Disclaimer: I am not a Giants fan and I am not an OBJ fan. I am a huge Good Morning Football fan.
Today on “Good Morning Football”, which is quickly becoming my favorite show on TV, the team debated how the Giants are handling the Odell Beckham, Jr. situation. It’s an interesting topic, and the team did a good job, as it always tends to, of exploring a variety of perspectives on the subject.
Nate seemed to take the “player’s stance”, which makes sense since he was a player. Nate recognizes and appreciates Odell’s talent, and seemed to suggest that it’s not smart for the Giants to be shopping him in what amounts to a very public fashion, both because of the message it sends to OBJ and because OBJ really should be considered untouchable because he’s so valuable to the team. And he also brought up the fact that football is a business, and OBJ puts butts in the seats. We’ll come back to this.
Kay raised the question of just how much another team would have to give up to acquire Beckham from the Giants. She suggested, and rightly so, that it should take a pretty big haul. In her eyes, the Giants will need a first round draft pick in 2018, another in 2019, and a player on top of those picks. That sounds like a pretty good option to me, but we’ll come back to this as well.
Kyle brought the conversation back to his belief that the Giants need to focus on this season, because he thinks the team could position itself to compete for the Super Bowl. We’ll call this the “(hopeful) fan’s perspective”. I dont know that I agree with him (although I wrote something similar in one of my first mock drafts and used it to justify the Giants taking Barkley with the second pick: https://medium.com/@dushanewalker90/browns-off-season-moves-all-about-preserving-optionality-and-providing-insurance-f164f9090f2c), but I think if the Giants really believe they have a chance to win it all, then yes, they should not unload OBJ. You can’t place a value on the Super Bowl (well, you can try) so there is no trade worth making if you think OBJ is the key to winning one in the season ahead. Kyle’s feeling is that it would take a top player and a first round pick for him to consider trading OBJ, assumedly because those players, along with the number two pick in the 2018 draft, will not decrease and may even increase the odds of the Giants winning the Super Bowl this season. Kyle would not bw willing to trade OBJ for draft picks only, even if they are first round picks, since they don’t guarantee the player(s) selected will be any good. Also, he knows the message such a trade sends to football fans- the Giants would be moving into “rebuild” mode.
Peter took what I will call the “GM’s approach”. He did so in a bit of a “devil’s advocate” sort of manner, but I think he believed in the opinion he was sharing (side note: this is one of the things I love most about this show- they have assembled a cast with diverse persepctives that have intelligent discussions, as opposed to all the shows where talking heads argue the most controversial viewpoints they can come up with for shock value). Peter raised some terrific points, not the least of which was that OBJ’s looming contract negotiation may be the the biggest reason to unload him at this point in time. Even if OBJ shows up this season, the Giants could end up in an ugly, and very public negotiation that could undermine the season and end without a resolution that is good for the Giants. The worst case scenario for the Giants is that they will not qualify for the play-offs and OBJ will move on before the 2019 season kicks off. In this scenario, the Giants will have received nothing for him and will have nothing to show for his time there.
My wife seems to think I consider myself the fifth member of the GMF team, so I’ve decided I’ll add my thoughts to the team’s. I would probably describe my perspective as “business analyst meets fan”, which makes sense since I‘ve been in business consulting and executive management roles in my career and have a profound love for football. I like to look at sports the way a businessperson would look at business.
And with that being said, I like what the Giants are doing, and here is why.
- Football is a Business, but is OBJ Good for Business?: Nate brought up that football is a business when he said OBJ puts butts in the seats. But he also alluded to his concern of OBJ’s ego being hurt by the Giants contention that he’s not untouchable, thereby implying they are willing to listen to offers for him. Well, that’s part of business too. Much of business is about extracting disproportionate value from your assets. OBJ has value to the Giants, but he may be more valuable to another team, and the Giants would be smart to accept an offer that values OBJ to a higher degree than they do. That’s why I think they were smart to say that nobody on the roster is untouchable. In business, everything is for sale for the right price, or at least it should be. Let’s pretend I am run a company that generates revenues of $10 million a year, and has profits of $6 million. If someone offers me $30 million for that business, I probably won’t be too interested in divesting the company. If they offer me $40 million and I think the growth is going to slow and the profit margins may come under pressure, I may consider the deal. If they offer me $70 million, then even if I think the company has very good future propsects, I may consider selling it. Whether or not I consider trading OBJ depends to a large extent on the offer that is made. There is no harm in seeing what other think his value is, right? If this is a business, there shouldn’t be after all. I doubt OBJ will be afraid to test his value on the open market, so why should I worry about doing so? It’s not personal; it’s business.
- OBJ’s Value to the Giants: So how should the Giants value OBJ? There are two ways I think would make sense: one is in dollars and one is in football value. Nate brought up ticket sales and merchandise sales. I’ll give him the merchandise sales. There is no doubt that OBJ sells jerseys, but I don’t know that those revenues are enough to sway the Giants. As for tickets…I’ve lived in New Jersey, so I can say with confidence that the Giants will come close to selling out the stadium eight times a season whether OBJ is there or not. The real question is whether OBJ helps the Giants make the play-offs. The revenues from a play-off game might really make a difference, and imaging if they manage to play in a few play-off games. Kyle and Nate both brought up the on-field performance, and how much better the Giants are when OBJ plays. That is absolutely fair. The offense scores a touchdown more per game when OBJ plays and the team’s win-loss record, while still not great, is far superior with OBJ playing. Whereas the question regarding dollars revolves around whether having Odell takes the Giants to the play-offs, the question here, when talking football value, is whether OBJ helps them win the Super Bowl. To me, OBJ is unlikely to help the Giants do either, even with the potential addition of Saquon Barkley or another top prospect. The chance he helps the team make the play-offs, and in turn drives significant additional revenues for the organization, is far better than the chance that he helps the team win the Super Bowl next year. Therefore, his value is incremental in terms of dollars, and almost nothing in 2018 in terms of football value. After all, they say “Super Bowl or bust”, right?
- The Optional Value: There is one other factor to determining OBJ’s value to the Giants, and that has to do with preserving the organization’s option to sign him to a long-term deal, which could drastically change the value equation. I am a big believer in preserving optionality, and it’s why I like the off-season moves the Browns made that allowed them to hold onto their options in the draft (INSERT LINK). But this is a little different. If the Giants trade OBJ, they have eliminated the option of signing him to a long-term deal (assuming he doesn’t become a free agent and wouldn’t sign with the Giants after next season with another team). If they sign him, they have also eliminated the option, though they will have him signed up as part of the team for years to come (assuming he doesn’t demand more money yet again in a year or two). But if they start the season with him on the roster, without a new deal in place, are they really retaining optionality? I would argue that each week that goes by that OBJ doesn’t sign a long-term deal with the Giants, the value of the options decrease. His trade value would decrease if he exhibits a bad attitude, plays poorly, or shows a hesitancy to negotiate rationally. And with each passing week, the likelihood the Giants will sign him at some point decreases. The value of the options related to OBJ are highest right now and the Giants need to take advantage of that. Putting off a decision reduces the value of the option, even if doing so hypothetically preserves the options.
- Minimizing downside versus maximizing upside (risk-adjuasted): Peter hit on this when he brought up the potential disaster looming for the Giants. The worst-case scenario seems to far outweigh the best-case scenario, especially when you risk-adjust for each scenario. Let’s say the Giants have a 2% chance of winning the Super Bowl with OBJ next season, which is the best-case scenario. If you think the Giants would be happy with qualifying for the play-offs, which I don’t think is sufficient for them, we can go with that as a “good-case” scenario. The NFC East has the Eagles, who are better than the Giants, and the Cowboys, who are probably better, and the Redskins, who you could argue may be worse than the Giants. Then you have a number of other teams in the NFC that are likley better than the Giants, such as the Vikings, Rams, Packers, Falcons, Panthers, and Saints. Let’s give the Giants a 15% chance of making the play-offs (which is a somewhat random number, I’ll admit). Let’s look at the downside. The worst-case scenario is that negotiations become contentious, OBJ plays poorly (probably due to lack of effort), the locker room becomes divided, and OBJ leaves at the end of the year after the Giants have another terrible season. I would put the chances of that in the 10–15% range. Another scenario that is somewhat less extreme, is that OBJ plays well, the negotiations are contentious and become a distraction, the Giants fail to make the play-offs, and OBJ signs elsewehere in free agency. I give this scenario about a 50% chance of occurring. I realize this is all subjective, but I think what I would call a negative outcome is far more likley than a positive outcome, and the value of the likely negative outcome is far more significant than the value of the likely positive outcome.
- The precedent: There is another issue here that Peter alluded to, and that is what message it sends if the Giants bow to OBJ’s demands. What kind of precedent does that set? The Giants are not just the New York Giants, they are New York Football Giants, one of the most valuable and admired organizations in sports. The orgnization has a reputation that has a real value, and part of that reputation is that no player is bigger than the team. And there have been some big names in the franchise’s history, such as Lawrence Taylor. If the Giants give in here, will other players expect the same kind of treatment? Hopefully not, since most will have enough awareness (I would hope) to understand they are not OBJ. But what about the precedent it sets for OBJ? What if, a year after he signs a long-term contract, another receiver signs an even more lucrative contract? Will OBJ respect the terms of his contract and play ball, or will he whine and make additional demands? The Giants seem to realize the organization is on thin ice here, and management needs to tread carefully.
- Forecasts Have to be Realistic: GMF’s Kyle is very optimistic; the Giants are not going to win a Super Bowl next season, with or without OBJ. In fact, I don’t think they will win one in the next three seasons, and that is assuming Eli Manning can play that long, OBJ stays with the team, and they draft Barkley. For this reason, I find myself aligned with Kay, and possibly Peter (though he didn’t really reveal where he stands). I believe the Giants need to realize it’s time to look for the future. The organization should absolutely try to stay comeptitive over the next three seasons, but should be more focused on a four-plus year plan. If I can get a team to trade me a first round pick this year, another next year, and a decent player in return for OBJ, I take it! I understand that draft picks are not guaranteeed to be great players. I understand next year’s draft, and even this year’s, may not promise an OBJ, but neither did the draft in the year OBJ was selected! Nobody thought OBJ would be as good as he is. If anyone did, he would have been drafted earlier than he was (seriously, look at some of the guys draftd ahead of him: https://en.wikipedia.org/wiki/2014_NFL_Draft), so let’s not pretend we can predict in either direction what a draft pick’s potential is. The reality for the Giants is they can comete again for a Super Bowl in four years if the organization plays its cards right. Kay gets it.
- The gameplan: If I am the Giants, I would trade Odell for the assets that Kay outlined. Take your QB of the future with the second pick in the draft. Take the best player available that meets a need with the other first-round pick acquired via the trade. Maybe that’s an OL, or possibly a pass-rusher such as Tremaine Edmunds or Harold Landry (assuming Chubb is off the board). Maybe it’s an RB, although the Giants might be able to get one of the top RBs in the second round. Let your young QB develop under Manning this season while Shurmur implements a new offense. Draft some other notable players in the later rounds that can contribute to the team. Next off-season, sign a free agent or two and enjoy adding two first round picks to the roster. Or, trade those two picks for an even higher pick and a potential impact player. That would be my gameplan.
I once had a boss who believed in being “completely agnostic” about our business. That was his way of saying we would never get attached to a product, a division of the company, or even the company as a whole. Everything was for sale for the right price. He said this on investor calls. It was his way of letting other companies know they should feel free to make us an offer. If that offer represented more value than we attached to an asset or to the company, we would sell. If it didn’t, we woudl move on. Of course, that meant none of us needed to get distracted or whine a out the decision (which may be the big difference here).
The Giants are doing the same thing. They are running a business, and they are displaying the discipline one needs to practice in order to be a strong, sustainable company. No product, even your top product, is bigger than the company. The Giants are saying that right now, and I think it is the right thing for them to do.