NFL Alphas 2018

NFL ALPHAS 2017-2018 NFL ALPHAS 2017-2018 99.8% With 6:04 remaining in the third quarter of Super Bowl LI, the Atlanta But not all was doom and gloom this season. While no teams relocat- Falcons were shocking the football world. They led the favored New ed to Los Angeles for a change, league owners did approve the Oak- England Patriots 28-3 and made their seemingly invincible quar- land Raiders move to Las Vegas in 2020 (talk about a perfect football terback Tom Brady look merely mortal in the process. At this very marriage). Former Dallas Cowboys quarterback Tony Romo showed a moment, ESPN computed that the Falcons had a 99.8% chance of keen ability to predict upcoming plays in his first season as a CBS color winning their first title. But it was not to be. What ensued was one of commentator. Jon Gruden left the “television booth at the end of the the most epic collapses in NFL history. The Patriots rallied back. With season to return as head coach of the Raiders, sparing football fans four minutes left in the game, a series of specious play calls and a sack from hearing him compliment every player on the field each Mon- forced Atlanta out of field goal range, which ended up being their day night. Finally, Commissioner Roger Goodell received a five-year last stand. The Patriots then tied the game with 57 seconds left, and contract extension —which may or may not have included his requests then went on to win their fifth title with a touchdown run by James for lifetime use of a private jet—which ensures that we’ll have plenty White in the first-ever overtime Super Bowl. As a result, Analytic’s more opportunities to comment on the league’s fearless leader in prediction was incorrect, but we have successfully picked 10 Super years to come. Bowls out of the last 14 (71%). On February 4 in Minneapolis, the Patriots dynasty goes up against Despite this defeat, some good came out of it. As we do the underdog Philadelphia Eagles in Super Bowl LII. Similar to last year, when managing investment portfolios, we can learn from our New England will be seeking to add to their case of Lombardi trophies, mistakes. Half of a successful investment involves knowing what while Philadelphia is hoping to construct one to house its first. It remains to buy, and the other half is knowing when to sell. Had the Falcons to be seen if this paper correctly predicts the result via our quantitative been a stock, the time to sell was at the 99.8% moment. Hindsight is process, but we can tell you that this matchup will certainly create a indeed 20/20, but the silver lining is that our “buy signal” was right. Now dilemma for New York Giants and Jets fans regarding who to root for. if only we could factor in the human element, i.e., questionable coach- ing decisions by a Patriots opponent (see Seattle Seahawks, Super What’s In Our Alpha? Bowl XLIX)… In the coming days, many football and gambling “experts” will give their predictions based on matchups, trends, and even data. Similar The 2017 season was a “Groundhog Day” of sorts, as the issues of the 2016 to how we manage investment portfolios using quantitative model- season lingered. The National Anthem protests continued, prompting ing, we came up with a formula for every NFL team in which we com- some choice words from President Trump on the matter, which in turn pute the cumulative return on investment (ROI) relative to market (i.e., inspired both players and owners to stand in solidarity on the sidelines. bettor) expectations for each team’s 16 regular season games. We call Dallas Cowboys running back Ezekiel Elliott appealed his six-game sus- this NFL Alpha. As an illustration, let’s assume that an eager Raiders pension, resulting in his playing status being in limbo on what felt like fan named Richard visits Las Vegas to check on the progress of the a weekly basis. Television ratings for games declined yet again—with construction of his team’s new stadium. While there, he places 16 dis- some attributing it to the protests and and others the oversaturation tinct wagers of $100 for the Raiders to win each of their 16 games on of its product with games played on Thursdays, Sundays, and Mondays. the “money line.” This means that if the Raiders win, he will collect the On the field, the game was affected by an abundance of injuries to star $100 he put down, plus an additional sum that is computed based on players like Aaron Rodgers, Odell Beckham Jr., J.J. Watt, and Deshaun the team’s win probability per market expectations. If they lose, he Watson. The question “What is a catch?” became even more nebulous. has lost his $100. Once the regular season ends, he adds up his total Every pass play felt as though a pass interference penalty was immi- winnings, and compares it to his $1,600 in total wagers. Anything less nent. Although the replay process was supposedly streamlined and than this amount indicates a negative NFL Alpha and anything above simplified, it appeared as if every close play was under scrutiny, bring- it is a positive one. Richard is now disappointed to learn that the Raid- ing games to a screeching halt. ers had a -33.8% NFL Alpha (Table 1) and his $1,600 has become $1,060, but holds out hope that coach Gruden will reverse this trend in 2018. “Upon further review, the ruling on the field stands—the NFL Alphas paper can continue.” | 2 | NFL ALPHAS 2017-2018 Table 1 Alphas for all 32 NFL Teams ALPHA 2017-2018 Team 2017 - 2018 2016 - 2017 Alpha Change Record Favorite/Underdog Carolina Panthers 40.2% -27.4% 67.6% 11-5 9-7 Minnesota Vikings 37.3% -5.5% 42.8% 13-3 12-3-1 Miami Dolphins 33.5% 38.2% -4.7% 6-10 2-13-1 Philadelphia Eagles 31.8% -11.0% 42.8% 13-3 11-5 Buffalo Bills 27.4% -16.1% 43.5% 9-7 7-9 Pittsburgh Steelers 23.3% 7.1% 16.3% 13-3 14-2 Jacksonville Jaguars 20.6% -56.6% 77.2% 10-6 11-5 Los Angeles Rams 19.2% -23.0% 42.1% 11-5 12-4 Kansas City Chiefs 18.0% 39.0% -21.0% 10-6 13-3 Arizona Cardinals 13.2% -15.4% 28.5% 8-8 5-11 New England Patriots 12.4% 40.5% -28.2% 13-3 16-0 New Orleans Saints 9.6% -11.7% 21.3% 11-5 11-5 Detroit Lions 4.9% 21.8% -16.9% 9-7 7-8-1 Atlanta Falcons -0.9% 29.2% -30.1% 10-6 13-3 Los Angeles Chargers -1.6% -35.6% 34.0% 9-7 8-8 Seattle Seahawks -1.7% 6.2% -7.9% 9-7 9-7 New York Giants -3.2% 35.8% -39.0% 3-13 3-13 Baltimore Ravens -4.3% -14.2% 9.9% 9-7 10-6 Dallas Cowboys -5.8% 50.6% -56.4% 9-7 12-4 Washington Redskins -7.5% 5.9% -13.4% 7-9 6-10 Cincinnati Bengals -7.5% -29.3% 21.8% 7-9 7-9 Tennessee Titans -9.0% 19.9% -28.9% 9-7 12-3-1 Chicago Bears -14.7% -52.9% 38.2% 5-11 3-13 Green Bay Packers -18.3% 6.6% -24.9% 7-9 6-10 San Francisco 49ers -19.6% -66.8% 47.2% 6-10 3-13 New York Jets -20.4% -32.5% 12.1% 5-11 2-14 Oakland Raiders -33.8% 42.1% -75.9% 6-10 7-9 Tampa Bay Buccaneers -37.0% 40.5% -77.6% 5-11 6-8 Denver Broncos -40.6% 6.6% -47.2% 5-11 9-7 Indianapolis Colts -44.0% 13.1% -57.1% 4-12 1-15 Houston Texans -47.5% 12.2% -59.7% 4-12 5-11 Cleveland Browns -100.0% -82.5% -17.5% 0-16 1-15 Sources: Analytic Investors and nfl.com. | 3 | NFL ALPHAS 2017-2018 The Surprising and the Predictable Bad Teams, Good Alphas When the NFL season concludes, we all hazard a guess or two as to For fans of the Miami Dolphins and Giants, the end of the season which teams would be the high and low NFL Alpha teams prior to couldn’t come soon enough. Both teams were coming off playoff crunching the numbers. This year, the top team surprised us, while appearances in 2016 and expected to improve on that in 2017. Instead, the bottom one did not. The Carolina Panthers rebounded from they imploded thanks to a series of injuries and controversies to finish a disappointing 6-10 record in 2016 and finished 11-5 in 2017, earn- with records of 6-10 and 3-13, respectively. The Dolphins lost start- ing them a league-best NFL Alpha of 40.2% (Chart 1). On paper, the ing quarterback Ryan Tannehill for the season when he tore his ACL Panthers were not the impressive team that went to Super Bowl 50. during training camp in August. Head coach Adam Gase wasted no They had a less-than-impressive offense that only generated attention time in finding a replacement, luring the recently-retired (and under- when quarterback Cam Newton made controversial remarks directed achieving) Jay Cutler from the Fox broadcast booth to make him the at a female reporter.

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