allowed Clubs to recruit eligible an advantage in selecng a player. For example, it is possible for the players at the ﬁxed cost of a 3rd round dra selecon. Club that has won the premiership to receive the number one • The bidding process takes place prior to the trade period as follows: selecon in the dra ulising pick 18. This is an outrageous windfall in o Each Club nominates the eligible F/S and Academy players they itself, but if there was a second player bid for at pick 2, they would intend to select prior to the bidding process (“Nominang also receive that player for just pick 36. Club”). • The potenal anomalies arising in the exisng system were obvious o In reverse ladder order starng with Pick 1, Clubs can bid for from the outset. However, the view at the me was that this was an nominated players (“Bidding Club”). 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 o If a bid is made for a player, the Nominang Club can match the compeon. bid with its next available selecon to secure the player, otherwise the bidding Club will secure the player. • However, the reality has become clear in subsequent years. The compeon cannot tolerate a disproporonate advantage being given o A Nominang Club can secure mulple players under this to one team over the rest: the “swings and round abouts” actually process. If its selecon in a parcular round has already been play out in premierships, ﬁnals appearances and wooden spoons. used, its selecon in a subsequent round may be used to secure the player. • 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.

Goals in developing a new system The soluon

• objecve and fair; • AFL, with the aid of the Player Movement Advisory Group examined many diﬀering models for an

• works consistently across all improved bidding system. Finally, a system was scenarios including in extreme chosen by the AFL that: cases; • ﬂexible enough to encourage and facilitate the lisng of F/S and Ø Assigns points to value each Dra pick Academy players to Nominang Clubs; Ø Updates the dra order when F/S and Academy • provides a clear and transparent players are selected incenve for Clubs to invest in their local academies and to select F/S players. Ø Applies a discount to encourage F/S selecons and investment in Academies

• The new system is explained in the following pages

The concept of a Dra Value Index

• A key issue with establishing “fair value” in the current system is that there is no objecve way to equate the value of one dra selecon to another. “Overall the construcon of a DVI for the AFL Naonal Dra is a high quality • We have solved this problem by establishing a Dra Value Index piece of work. It compares favourably with similar work that I have seen for (‘DVI’) which assigns a relave points value for each pick in the internaonal compeons such as the NFL and NBA. The methodology for Naonal Dra. construcng the DVI displays a solid knowledge of the literature on this topic • The idea for this came from published works on a theorecal and good judgment in its choices about the details of applicaon to the AFL. mathemacal model DVI. We developed this idea further using actual Overall I agree with the main aspects of the methodology. The empirical data relevant to the AFL derivaon 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 • Points were calculated using stascal analysis of player salary data derivaon of the DVI, such as the applicaon of player salary data as a from 2000-2014 – an indicator of the relave ‘market’ value of players measure of player value, are best-pracce and an improvement over at each dra pick. methods that are commonly applied in other internaonal sporng • The methodology was reviewed in detail and endorsed by Professor compeons.” Jeﬀ Borland (University of Melbourne, Department of Economics)

• In addion to academic sign oﬀ, on a praccal level the DVI has been Professor Jeff Borland heavily “stress tested” by the Player Movement Advisory Group (“PMAG”), consisng of Club List Managers and General Managers of University of Melbourne , Department of Economics Football. We have found that the DVI is a good indicator of the general value of picks relave to one another and also agrees with trades actually executed by Clubs. • As described in the next secon ulmately the points assigned by the DVI are used to create an objecve, fair and consistent approach to valuing F/S and Academy selecons.

Round 1 Round 2 Round 3 Round 4

3,000

2,500

2,000

1,500 Points

1,000

R2 of raw data = 74.82% 500

– 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

Dra pick Raw data (AFL player salaries) AFL Dra Value Index graph

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 Examples of actual trades in recent years 2 2,517 20 912 38 465 56 194 74 –

3 2,234 21 878 39 446 57 182 • 2014, Geelong and Adelaide:

4 2,034 22 845 40 429 58 170 • Geelong 14 and 35 for 5 23 41 59 1,878 815 412 158 • Adelaide 10 and 47 6 1,751 24 785 42 395 60 146 • 1683 points for 1711 7 1,644 25 756 43 378 61 135 • 2013, St Kilda and Hawthorn: 8 1,551 26 729 44 362 62 123

9 1,469 27 703 45 347 63 112 • St Kilda 24 and 59 for

10 1,395 28 677 46 331 64 101 • Hawthorn 19 11 29 47 65 1,329 653 316 90 • 943 points for 948 12 1,268 30 629 48 302 66 80 • 2013, Collingwood and WCE: 13 1,212 31 606 49 287 67 69 • Collingwood 11, 31, 49 14 1,161 32 584 50 273 68 59

15 1,112 33 563 51 259 69 49 • WCE 6 and 44

16 1,067 34 542 52 246 70 39 • 2222 points for 2113 17 1,025 35 522 53 233 71 29

18 985 36 502 54 220 72 19

The mechanism for updang the dra order Applying the discount

• Under the new system, the exisng bidding system is retained • An incenve is required to encourage Clubs to invest in their whereby Clubs bid for F/S or Academy players in accordance with the Academies and select F/S players, however we do not want Clubs to reverse dra order. However, this will either occur live on dra night receive too great an advantage for doing so, especially in early rounds. or shortly prior to the dra in order to reflect a far more accurate • A Nominang Club will be required to pay an amount of points equal market value for each player. to the discounted value of the Bidding Club’s pick to secure the player. • The value of the bid determines the points that must be “paid” by the • Developing the discount level has been a key focus. Important Nominang Club to secure the player. feedback in relaon to the discount was: • In order to pay for the player, the Nominang Club’s next available o it must incenvise investment in Academies and selecon of F/S pick move backwards in the dra order to the value of the points players; required. o the concept of “fair value” is most important in the early rounds; • If the points required are greater than the value of the next available pick, the remaining points are subtracted from the Nominang Club’s o in the later rounds it should be easy for Clubs to take a chance on next selecon and so on, unl all points are paid. F/S and Academy players so as to encourage these players being listed by the relevant Clubs. • If a Nominang Club does not have enough points to secure a F/S or Academy selecon in a given Dra, the points required will carry over • In the first round, a maximum discount of 20% will be applied to the Club’s first selecon the following year. • The discount will then be fixed at 197 points (the discount for pick 18). o In this case, points will be deducted prior to the trade period to • Structuring the discount in this way ensures: ensure the Nominang Club pays it points debt, rather than o “fair value” is paid in the early rounds trades picks away. o the lisng of F/S players and local Academy graduates is o Clubs will not be eligible to parcipate in the bidding system if facilitated in later rounds because the discount rises steadily they sll owe points going into the next dra. from 20% in Round 1 to 100% at pick 56 (if a player is bid from this point, a Nominang Club need only use their last pick in the dra to list the player).

Exisng Bidding System Proposed Addions to Exisng Bidding System

Sydney choose Points are Points are Points are Remaining Melbourne bids to match bid subtracted from subtracted from subtracted from points are Explanaon for Isaac Heeney and select Isaac Sydney’s next Sydney’s next Sydney’s next subtracted from at Pick 2 Heeney using available pick, available pick, available pick, Sydney’s next their next pick Pick 18 Pick 37 Pick 38 pick, Pick 57

20% discount Pick 18 moves to Pick 37 moves to Pick 38 moves to Pick 57 moves to applied to value back of dra and back of dra and back of dra and pick 64 and no Process of Pick 2 – Sydney owe further Sydney owe further Sydney owe further more points Sydney owe 1,028pts – dra 545pts – dra order 80pts – dra order owed – dra 2,013pts order is updated is updated is updated order is updated

Pick 2 = 2,517pts Pick 18 = 985pts Pick 37 = 483pts Pick 38 = 465pts Pick 57 = 182pts Calculaons 2,517pts x 80% = 985pts – 2,013pts 483pts – 1,028pts 465pts – 545pts 182pts – 80pts = 2,013pts = (1,028pts) = (545pts) = (80)pts 102pts

Sydney receives Pick 18 moves Pick 37 moves Pick 38 moves Pick 2 which to the back of to the back of to the back of Pick 57 moves Outcomes they use on the dra (Pick the dra (Pick the dra (Pick back to pick 64 Isaac Heeney 88) 88) 88)

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

Proposed Addion to Exisng Bidding System Exisng Bidding System

Collingwood choose to match Points are subtracted from Bulldogs bids for Darcy Moore bid and select Darcy Moore Collingwood’s next available Explanaon at Pick 5 using their next pick pick, Pick 6

Collingwood get Pick 5 for Pick Maximum of 20% discount 6 and no more points are owed could be applied to value of – dra order is updated Process Pick 5 – Collingwood owe Note: Remaining 249pts are not 1,503pts used by Collingwood

Pick 5 = 1,878pts Pick 6 = 1,751pts Calculaons 1,878pts x 80% = 1,503pts 1,751pts – 1,503pts = 249pts

Collingwood receives Pick 5 Outcomes which they use on Darcy Collingwood give up Pick 6 Moore

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

Exisng Bidding System Proposed Addions to Exisng Bidding System

GWS choose to match bid Points are subtracted Remaining points are North bids for Jack Steele and select Jack Steele from GWS’s next subtracted from GWS’s Explanaon at Pick 15 using their next pick available pick, Pick 23 next pick, Pick 24

Pick 23 moves to back of 20% discount applied to Pick 24 moves to Pick 27 dra and GWS owe value of Pick 5 – GWS owe and no more points owed Process further 75pts – dra 890pts – dra order is updated order is updated

Pick 15 = 1,112pts Pick 23 = 815pts Pick 24 = 785pts Calculaons 1,112pts x 80% = 890pts 815pts – 890pts = (75pts) 785pts - 75pts= 709pts

GWS receives Pick 15 Pick 23 moves to the Pick 24 moves back to which they use on Jack back of the dra (Pick Outcomes pick 27 Steele 90)

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

Proposed Addion to Exisng Bidding System Exisng Bidding System

Melbourne choose to match Points are subtracted from Adelaide bids for Billy Stretch at bid and select Billy Stretch Melbourne’s next available Explanaon Pick 30 using their next pick pick, Pick 38

Given bid is aer pick 18, ﬁxed Pick 38 moves back to pick 71 discount of 20% of pick 18 and no more points owed – Process applied – Melbourne owe dra order is updated 456pts

Pick 30 = 629pts Pick 38 = 465pts Calculaons 629pts – 197pts = 432pts 465pts – 432pts = 32pts

Melbourne receives Pick 30 Pick 38 moves back to Pick 71 Outcomes which they use on Billy Stretch

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

Exisng Bidding System Proposed Addions to Exisng Bidding System

Sydney choose to match Points are subtracted Points are subtracted Fremantle bids for Jack bid and select Jack Hiscox from Sydney’s next from Sydney’s last Explanaon Hiscox at Pick 33 using their next pick available pick, Pick 62 available pick, Pick 69

Pick 69 moves to back of Given bid is aer pick 18, Pick 62 moves to back of dra and Sydney owe ﬁxed discount of 20% of dra and Sydney owe further 194pts to be paid Process pick 18 applied – Sydney further 242pts – dra back in 2015 – dra order owe 366pts order is updated is updated

Pick 33 = 563pts Pick 62 = 123pts Pick 69 = 49pts Calculaons 563pts – 197pts = 366pts 123pts – 366pts = (242pts) 49pts - 242pts= 194pts

Pick 69 moves to the Sydney receives Pick 33 Pick 62 moves to the back of the dra (Pick which they use on Jack back of the dra (Pick Outcomes 93) and Sydney owes Hiscox 93) 194pts in 2015

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

Proposed Addion to Exisng Bidding System Exisng Bidding System

Bulldogs choose to match bid Points are subtracted from Fremantle bids for Zaine Cordy and select Zaine Cordy using Bulldogs’ next available pick, Explanaon at Pick 52 their next pick Pick 61

Given bid is aer pick 18, ﬁxed Pick 61 moves back to pick 66 Process discount of 20% of pick 18 and no more points owed – applied – Bulldogs owe 49pts dra order is updated

Pick 52 = 246pts Pick 61 = 135pts Calculaons 246pts – 197pts = 49pts 135pts – 49pts = 86pts

Bulldogs receives Pick 52 Pick 61 moves back to Pick 66 Outcomes which they use on Zaine Cordy

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