“Just OK is Not OK,” so follow Packers’ unconventional way to success

Whether you’re an NFL team trying to make it to the Super Bowl or an investor who wants to generate better-than-average long-term results, your odds of success are greater if you ignore conventional wisdom and do things differently than average.

That’s the message from a recent article by Andrew Beaton in The Wall Street Journal; “The Surging Packers Are Exploiting One of the NFL’s Biggest Inefficiencies,” which explained how the team goes against the grain and why it’s no coincidence the Green Bay Packers are one of the final eight teams in the NFL Playoffs. For full disclosure, I am an “owner” and anything but objective.

The article discussed the findings of George Mason University Associate Professor of Finance Derek Horstmeyer published in his paper, “2nd and 1: What Should be the Most Valuable Play in Football.” With the help of NFLsavant.com, Horstmeyer analyzed every play run on 1st, 2nd and 3rd downs, broken down by Long (>8 yards to go), Mid (3-8) and Short (1-2), for all 32 teams over six seasons (2013-2018), a total of 195,746 plays.

According to classical economics, NFL coaches and investors are perfectly rational and capable of unemotionally analyzing all relevant data. In reality, humans are highly emotional and are influenced by all sorts of biases, which often lead to poor decisions that prevent them from reaching their goals, whether that’s making it to the Super Bowl or achieving long-term investment success.

In football, the offense’s objective is to move the ball at least ten yards in four downs or less. Horstmeyer’s theory was teams would act rationally to ramp up/down the risk of their play calling depending on the down and distance to the first down marker. In particular, coaches would take advantage of the most valuable option—to increase the risk and diversity in play calling when faced with 2nd (down)-and-short (1-2 yards to go for 1st down).

In other words, since 2nd-and-short is a “free/no-risk” play (i.e. if it fails, you still have 3rd and even 4th down to gain the 1-2 yards), teams should use this valuable option to pass (vs. run) deep (vs. shallow). Indeed, the empirical data showed teams that are more aggressive on 2nd and short can expect to score 0.6 extra marginal points on a given drive, which can be the difference between winning and losing.

Instead, his table below showed NFL teams actually run the ball the most on 2nd-and-short, even more often than 3rd-and-short, which is absurd.

According to the article, the Packers pass more than 50% of the time and average 14.2 yards (almost twice as much as the second-best team) on 2nd- and-short. Two of QB Aaron Rodgers’ four completions this season for 50+ yards have come on 2nd-and-short. The rest of the NFL has exactly one 50+ yard completion on 2nd and short. This is one reason why the Packers are 13-3 and your team isn’t.

Horstmeyer says “the prevailing wisdom among coaches is that ‘the fewer the number of yards to go, the more risk-averse we must be in the play we run.’” Decades of inefficiencies in NFL play calling can be attributed to the fact “decision makers are aggressively conservative,” according to Beaton. That’s why it took so long for teams to understand their probability of success can be greater if they utilize all four downs on offense, not just three.

In the past decade, mindless and robotic passive “investing” strategies outperformed active, stock-picking managers at lower costs, so that’s where all the money went. I certainly “get” the simplistic marketing appeal of today’s conventional “wisdom.” However, I believe like all prior investment fads, it won’t last forever and will be wrong for the decade ahead.

“Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally,” wrote famed English economist John Maynard Keynes. Further, a successful investor must be “eccentric, unconventional, and rash in the eyes of average opinion.” The difficulty is, “if he is successful, that will only confirm the general belief in his rashness; and if in the short-run he is unsuccessful, which is very likely, he will not receive much mercy.” The same goes for NFL coaches.

The opinions expressed in these articles are those of the author as of the date the article was published. These opinions have not been updated or supplemented and may not reflect the author’s views today. The information provided in these articles does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular stock or other investment.