Predicting Success II

Back in the first installment of "Predicting Success", I talked a bit on how the turnover of NFL playoff teams is higher than the prognosticators are ever willing to predict.  Not only that, but the instability of the league in repeat participants in postseason play has been increasing over the past few years.

Part of gathering that data also revealed another little bit of what I thought was interesting data.

Division Winning Streaks and Parity Cycles

In looking at playoff participants I went back to 1970 and what some would consider the start of the modern NFL.  This was the first year after the merger of the NFL and AFL.

From 1970 to 1977 the league was dominated by a handful of teams winning over and again.  The eight year period included the following playoff runs; Baltimore (5 appearances), Pittsburgh (6 appearances), Oakland (7 appearances), Dallas (7 appearances), Minnesota (7 appearances) and LA Rams (5 appearances).  It was also a period of stability in the division winner measurement as well.

Beginning in 1978 the league expanded from one wild card to two wild cards, and this seems a good break point where the shift to so called "parity" begins.

None-the-less, these are the longest consecutive division winning streaks in the modern NFL. (1970 to present)

LOS ANGELES RAMS	'73 TO '79	7
PITTSBURGH	'74 TO '79	6
MINNESOTA	'73 TO '78	6
NEW ENGLAND	'03 TO '07	5
INDIANAPOLIS	'03 TO '07	5
DALLAS	'92 TO '96	5
SAN FRANCISCO	'86 TO '90	5
CHICAGO	'84 TO '88	5
OAKLAND	'72 TO '76	5
SEATTLE	'04 TO '07	4
PHILADELPHIA	'01 TO '04	4
PITTSBURGH	'94 TO '97	4
SAN FRANCISCO	'92 TO '95	4
BUFFALO	'88 TO '91	4
DALLAS	'76 TO '79	4
MIAMI	'71 TO '74	4

Only four years in this modern period resulted in no team defending their division title.  1983 (proceeded by the strike year where no division winners were awarded), 1992, 1998 and 2000.  Currently there is one team holding a streak; and New England (fresh off their five year streak that was ended in 2007) is looking to win the AFC East for the fourth year in a row.

But this past season wasn't the only year to have but one defending division winner hold their title.  1980, 1981, 1991, 1999, 2001 and 2011 seasons all resulted in only one team defending their division crown.

On the flip side there have only been five seasons where four teams successfully defended their division; 1984, 1987, 2004, 2006, 2007.  1978 is the one and only season since 1977 where five teams defended their division. (The mid-90's saw several years of three repeat winners).  Also keep in mind that the league went from six to eight divisions in 2002.

Now I didn't run the numbers officially in statistic land, but the results since 1977 don't seem to bear a statistically relevant set of data to support the notion that the league is increasing in parity during this 35 year period.  On the other hand there may be some evidence that a sort of cycle has set in where periods of dominance by a few teams are followed by a free for all as the next big thing comes along.  It also seems to run in a ten year cycle.  And it seems that we happen to be in another period of "big-dog-less-ness".

Why this is certainly would be up for debate.  As I say in my job, "I can show you what is happening, but everyone will have their own why"

The "what" in this case is that there are far fewer dominant teams in the league than in the past.  "So what?" you may say, "Everyone knows that."  And sure it's good to run the data yourself to see what there is to see.  But what I would also say is that the parity level has remained fairly stable in a cyclical manner since the old NFL was washed away in 1977.  Since then we've seen three periods of lesser parity and we are in the fourth period of greater parity.  The aggregate for the entire period would fairly be judged as being flat.   The comparison that makes this statement true, "The NFL today has far more parity than in the past", can only be between the eras before 1977 and after 1977. 

The "Why" will have to wait for another day.
** The 1981 strike resulted in a playoff system that completely ignored division standings.  As a result no division winners were awarded that season.  The Miami streak was the one streak that was effected by this issue.  Had the league played a full season and Miami won the East, that team would have strung together a five year dominance of the AFC East.  Unfortunately for those Dolphins, this is not the case.

"One Billion Dollars..."

The Cleveland Browns have had remarkably few ownership groups.  Four to be precise.

1 Arthur McBride
2 Dave Jones
3 Art Model
4 Al & David Lerner

And now Jimmy Haslam and his group will be the fifth.

I imagine that ownership changes in the NFL aren't all that common.  Perhaps if I looked them up we would find that most teams don't transfer more than once every fifteen to twenty years.

But the current price tag for the Browns is both astounding and insightful in many ways.

The Haslam group is paying one billion dollars.  A far cry from the price of  $50,000 paid by Arthur McBride in 1945.  Of course we know that the dollar has diminished in value (or purchasing power) over the past century so I was curious how much each owner paid in real terms, or current dollars.

Owner          Year of Purchase                 Price                                    Price in 2012 Dollars

McBride        1945                                $            50,000                       $          637,439
Jones             1953                                $          600,000                       $       5,156,809
Model            1961                                $       3,925,000                      $     30,123,784
Lerner            1998                                $   530,000,000                      $   747,300,000
Haslam           2012                                $1,000,000,000                      $1,000,000,000

(all real dollars calculated with the BLS CPI calculator.  Of course that number isn't undervalued)

The increase in real value over time is astonishing.  This really gives someone an idea of the monster growth the NFL has seen in the later half of the twentieth century.   It also shows you how strong the Browns franchise is over time as well.  Certainly the growth over the past 14 years is due to the strength of the NFL and not some top notch stewardship by the Lerners.

Even still the Lerner clan saw a return of 33.8% when adjusted for price inflation.  Additionally we see a 1,568% increase over the life of the Browns.  Not too shabby.

But let's look at the value of the Browns in another way.  Let's say this were a real estate property.  Like a really big and really nice safe apartment.  Without spending too much time in appraisal world, large safe apartments in really nice neighborhoods with good occupancy rates are among the most desirable thing really big real estate investment trusts.  They like safe returns.  Safe properties also capitalize their values at a lower rate because there is less risk (ie a lower cap rate)  Part of the way you value a revenue generating property is by how risky that property is.

But I digress; if I were to value the Browns as an appraiser using a conservative apartment cap rate I would estimate that the annual income less expenses to be around $80,000,000 a year!  To put it another way.  For a real estate property to be worth one billion dollars right now, it would have to generate an annual gross profit of around eighty million dollars.

The Browns are worth a whole lot more now than when they were NFL powerhouse champions.  This tells you a lot about the state of the NFL and the kind of revenue it generates.