After news broke yesterday that talented, now former, Jaguars tackle, Eugene Monroe, had been traded for a 4th and 5th round pick in the 2014 NFL Draft, I immediately started breaking down the values of each side to see who came out on top. After considerable analysis, it can be found that both sides found a surplus in value based on certain characteristics indicative of the directions of each team. The Ravens are a team who were looking for some consistency on their offensive line, as well as cap relief. I determined their biggest value laid in the team’s ability to save future dollars, as well as satisfying their need for a tackle. The Jaguars are a team looking to completely overhaul their roster in an efficient manner, which more obviously points to the team seeking highest value in draft picks.
The tricky part with this trade starts with understanding the value of Eugene Monroe. Monroe was a top 10 draft pick a few years ago, now in a contract year, who is a solid contributor on the Jaguars offensive line. Upon this, one could suppose that Monroe warranted at least a day 2 pick. However, the Jaguars are a team with no leverage. They are an extremely poor performing team, who needs to rebuild through the draft. Worst of all, everyone knows it. I set Monroe’s value at a 2015 late 3rd round draft pick, which is what the team would recoup if they decided to keep Monroe for the rest of the year, and let him walk in free agency. Since Monroe only has value to Jaguars as a future 3rd round pick, he will be treated as such.
With the precedent set by a substantial amount of trades in past drafts, the discount rate of 136% is accurate in determining pick-for-pick trades. I used this discount rate to determine the value of a late 3rd round pick in 2015. I found it to be worth about a 2014 late 5th rounder if the time interval is with reference to the the day the trade was agreed upon, October 1st, 2013. From this analysis alone, it can be seen that the Jaguars actually came away with nearly double the value of Monroe. In fact, the Jaguars came away with a surplus of a 2014 4th round pick. Feasibly, the Ravens could have asked for a value equivalent of 2014 5th rounder, but the Ravens chose not to take on the future contract.
The following charts depict how I derived the present values of each pick according to the NFL draft pick value chart.
Present Value= Future Value/((1+discount rate)^time interval)
|Ravens Picks: 4th & 5th||Monroe’s Value: 2015 late 3rd|
|60||pick 117||mid 4th||29||pick 156||late 5th|
|Difference in Value:||Pick #:|
I could say case closed, the Jaguars won this trade, but it is necessary to see all trades as a zero sum game. To find the value on the Ravens side of the deal, I had to break down the picks into dollars and cents. The Ravens gave up the anticipated contracts of a 4th and 5th rounder next year, as well as the 5th round pick they chose not to ask for in return. The sum of these contracts, based on 2012 contract numbers is $2,590,000. If we compare this number compared to the $2,850,000 prorated salary they take on from Monroe’s contract, it can be seen that the Ravens take on a long term deficit of $260,000. Considering that Monroe could command a contract with a base salary of 5-6 million, $260,000 is a great rental price for Monroe’s services for the remainder of the season.
|2012 Contract Values:|
|pick 114||pick 146||pick 151|
|Monroe’s 2013 contract||Games remaining|
|Monroe’s prorated contract:|
|Monroe’s prorated contract-Gross Contracts Surrendered= Rental Price|
In conclusion, the Jaguars managed to cash in a 2015 supplemental pick for present value, a 5th round pick, as well as gaining a 4th round pick for the rental of Eugene Monroe. The Jaguars turned an unrealized, immovable asset into 2 realized, movable assets, which is a considerably business savvy move by the Jaguars front office. On the other hand, the Ravens did a good job filling a need by renting Monroe for $260,000, cut back on future contracts, and gave their team the inside track to signing a quality offensive lineman. Either way, this deal was a great move by both teams in a definite win-win scenario.**UPDATE**
New broke that the Ravens would only be paying $715,000 of Monroe’s Salary after Jacksonville adjusted his contract to make a large chunk a bonus as to make the deal work with Baltimore’s cap. With this new number, the Ravens are now paying $1,840,000 to rent Monroe for 12 games, which is much closer to the estimated value of the contract of the 4th round pick the Ravens sent to Jacksonville. Essentially, this news brought the deal closer to a zero sum transaction.
–Daniel Jonsson– @HighDesertScout