Most large fortune 1000 companies involved in producing consumer goods and services spend anywhere from 15% to 20% of their gross income on research and development (R&D) in creating new products or improving on current ones.
Translating the corporate R&D investment formula to the NFL would mean that each NFL team would spend about 15% of gross revenues on their scouting departments and all related player diligence expenses.
With about $8 billion in NFL gross revenues in 2010, that filters down to $250 million per team. 15% of $250 million is $37.5 million. That amount of money doesn’t obviously translate as it’s way too high for the required task. So let’s take the max cost of players’ salaries (about $130 million per team) and multiply that times 15%. That gets us to $19.5 million per team spent on R&D. I am sorry to inform those who think their NFL team should be run like a business, because that’s not happening. NFL teams on average spend only $2 to $3 million dollars per year on their scouting department (R&D).
Let's break down a typical structure with average Salaries per position:
Director of Player Personnel: $455,000
Director of college scouting: $275,000
Pro Personnel Director: $250,000
Assistant to Pro director: $95,000
7 area scouts: $95,000 per scout on average. Total: $665,000
Miscellaneous assistant: $45,000
Total yearly salaries: $1,835,000
Add in travel, per diems, hotel, equipment, service vendors, communications, tape/digital transfers, testing services, car allowances, and miscellaneous items: a typical scouting department may have an additional $300,000 to $600,000 in expenses.
My best estimates are that an average NFL team spends between $2 million and $3 million per year on R&D (college and pro scouting), which is only slightly less than 2% of what a team contributes to player salaries. I bet that if I showed this number to some sharp corporate executives, along with the inefficiencies of draft selections, I’m sure they would agree that the number is way too low.
The research and development arm of a company is usually the lifeblood of that company. If Apple, DuPont, Dow, 3M, Amgen and Pfizer don’t spend adequately on the development of new products, technology and drugs, their competitors will eat them alive.
ICONGil Brandt, former Cowboys VP of player personnel, revolutionized the art of scouting.
It amazes me that NFL teams don’t spend more money doing more diligence on college and pro players. I know you hear all the stories about scouts being thorough and checking on guys’ social activity all the way back to high school, but the reality is that many bad seeds still slip through the screening cracks along with a lot of bad draft picks that cost teams money and opportunity.
If I ran a team I would have the highest R&D cost in the league because I know it will save my team money in the long run and give me more wins. I would allocate more money on intelligence testing, character/social habit evaluations and practice habits. I would use more private investigators and even hire former highly respected coaches (and former strength coaches) to gather hard to get information from college coaches.
Of course the second part of this equation is that you have to find coaches who can develop your draft picks. Why not hire a scout to exclusively evaluate other coaches and keep scouting reports on them?
It baffles me that I can ask one of my current players (or even a college coach) about a prospect he played with or coached in college and he may tell me to “stay away” because of some obvious reason. However, an NFL team will never get the same intel I received by just doing a little diligence. It also amazes me how one NFL team can pick up on a major character, work ethic or physical deficiency while others won't catch it.
Good NFL scouts work like dogs and are probably the most under paid professionals in the NFL food chain. In addition, there will always be growing pains with new and young scouts as they replace older and higher paid scouts. Therefore, why not train a scout for 2 or 3 years before you let him start contributing to the evaluation of players? Expenses may go up for the R&D department but inefficiencies may decrease. I’m not saying more scouts are the answer but I am saying more resources are needed for an effective evaluation system. One problem brought to my attention by one scouting director is that area scouts become underappreciated by most team presidents as they are “out of sight and out of mind because they don’t work in the team building”.
I firmly believe that if scouting departments had more resources and bigger budgets, players like Wes Welker, Danny Woodhead, John Randle, Kris Dielman, Antonio Gates, Tom Brady, Jon Kitna, Kurt Warner, Jeff Saturday, and many others most likely would have been drafted or drafted higher. On the flip side, high first round picks such as Ryan Leaf, JaMarcus Russell, Tony Manderich, Brian Bosworth, Akili Smith, Lawrence Phillips, Heath Shuler, and Blair Thomas probably would have been drafted substantially lower than where they were originally picked.
To their own detriment, some NFL teams are still run like small mom and pop businesses, while others are highly efficient and have more of a corporate structure and/or use proven management principals. That’s why this years draft will be like many others with great players being passed over for more overhyped ones.
Follow me on Twitter: @jackbechta