Steve Keim followed Warren Buffett's rules to investing


"Becoming Warren Buffett" World Premiere - Arrivals

"Becoming Warren Buffett" World Premiere - Arrivals

General managers are the NFL's equivalent to investors on Wall Street. They make a series of delicate short and long-term bets - albeit with the team owner's money - with the hopes of building a sustainable, successful portfolio.

After developing a reputation as the Charles Ponzi of the NFL in 2018, Steve Keim looks a lot closer to Warren Buffett now that the Cardinals are 2-0, sitting as touchdown favorites over the Detroit Lions this coming Sunday.

How did that happen? Simple. Keim followed Buffett's four simple rules to investing.

Rule 1: Buy Below Market Value - In 2018, Steve Keim signed David Johnson to what would become one of the worst contracts in football. 3 years, $39 million, with $30 million guaranteed. In the 25 games Johnson played for the Cardinals since, he averaged just 3.7 yards per carry, had more injury problems, and lost most of his juice along the way. Buffett would call that a sunk cost. So, what did Keim do about it? He flipped Johnson, along with a 2nd-round pick, for DeAndre Hopkins. Hopkins - who's never missed a game due to injury - has since transformed Arizona's offense, catching 22 of his 25 targets for 219 yards in just 2 games. Meanwhile, Keim signed Hopkins to a two-year, $54.5 million extension which brings Hopkins's average salary to about $19 million/year - good for about the 5th-highest paid receiver in football. Rule 1? Accomplished.

Rule 2: Managers Must Have a Fact-Driven Temperament - Steve Keim did not want to draft Kyler Murray after trading up for Josh Rosen. The admission that a general manager was wrong about a 1st-round quarterback is one that most will put off until their dying breath - just ask Bears GM, Ryan Pace. Operating with a fact-driven temperament, though, forced Keim to swallow his pride.

"To be honest to the process, I really did not want to like Kyler as a player because we had just drafted Josh the previous season." Keim said on the Rich Eisen show, "When you have the first pick in the NFL draft, again, to me, you have to be honest to the process.

Have you ever wondered why more NFL general managers don't bail on their young quarterbacks after it becomes clear early on it's not working? Dwayne Haskins, Jameis Winston, Mitch Trubisky and Blake Bortles all got more starts than they should've because their general managers didn't operate with a fact-driven temperament. They were emotionally invested in their pick working. Steve Keim, to his credit, went with logos over pathos.

Rule 3: Study the Business, Not the Stock Price - This was Steve Keim's greatest work, as it pertains to following Buffett's rules for investing. NFL coaches have mastered the art of artificially inflating their stock price. This offseason, Mike McCarthy had more than a few long-form features written about the "McCarthy group" - a group of veteran NFL coaches he assembled in hopes of stoking press excitement about his chances of landing one of the NFL's head coaching vacancies. Peter King did a 35-minute feature film about it.

This is a common tactic used by modern NFL coaches, in hopes of giving the NFL world amnesia about why they were fired at their last stop. It worked on Jerry Jones, but not Steve Keim. Keim studied the business, not the stock price. He understood that in today's NFL, supporting your quarterback is exponentially more important than addressing any other part of a football team. That's why Kliff Kingsbury's 35-40 record at Texas Tech didn't scare Keim off. Kingsbury had groomed Baker Mayfield, Patrick Mahomes, and had a good relationship with Kyler Murray. Now, as Kyler Murray explodes in his second year as Cardinals quarterback, it is apparent that Steve Keim studied the business of the NFL, not the stock price of NFL coaching candidates.

Rule 4: Don't Give into the Hype - Did you know that Warren Buffett purposefully stays away from Wall Street? He believes there's too much hype, too many rumors and too much advice being tossed around in our nation's financial capital. This helps him with Rule 2: Maintaining a Fact-Driven Temperament. Steve Keim benefits from operating out of Arizona the same way Buffett benefits from staying away from Wall Street. Would Keim have been able to handle the heat that comes with drafting back-to-back quarterbacks in the first round, or hiring a college coach with a losing record in New York or Boston? Maybe not. Keim enjoys the great benefit of operating in the comparatively friendly media market of Arizona.

Steve Keim cleaned up a mess he created by following the same core principles that made Warren Buffett one of the most respected investors in our nation's history.