Who gets the most bang for their buck? (NBA Edition)
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by user Davis21wylie
NBA Free Agency is definitely in full swing right now, and some other hoops writers like John Hollinger and Kevin Pelton have been examining trends in the FA markets of recent summers. When asking in his article why high-profile free agent deals go sour on teams so often (he suggests that as many as 20 of the 34 FA's who signed deals worth at least $35 million in the last two summers were busts), Hollinger brings up the phenomenon of the "Winner's Curse", which is of particular interest to the free agent market: it states that, when bidding on an item of undetermined value (and nobody really knows for sure the true value of any NBA player), the winning bidder often wins because he overestimated the item's worth in the first place. You can definitely see this at work with deals like Derek Fisher's with Golden State two years ago, and perhaps even with Joe Johnson's Atlanta deal last summer. In fact, I would even venture that all but the elite UFA's are vastly overpaid when they get signed.
Let's look at it this way: Baseball Prospectus has determined that elite free agents are almost universally worth every penny of their large contracts; Barry Bonds, Greg Maddux, and Randy Johnson are good examples. Their teams paid the max, and got just what they paid for. Likewise, the roster-filling role player free agent signing rarely backfires on a team, because expectations are low, salaries are lower, and any extra production is gravy. The killer is the fat contract to the pseudo-star, though: Cliff Floyd, Roger Cedeno... I could do an entire list of post-1999 Mets, but you get the picture. These free agents are often signed on the basis of one of three things:
- 1. They have "potential". Which is fine if they're 22 and coming off a sophomore big-league season. But for some reason, GM's hold out the "he'll get it one of these days" talk until a player hits thirty, which is well past the expiration date on a "prospect".
- 2. They had some unlucky injuries. You know, if Cliff Floyd could ever notch 600 plate appearances consistently, he would be close to an all-star level player... but it ain't happening (except, astonishingly, in 2005). Players with injury problems usually don't get better, though -- they get worse.
- 3. They put up some massive numbers in a walk year, numbers that would never be repeatable again in 724 years. Carl Pohlad's Twins (under Terry Ryan) are the kings of this, paying out to overvalued pitchers (cough, Joe Mays, Eric Milton), acquiring expensive OF's when they already have equal talent in the system (Shannon Stewart), and generally anteing up after any player's career year.
Rarely do any of the players signed under the above conditions ever pan out. Heck, Cristian Guzman in 2005 applied under all of them! But what, you ask, does this have to do with the NBA?
Everything. The same rules apply, especially in this summer's financial market. Some of the best signings, like Tim Duncan in 2000 and Kobe Bryant in 1999, were on elite players going into the prime of their (relatively injury-free) careers. Some of the most onerous were on "potential" players (Austin Croshere, Jalen Rose, Tim Thomas in 2000), injury risks (Grant Hill, 2000), players coming off huge years (Chris Webber, 2001), or made by GM's presumably smoking multiple kilos of oregano (Tariq Abdul-Wahad, 2001). Middling "stars" make for bad-looking max contracts, just ask Allan Houston.
Which begs the question: are there really any winners in free agency (besides the players, of course)? Given the way that the league's CBA is set up, unrestricted free agents (the kind that spark the offseason feeding frenzies) only come around after their rookie and restricted free agent contracts are expired -- usually when players are nearing 30, the very back end of their primes. Is it efficient to shell out big paydays to veteran players whose best years are behind them? Obviously, Miami went after pricey vets (albeit not UFA's) and won a title, but they would have nothing without the insanely underpaid Dwyane Wade, still on his $3,031,920-per-year rookie contract. The Pistons have been very successful in recent years despite having just the 17th-highest payroll in basketball, thanks to finding cheaper players who aren't stars but who fit their system (instead of going after big names). The 2004-05 champion San Antonio Spurs have been heavily reliant on cheap contracts as well, getting fantastic bang for their bucks by scouting young players (Tony Parker, Manu Ginobili, etc.), not overpaying veterans.
All of which boils down to being wary with how you spend your money. Teams that are cautious in free agency will always reap more rewards than teams that spend freely, because the salary cap will eventually rear its ugly head. To quote Billy Beane, "You can always recover from the player you didn't sign. You may never recover from the player you signed at the wrong price." To that end, I wanted to see which teams had been the most efficient with their payrolls in 2005-06. The measure I used was not simply payroll divided by wins, though, because that model would not fully reflect reality -- the worst team you can field would not go 0-82 (and, believe me, the Hawks tried a few years ago), and you cannot pay your team $0 (to Donald Sterling's great dismay!). Instead, I looked at marginal wins and marginal payroll.
Basically, MP/MW compares a team's payroll to the performance it could expect if it fielded a team of minimum-salary replacement players. The formula is:
- MP/MW = (Team payroll - (12 * League minimum salary)) / (82 * (Winning % - .110))
That .110 just happens to be the winning % of the worst team in NBA history, the 1973 Philadelphia 76ers. I'm pretty sure a team of replacements in today's NBA couldn't do worse, although, like I said, the Hawks seemed to be going for that record a few years ago.
The resulting MP/MW figure represents how much money a team has spent, per win above the theoretical minimum number of wins possible. The lower the number, the more efficiently the club has spent its money. However, team record must also be taken into account -- teams can be considered "efficient" if they get better than what they pay for, but if they pay for a 20-62 team they shouldn't receive credit for cheaping out, either. Therefore, I broke each team into 7 categories:
- Low MP/MW, very good record - Super-Efficient club
- Low MP/MW, above-average record - Efficient club
- Low MP/MW, bad record - Not spending enough (generally any team below the salary cap)
- Average MP/MW, average record - Semi-Efficient club
- High MP/MW, above-average record - Spending their way to the top
- High MP/MW, below-average record - Poorly-run club
- High MP//MW, very bad record - Super-Inefficient club
Here are the results:
Rank Team % Rk Mgnl W Payroll Cap +/- Mgnl Payroll MP/MW Type of Team 1 Pistons 0.780 1 55 59619275 10119275 54834131 $997,346.9 Super-Efficient club 2 Spurs 0.768 2 54 63034710 13534710 58249566 $1,079,095.3 Super-Efficient club 3 Suns 0.659 4 45 53626924 4126924 48841780 $1,085,855.5 Super-Efficient club 4 Cavs 0.610 6 41 50836871 1336871 46051727 $1,123,761.0 Super-Efficient club 5 Clips 0.573 9 38 50931212 1431212 46146068 $1,215,009.7 Efficient club 6 Hornets 0.463 18 29 41277617 -8222383 36492473 $1,259,229.6 Not spending enough 7 Heat 0.634 5 43 59997698 10497698 55212554 $1,284,610.4 Efficient club 8 Nuggets 0.537 11 35 55956608 6456608 51171464 $1,462,877.8 Efficient club 9 Wizards 0.512 13 33 54555947 5055947 49770803 $1,509,120.8 Semi-Efficient club 10 Nets 0.598 7 40 66030223 16530223 61245079 $1,531,892.9 Efficient club 11 Grizz 0.598 8 40 67518596 18018596 62733452 $1,569,120.9 Efficient club 12 Bulls 0.500 14 32 57166530 7666530 52381386 $1,637,942.0 Semi-Efficient club 13 Jazz 0.500 15 32 57407402 7907402 52622258 $1,645,474.0 Semi-Efficient club 14 Kings 0.537 12 35 62811975 13311975 58026831 $1,658,857.4 Semi-Efficient club 15 Bobcats 0.317 27 17 33458932 -16041068 28673788 $1,688,680.1 Not spending enough 16 Sonics 0.427 21 26 48900280 -599720 44115136 $1,698,042.2 Poorly-run club 17 Mavs 0.732 3 51 97881086 48381086 93095942 $1,826,126.8 Spending to the top 18 Bucks 0.488 17 31 62563359 13063359 57778215 $1,865,016.6 Poorly-run club 19 Lakers 0.549 10 36 72866195 23366195 68081051 $1,892,191.5 Spending to the top 20 Warriors0.415 22 25 57115566 7615566 52330422 $2,094,892.8 Poorly-run club 21 Celtics 0.402 24 24 56907300 7407300 52122156 $2,173,567.8 Poorly-run club 22 Hawks 0.317 28 17 42944553 -6555447 38159409 $2,247,315.0 Not spending enough 23 Pacers 0.500 16 32 78681968 29181968 73896824 $2,310,719.9 Spending to the top 24 Twolves 0.402 25 24 61649061 12149061 56863917 $2,371,306.0 Poorly-run club 25 Rockets 0.415 23 25 69208809 19708809 64423665 $2,579,009.8 Poorly-run club 26 Magic 0.439 20 27 75365655 25865655 70580511 $2,616,030.8 Poorly-run club 27 76ers 0.463 19 29 84690863 35190863 79905719 $2,757,271.2 Poorly-run club 28 Raptors 0.329 26 18 62123201 12623201 57338057 $3,188,990.9 Super-Inefficient club 29 Blazers 0.256 30 12 59966214 10466214 55181070 $4,606,099.3 Super-Inefficient club 30 Knicks 0.280 29 14 126610272 77110272 121825128 $8,714,243.8 Super-Inefficient club
(Payrolls are thanks to Patricia Bender's awesome NBA site.)
The Pistons, Spurs, Suns, and Cavs were in a class by themselves. The Mavs were the Yankees of the NBA, enjoying success, but at a huge cost. Houston was beset with a lot injuries, so they probably deserve a do-over (in 04-05, they were 7th in record and only 13th in payroll). And the Knicks... Well, you didn't need me to tell you that they were the least efficient front office in the league.
Date
Tue 07/18/06, 10:22 am EST
