The Stock Market Story Behind the Inquisition of Johnny Manziel
It's been said about legendary defensive coordinator Buddy Ryan that his analysis of potential football players most prominently took place at locker room sinks. Word is that he would watch the players shave: if they let the water run throughout then they were spoiled, and too soft. On the other hand, those who turned the sink off in between swipes had grown up familiar with scarcity, and as such, would be willing to play through pain.
Ryan's sometimes unconventional scouting techniques came to mind amid the intensive investigations done on former Texas A&M quarterback Johnny Manziel. It would be hard to find a modern player more scrutinized than was the Cleveland Browns' first round NFL draft pick, not to mention a player whose skills elicited so many disparate reactions.
Despite voluminous amounts of information unearthed, and countless hours of film study, seemingly no one could agree. Some said he was too "arrogant" such that he was "undraftable," highly respected ESPN film guru (and former NFL quarterback) Ron Jaworski rated him a lower round draft pick, while other credible football minds with access to the same information possessed by the naysayers viewed him as a "rare competitor" who would be picked no later than 4th (the Browns picked him 22nd overall) in the first round.
What the wildly divergent opinions about Manziel first tell us is that those who spend their time wringing their hands about the alleged horrors of "insider trading" need to go out in search of real lives. Manziel was poked, prodded, and analyzed in too many ways to count, yet despite all the information gleaned, the greatest football minds in the world couldn't agree on his worth as an NFL prospect.
Those who waste brain cells on rooting out "insider trading" in the stock market presume that access to the obscure, or "non-public" information amounts to automatically higher returns. But as the wide-ranging opinions on Manziel made plain, the brightest and most informed minds in a multi-billion dollar sport frequently see things differently, and react to information in ways totally opposite to how their NFL peers will.
The stock market is no different. By definition. That's why it's a market. If everyone responded to information in the same way, the market would be a very sleepy place, and a hard vehicle for achieving profits. It's precisely because the world's best investors (much like the world's greatest NFL personnel types) react so differently to seemingly everything that there's the potential for outsized investing profit.
It's well known now that the NFL has increasingly distanced itself from other U.S. sports leagues in terms of per-team profits, along with league wide profits. The NFL is BIG business in every way imaginable, and because it is, it's a league driven by information. There are so many examples of the latter, but going back to the 1998 draft, there was a great deal of disagreement about who was a better quarterback: Peyton Manning or Ryan Leaf. The Indianapolis Colts drafted Manning (GM Bill Polian was apparently wowed by their final in-person meeting) on the way to numerous wins, playoff appearances, and a Super Bowl win, while the San Diego Chargers' selection of Leaf set the franchise back many years.
And precisely because personnel moves driven by voluminous amounts of information can so profoundly impact a team's fortunes, there are no detectable rules in the league governing information's dissemination. Every scout, coordinator, coach and general manager is constantly in search of an information edge; something, somewhere that will help a team to avoid JaMarcus Russell style blunders that can be measured in years, and in the hundreds of millions of dollars. To be clear, "insider trading" or the accession of "inside information" is a tautology in the NFL.
Do the fantasy football participants, bettors, and fans care about what is the living, breathing definition of an "unlevel" playing field? Do they whine about how unfair it is that billionaire owners Jerry Jones, Bob Kraft, and Paul Allen have "bunnies" with "better noses" than the most feverish of gamblers and fantasy players? Not one bit. We're talking about adults here in a game that is happily much less regulated than our stock markets. It's understood from the fan up to the owner that the owners, general managers, coaches, and scouts are taking multi-million dollar risks with every decision, and because they are, it's only natural that they'd seek an information edge not enjoyed by the average fan.
Of course the beauty of skewed information access is that scouts, coaches and general managers take the big risks with the money of billionaires, and because they do, fantasy players, gamblers and Sunday fans don't risk as much. Billionaire owners spend gargantuan sums to make their organizations knowledgeable, and that means the average fan or sports book gambler doesn't have to; all this while enjoying a product the value of which grows on an annual basis.
An NFL that would make it policy to block information from reaching teams would be a lousy one; a league defined quite a bit more by busts like Akili Smith and Heath Shuler, and lot less by late round finds of the Tom Brady variety. Comically, the overseers of the various U.S. stock markets do what an information-driven NFL never would whereby investors pursue market and economy enhancing information with the threat of jail hanging over them for doing so.
The obvious problem is that the stock market is no different, or should be no different than the NFL. While the NFL's worth can be measured in the tens of billions, with the stock market we're talking about much greater sums of money, along with the health of the overall economy. When information is slow to reach the markets, bad businesses receive more capital to waste or destroy, while good business concepts are potentially starved of capital altogether.
Though institutional investors with capital that can be measured in the billions and sometimes trillions would like to take risks on information that would improve the economy, all the while rendering the markets much more informed and safe for the little guy, they do so once again at the risk of going to jail. To be clear, it's the policy of stock exchange overseers to blind markets to the mis-information equivalent that would lead a team to draft Ryan Leaf over Peyton Manning. It would be funny if it weren't so sad.
Let's please get real, and act our age. The NFL that so many enjoy is greatly enhanced by an asymmetrical information playing field. It's time to be adults about the stock markets too, and realize that we're all made better off when the biggest investors are also the most informed.
