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Home | Blog | Bill Belichick: Entrepreneur

Bill Belichick: Entrepreneur

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02/06/2017

With last night’s incredible win over the Atlanta Falcons, Bill Belichick won an NFL-record fifth Super Bowl as a head coach. This feat is made all the more incredible by the era in which he won it, with a salary cap and various other mechanisms put in place to make it harder for dynasties to last.  While the hay day of the Steelers and Cowboys were built on a core group of skill players (Franco Harris and Lynn Swann for Pittsburgh, Emmitt Smith and Michael Irvin for Dallas), the Patriots had a different leading receiver every Super Bowl season, and four different leading rushers.

Belichick is also one of the rare head coaches in the NFL who serve as their own general manager. While every coach dreams of having the power to “buy the groceries”, as Belichick’s mentor Bill Parcells described it, few coaches have had much success doing so in recent history. Only the Bengals’ Marvin Lewis plays a similar dual role within the organization.

Belichick’s ability to thrive in the modern NFL makes Belichick not only America’s greatest football mind, but one of its greatest entrepreneurs.  

After all, entrepreneurship is, as Peter Klein describes it, decision making under uncertainty, and there are few arenas more uncertain than football. From giving million dollar contracts to unproven draft picks, to balancing the personalities in NFL locker rooms, to the ever lingering specter of injuries, no sport in America has greater parity -- and no one man in sports has done a greater job at hedging his risks than Belichick.

So what is the key to his success?

One of them is flexibility.

Every coach has their own preferences. Defensive coaches, for example, usually have a preferred alignment – normally a 4-3 or 3-4 scheme (the first number describing the number of linemen on the field, the latter number the linebackers.) Often if a coach joins a team built to run a certain style of defense, he will trade away players better fit for another scheme. When Chip Kelly obtained control of the rosters in Philadelphia, for example, he dramatically remade the roster to fit his vision – trading and releasing a number of talented players.

Belichick’s approach has been different. Throughout his 17 years with New England, he has used both a 4-3 and 3-4 defense, and his offensive style has ranged from a run-first approach with backs like Corey Dillon and Antowain Smith, or an air-it-out approach with players like Randy Moss and Wes Welker. This style isn’t only a testament to Belichick’s versatility as a coach, but ties directly to his success in building a roster.

After all, NFL free agency works like any other market – the more demand a certain player has, the higher his cost. When restricted by a salary cap, not only does a larger contract hurt the bottom line of the owner, but it directly limits what can be done with the rest of the roster. An NFL GM forced to cut contributing players to make room for a new high-priced acquisition understands “the seen and the unseen.”

By maintaining roster flexibility, the Patriots never find themselves desperately chasing a certain player. If you have four 3-4 teams needing to upgrade at nose tackle (the center of the defensive line whose responsibility is taking up two offensive linemen), then the top players at the position may end up being paid significantly more than similarly talented defensive tackles that are better in a four-man front. By avoiding overpaying for a specific scheme, a team can put those savings at key positions allows for maintaining better quality depth at others.

Belichick has also directly benefitted from his reputation for success.

Belichick has always attracted veteran free agents who are looking to earn their first ring. In this situation, the realization that they have only a few remaining years playing football has changed the value scales of individual players. A player that could get more money playing for the Cleveland Browns may be willing to sacrifice cash for a better shot at a title. This year Chris Long, a defensive end that spent his career with the St. Louis Rams, took a one-year under-market deal for a shot to play under Bill Belichick.

As an NFL agent told Sports Illustrated leading up this past weekend’s game:

They’re a nightmare for agents, because you know that if your player wants to play for the Patriots, they’re going to take the discount.

Not only is this yet another refutation of the idea of “homo economicus”, but it’s a major asset in the modern game that Belichick has built for himself.

The NFL draft is another area where the high time preference of others pays off for Belichick.

One of the keys to handling uncertainty is being able to recognize it in the first place. Unfortunately far too few GM’s seem to appreciate how much uncertainty exists in projecting how a college player will perform on Sunday. As such, it seems every year a team falls in love with a specific player, making a major deal to move up and acquire them. For example, the Rams traded with the Titans to the top of the last draft in exchange for their 1st round pick, two 2nd round picks, a 3rd round pick, and a 1st and 3rd round pick this year (they also received a 2016 4th and 6th round in return.) That’s a lot of capital for a player that had never taken an NFL snap.

Belichick would never make such a move. Instead, Belichick almost favors trading down, acquiring more picks, and taking more shots. Given the number of variables at play on what players will succeed at the next level, it’s impossible to eliminate the risk that goes into selecting a player. Even an ideal player can have his career ruined before his first game by a fluke injury. The more draft picks you secure, the more chances you have to hit. This, combined with a coach staff that excels at player development, has given the Patriots a consistent source of young talent – even allowing the team survive occasional disappointing draft picks.

This does lead to the Patriots missing out on some players, Belichick infamously suggested Atlanta Falcons GM Thomas Dimitroff – a protégé of his -- not trade up for star receiver Julio Jones, but on the whole it has helped New England effectively manage the risk of the game.

Belichick’s skill at doing just that for so long has allowed him to build the most successful dynasty in NFL history. He should be recognized not just in the pantheon of football legends like Chuck Knoll, Bill Walsh, and Jimmy Johnson, but along with other entrepreneurial revolutionaries like Henry Ford, Steve Jobs, and Patrick Byrne

Tho directs the Mises Institute's social media marketing (e.g., twitter, facebook, instagram), and can assist with questions from the press.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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