VII Super Bowl Lessons

Super Bowl LVII offers insights into investing and life.

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VII Super Bowl Lessons

Sunday is by far the biggest unofficial American holiday of the year and a lot bigger than most official holidays. Super Bowl LVII will be contested that day between the Kansas City Chiefs and the Philadelphia Eagles. The teams seem evenly matched and are fun to watch with engaging stars. It should be a lot of fun to watch. The game and its surroundings offer some pretty good lessons, too — lessons that are applicable to investors and to life. Let’s look at seven (VII) of them.

I. Math is powerful.  Apparently, a fair amount of money gets bet on and about the Super Bowl. Who knew?

Over 50 million adults in the United States – a record, and roughly 20 percent of the population – are expected to combine to bet approximately $16 billion on Super Bowl LVII. Winning as a gambler is tough generally, but there are typically several Super Bowl bets where simple math demonstrates that the line is off (in terms of reality if not in terms of equalizing the total bets). For example, the likelihood of overtime is usually only about half as likely as the betting line suggests (this year’s +1100 on overtime happening implies overtime almost 8.5 percent of the time when it occurs only about 5.5 percent of the time). Betting on a safety being scored at +900 implies that it will happen about 10 percent of the time even though the real number is more like 7 percent.¹

Similarly, there are any number of bets the existence of which demonstrate the impact our cognitive and behavioral biases have on us. For example, we overvalue bets at the extremes because we are always looking for the big score (despite the odds against it — think your state lottery) and are willing to pay too much for insurance against the highly unlikely due to our risk aversion. An obvious example is betting that the Eagles will score a total of 4 points in the game at 10,000-1. It could happen (the Chicago Cardinals scored 4 points against the Racine Legion on November 25, 1923), but is vanishingly unlikely today. The odds should be much longer. If you know and can apply it, math is a major edge in gambling about football and elsewhere.

II. Evaluation matters. You don’t succeed in NFL management or in investing without being able to evaluate the available options and to recognize quality.

The Philadelphia Eagles made the NFL playoffs this season for the fifth time in six years and are a win Sunday away from the franchise’s second NFL championship in six years, this time with a different coach and a different quarterback. The through-line of this success is GM Howie Roseman and his analytically driven, bold, and innovative leadership.

Social media declared that the Roseman was clueless when he drafted quarterback Jalen Hurts in the second round in 2020 because they already had what was touted as a franchise quarterback in Carson Wentz and were paying him a fortune. More than 60 percent of the 12,000 Philly fans who graded Hurts’ selection for an Eagles fan blog gave it an F. The second most popular grade was D. The “expert” behind the poll hated the pick, too: “Howie Roseman and this front office are not inspiring confidence this offseason. There are real questions about the direction of this team.”

He was far from alone. Pretty much all the “experts” hated the pick. See here (“terrible”), here, here, here, here (“worst pick I can remember in 20 years”), and here.

All Hurts did this season is win 16 of 17 starts, lead the Eagles to the Super Bowl, and become an MVP finalist and runner-up to Chiefs QB Patrick Mahomes.

Roseman’s hiring of Head Coach Nick Sirianni wasn’t heralded, either. He had been an offensive coordinator for three years but had never called plays. His first press conference was…

The MMQB @theMMQB

If you can, hug an Eagles fan today...

…awkward. Critics thought he was underqualified.

Jeff McLane @Jeff_McLane

From an NFL source familiar w/ Sirianni’s credentials as a HC: “Good guy, solid candidate. Fairly smart but not super smart. Concern is he is likely to top out at a B-level coach for team that is in the mix to make the playoffs, but not a real SB chance. Low drama, even keel.”

And Roseman got the blame: “[U]ntil Howie Roseman (and to an extension the whole analytics department) get removed, the Eagles are going to be the doormat of the NFL for a long time.”

As it turned out (at least so far), Roseman’s evaluations were right and the alleged experts wrong. Evaluation matters.

III. Good decisions matter. It is well established mathematically that NFL teams should go for it on fourth down much more often than they do. The analytically inclined Eagles have long been one of the more aggressive organizations when it comes to the crucial fourth-down calls, thanks to Roseman, which may offer them an edge Sunday.

Fourth down aggressiveness helped to fuel the Eagles’ first Super Bowl title five years ago …

Pro Football Hall of Fame @ProFootballHOF

Five years ago today, there was a Philly Special. 📹: @Eagles

…and has helped Philadelphia get back to the title game this season thanks to two key fourth-down conversions in the first half of the NFC title game against San Francisco.

The Eagles converted more fourth downs than any other NFL team during the regular season and playoffs combined, despite playing from ahead more than any other team. Sirianni ranked number one this season on the Football Outsiders’ Critical Call Index, while his Kansas City counterpart Andy Reid ranked just 28th (even though Reid is generally regarded as the better coach overall).

Football Outsiders has an excellent model for determining when NFL teams should go for it and when they should punt on fourth down, using its win probability model that relies on historical play-by-play data adjusted for variables such as the strength and weaknesses of both teams, injuries, and other factors.

The Eagles have converted a league-best 25 fourth-down attempts with an impressive success rate of 71.4 percent (versus 51 percent league-wide). While much of that success has come in short-yardage situations where Hurts has thrived on quarterback sneaks that feature teammates giving him a legal push from behind — converting 27 of 31 runs on third or fourth-and-1 — the Eagles also have had success with more traditional plays.

For example, Hurts converted a fourth-and-3 on a deep pass to DeVonta Smith on the opening drive against San Francisco in the NFC Championship to set up a touchdown – even though the play looked like it should have been overturned had the 49ers challenged it.

Later in the first half, Sirianni made a riskier call when he went for it on fourth-and-1 from his own 34 midway through the second quarter in a tie game. A stop by the 49ers there could have given San Francisco the ball with a short field and a chance to take the lead before halftime, but Hurts converted the sneak. That led to another TD drive and Philadelphia was never challenged thereafter.

It turns out that Sirianni knows what he’s doing.

Ari Meirov @MySportsUpdate

Nick Sirianni to the ref: "I know what the f*** I'm doing, and I'm allowed to be down here."

Reid has typically employed a more old-school approach on fourth down. He attempted a league-low one fourth down from his own territory all season — a successful fourth-and-1 from his 45 late in a tie game against Tennessee in Week 9.

While the Chiefs did convert a key fourth-and-1 late in the first half against the Cincinnati Bengals in the AFC Championship when Mahomes threw a 14-yard TD pass to Travis Kelce, that has been more of the exception than the rule as Kansas City’s 12 fourth-down tries were tied for the second fewest in the NFL during the regular season.

IV. Don’t fail to commit.  Anywhere in life — as in football and investing — it’s possible to have the right idea but fail anyway because of a failure to commit to it. Wentz had already established himself as the Eagles’ QB and earned a huge contract when Roseman drafted Hurts and, later, when Sirianni installed Hurts as the starter, leading to Roseman getting rid of Wentz despite taking a huge cap hit. Few other coaches or GMs (perhaps none save my old New Jersey neighbor, Bill Belichick) would have done so. There’s an old expression about bacon and eggs that says the chicken is involved but the pig is committed. Roseman and Sirianni are really great pigs.

V. Smart people can do stupid things. Who knows what idiocy this year’s game will have to offer. But there are plenty of previous examples. For example, in his first Super Bowl appearance as a head coach, trailing the New England Patriots by 10 with 5:40 to go in the game, then Eagles Head Coach Andy Reid oversaw a dawdling Eagles touchdown drive that took almost a full four minutes. The time consumption forced Philadelphia to try an unsuccessful onside kick rather than pinning the Patriots deep and trying to force a stop.

Although the Eagles were able to get the ball back with 46 seconds to go, it was at their own 4-yard line with no timeouts — a situation that even Donovan McNabb was unable to escape. Football coaches and investors alike need to align risk and reward properly. Moreover, success alone absolutely does not vindicate one’s process. Smart people can do some really stupid things.

Of course, we can always count on stupid people being stupid. How else can you explain people betting on whether the coin toss will come up heads or tails at -102 either way or on which team will make the first coach’s challenge at -110 either way? No skill is involved in either wager and the odds aren’t favorable (except to the house, of course).

VI. Learn from your mistakes. Roseman’s critics have repeatedly knocked him for errors, and he has made plenty (listen to this video, NSFW). But he seems to have learned from them (as when he drafted Hurts after an inadequate backup QB cost the Eagles a playoff game in 2020) and stuck to his guns when appropriate (like sticking with his analytical approach despite heavy criticism). He seems willing to keep learning, too.

VII. Think outside the box.  This phrase has been overused to the point of cliché, but the best thinkers are not afraid to think “outside the box.” Roseman took an enormous cap hit when he got rid of Wentz. He received tons of criticism for doing so. But it allowed for the promotion of Hurts and, thus, led to Super Bowl LVII. As Steve Jobs expressed it in perhaps the most effective advertising campaign of all-time (though I can’t verify that the commercial below aired during the Super Bowl, unlike the iconic Apple “1984” commercial, which transformed Super Bowl advertising), it can be extremely valuable to think different.

Enjoy the game.  And when you do, consider whether (and how) anything that happens — perhaps even in the commercials — might have relevance to your investment process and thus to your portfolio.

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Totally Worth It

The San Antonio Zoo is offering a special Valentine’s Day greeting for exes who just won’t bug off. For $10, the zoo will name a cockroach after your not-so-special someone and feed it to an animal. Those not into bugs can choose a vegetable for $5 or a rodent for $25 instead. Those with an especially stubborn ex can pay for a $150 upgrade, which includes a personalized video message to the recipient showing their cockroach, rodent or vegetable being devoured by an animal. Donors can opt to send their ex-boo a digital Valentine’s Day Card informing them that a cockroach or rodent was named after them and fed to an animal. Last year they received more than 8,000 donations from all 50 states and over 30 different countries. To participate, visit here before Valentine’s Day.

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Benediction

This week’s benediction is an old Ray Charles tune, later turned into a hit by Solomon Burke with the Blind Boys of Alabama.

The following is from Kate Bowler.

Blessed are we, the graced. 
We who don’t deserve it. 
Whose failures haunt us.
The things we said.
The things we left unsaid. 
The things we did—and left undone.
Our decisions and addictions and quick tempers.
All the times we’ve let the people we love down.
Somehow, we are the recipients of a mysterious gift.
Grace doesn’t erase the pain or harm we’ve caused. 
But grace, still. 
For us, the redeemable.
And if we are… that means they are too. 
Yes — even them. 
The rude neighbor. 
The estranged father. 
The high school friend who posts too much on social media.
The unforgiving ex. 
The boss who screwed you over. 
The doctor who messed up. 
The selfish pastor. 
The family member who did the unthinkable.
The uncle (why is it always the uncles) who are just dead wrong.  
Despite what we all have done and left undone. We are graced. 
Blessed are all of us who wrestle with unforgiveness and ungrace. 
You who make amends. 
You who reach for forgiveness. 
You who say you’re sorry even when sorry will never be enough. 
You who find the bridge to forgive the wrong done to you. 
Even when you cannot forget. Or can’t go back. 
Or they aren’t nearly sorry enough. 
Blessed are we who live here. 
In this mystery, this scandal, of grace. 

Amen

For more blessings like this, pick up a copy of The Lives We Actually Have: 100 Blessings for Imperfect Days by Kate Bowler and Jessica Richie.

Thanks for reading.

Issue 141 (February 10, 2023)

1. The prop bet that has garnered the most money is “no” on whether a quarterback will have a reception (it is currently -1200 after opening at -650). Those who bet against this happening obviously don’t expect the Eagles to unveil a Philly Special sequel.