Competitive Balance Probably Won’t Help the NBA

I was disappointed in Henry’s True Hoop post about competitive balance from today.  The important parts are more or less based on claims that are known to be false.  Henry’s post is laid out by points so I’ll follow suit.

The NBA has terrible competitive balance: No argument there.  Lots of people have pointed this out (here’s an excerpt from the Wages of Wins version).  However, I would argue a bit with the claim that ” in the NBA it’s rare for bad teams to become good. One way to test this is to see how a team’s wins this year work to predict their wins next year. The answer in the NBA is a lot. If you want to know where your team will finish in the standings next year, where they finished this year is a strong predictor. That’s not nearly as true in other sports. ”  Taking 7 years of data I have for team-level performance, last year’s wins predicts this year’s wins with an R squared of .31.   Now that certainly is better than football, where I keep pointing out that year-to-year performance is essentially random.  I don’t know how it compares to baseball.  But that means that 69% of the difference in teams is unrelated to how they did last year.  That seems like a lot to me.

The lack of competitive balance costs the NBA money: Henry’s argument is persuasive, but I think he’s right to list it as a theory.  It certainly isn’t true for ticket sales, as is mentioned in the WoW link.  Perhaps someone could correlate yearly league revenue with yearly Noll-Scully score to try to incorporate money made from TV and other non-ticket sources.  There isn’t much detail, but Dave Berri says that some kind of analysis shows that having more balance doesn’t translate to more TV money.

Competitive imbalance is because some teams are rich: Henry’s argument here is that teams that spend more money win more games.  This is true only in the loosest sense, as has been covered before.  Salary is a stand-in for player quality, and not a great one.  If playoff teams happen to spend more, it’s because they happen to have better players that they had to pay for.  But even then, teams are not great evaluators of talent (please see the following guys making over $10 million a year: Joe Johnson, Antawn Jamison, Baron Davis, Rip Hamilton, Ben Gordon, Chris Kaman, Michael Redd, Eddy Curry, Gilbert Arenas, Vince Carter, Peja Stojakovic, Rashard Lewis… you could argue that there are as many or more iffy players as great players making over $10 mil).  Towards the end Henry quotes an NBA exec as saying that allowing one team to spend $100 million while another only spends 50 is a big competitive advantage.  And that might be true.  But how much the team spends is the team’s choice; no one is forcing the Lakers to spend $100 million and the Kings to spend $50.  If the Maloofs were willing to pony up $100 million in salary, perhaps they could manage to pay good players and they would win more.  Or they could draft a good rookie who would produce wins without having to pay him much.

A hard cap would change something: Hard to argue with that level of vagueness, unless you wanted to predict that it would change nothing.  But that is a possibility.  Given that teams are poor evaluators of talent, if there were a hard cap they might be just as likely to cut loose unproductive people as productive people.  And since teams can’t tell the difference, the other teams will sign both groups.  And so balance could stay about the same.

More equal spending will mean more equal winning: No!  We just covered this.  Teams win because they can identify talent, or more accurately fall ass backwards into it.  So even if they are forced to spend less, they’re still going to hire players who are poor producers compared to their salary.  And the argument that Henry cites for this, the NBA number about correlating salary with wins, is BS unless it’s somehow vastly different from the one I talk about in my post linked earlier.  That would make it a different flavor of BS.

It’s about reducing guaranteed contracts:  Sure, could be.  But if owners could have been offering non-guaranteed contracts all this time and failed to do so, isn’t that their fault?  Don’t take it out on the players and the fans.

Hard caps are unproven in increasing competitive balance: Of course they have.  As we keep saying, the issue is with identifying talent.  Lowering how much players get paid doesn’t fix that; it just means teams overpay the wrong guy by $5 million instead of 10.  But Henry lists this as a fact, which contradicts his earlier fact that a hard cap would change something.  If hard caps don’t increase competitive balance, then nothing in the league will change except that the owners will keep more money and the players will keep less.  But the Lakers will still be good, the Kings crummy, and revenue won’t increase beyond what NBA popularity growth is already doing.

I actually thought the most interesting part of the article was Silver (the aforementioned NBA exec) saying that the hard cap wasn’t about keeping salaries down.  He went ahead and said that player salary is linked to league revenue, which is a fact that people have pointed out a number of times.  This is the key point to Arturo’s argument that the players can’t make ‘too much’.  Yet the owners want the players to take a smaller cut to make up for the owners’ losses.  So how about this: the players agree to a hard cap, which the owners say will raise revenue.  But the players don’t want this, so in return they should get a bigger split of revenue, say moving up from the current 57% to 60%?  With extra revenue from the increased competitive balance due to the cap the owners can make up for the players’ bigger share, right?  I wonder if the owners would agree to that deal.  And I wonder how they’re going to keep arguing that the players should get a smaller share now that they openly recognize the fact that players can’t make too much.