How blockchain could change the NFL draft

The NFL draft is entertaining, but it’s also the setting for high-stakes negotiations where teams often simultaneously seek a competitive advantage and cooperate with each other by trading draft picks. These deals are complex, fast-paced and rely on a clear understanding between the teams involved.

That’s exactly the sort of setting where blockchain smart contracts could be useful, according to a paper put forward by systems engineering researchers published in the International Journal of Sports Marketing and Sponsorship.

To learn more, we talked with the researchers: Brandon McConnell, an associate research professor in NC State University’s Edward P. Fitts Department of Industrial and Systems Engineering, and Lieutenant Colonel Mat Fukuzawa, an assistant professor of mathematical sciences at the U.S. Military Academy at West Point. McConnell and Fukuzawa proposed the idea of bringing blockchain to the NFL draft in a journal article published last year.

What was the problem or challenge you were setting out to address here?

Fukuzawa: There is nothing wrong with the NFL draft; it runs smoothly from year to year and participants and fans generally accept its design. So, we were not attempting to fix a broken process.

McConnell: However, the NFL draft is an interesting context for exploring blockchain applications, because it is a high-stakes setting in which sequential decisions are being made and in which various parties are cooperating or competing (or both). Specifically, we wanted to explore blockchain-enabled smart contract systems designs that improved the ability to cooperate/compete.

Fukuzawa: A few historical events highlight the need for careful time management and clear communication during the draft; those concepts are always present regardless of the technology given the current rules. Our research provides a proof-of-concept for a blockchain-based draft that could alleviate concerns with time, with particular emphasis on draft-day trades. [Editor’s note: two examples of these “historical events” involved the Vikings in 2003 and the Ravens in 2011.]

How exactly does blockchain come into play here?

Fukuzawa: Blockchain is a form of distributed ledger technology, in which a shared or common ledger exists among a network of participants. Because the ledger is shared, not only is there a system of record for all transactions, but there are rules on what constitutes a valid transaction.

While the particular rules differ from network type to network type, blockchains are lauded as a solution to the distrust problem that participants often experience in a public network. The structure and rules associated with most public blockchain networks make it prohibitively expensive to cheat or deceive others.

Also, there is still some work to do with actual employment of this technology in a non-financial setting. Factors like scalability, cost, energy usage and regulatory uncertainty are not mature enough to handle most practical applications.

How exactly could that work?

Fukuzawa: We make use of smart contracts, a component of blockchain that acts like the digital form of a traditional written contract.

McConnell: Instead of teams going back and forth via telephone/email, a blockchain system would enable them to use smart contracts to automatically execute once all parties agreed. This technology provides built-in transparency and validation but can also capture other features of the trade process such as side deals, including non-disclosed terms—parts of the deal that are made outside of public view.

Fukuzawa: Parties interact with the smart contract and when the specified input is received, the contract executes automatically (e.g., similar to a vending machine after a human deposits the correct amount of change). In our design, a smart contract models the trade process between two NFL teams on draft day. The digital interaction with the smart contract replaces the traditional elements of human, vocal negotiation, but the time savings are immense given the constrained environment of the NFL draft.

Have you actually fleshed this idea out?

Fukuzawa: Not in a full-scale implementation, only a demonstration of proof-of-concept. We published the findings of that research in the International Journal of Sports Marketing and Sponsorship.

So, is this ready for prime time?

Fukuzawa: No. There are numerous practical reasons for why this idea may not gain traction. The NFL Draft is a marketing spectacle; it attracts thousands of fans annually, and a blockchain-based system would likely disrupt that key fan experience. We also do not know the level of interest in adopting this form of technology.

As the top revenue-generating sport in the U.S., any major change to operations that has the ability to affect revenue is likely to be carefully scrutinized. Thus, future research needs to at least indicate the sentiment of adopting this form of technology.

Furthermore, implementation in terms of practical use involves back-end network design as well as front-end user application. We did not explore any type of user interface in the form of an app—that would be a separate design.

McConnell: That being said, it would be worthwhile for future research to explore how this technology could be used to benefit teams during the draft while also providing ancillary benefits such as increased opportunities for fan engagement, marketing, etc.

Last question. You’re engineering researchers whose work largely focuses on military and defense applications. What made you want to look at the NFL draft?

McConnell: I enjoy working on military planning and decision-support challenges. Smart contracts, powered by blockchain, have potential but we did not have a clear military application in mind. Fortunately, research is collaborative and one of my Army Ph.D. students—Mat—was creative enough to think of the NFL Draft as a decision-making environment with both cooperation and competition at play. Smart students make all the difference!

Fukuzawa: One of the interesting aspects of operations research is its interdisciplinary nature. The draft is merely a potential application area for a relatively recent technology. Addressing this particular application requires the development of systems and processes that support its potential implementation.

Since the NFL is a business, part of this research includes thoughts on business, marketing, decision-making and negotiation. The programmatic aspect of smart contracting also includes elements of computer science and mathematics. Regardless of whether this application moves forward, it’s a fascinating—and useful—case study to consider.