Imagine that you made a mistake at your job that cost your employer $11.6 million. Would you expect to be fired? For most of us (okay, maybe not tenured professors, but that’s not my point today) the answer would be yes. For Isiah Thomas, though, this is business as usual.
Well, it’s a bit more than business as usual. Thomas did not “mistakenly” harass Anucha Browne Sanders. This was clearly not a case of Thomas spilling a cup of coffee. No, Thomas took deliberate actions that he has now learned are considered quite wrong by the society he lives in. Whether or not he learned a lesson, though, is still debatable.
Both Tim Kawakami of the San Jose Mercury News and Tom Ziller of AOL Fanhouse have made the same observation I wish to build upon today (hat tip to Henry Abbott at TrueHoop). In his role with the Knicks, Isiah has made a number of very large financial “mistakes”. Many of these eclipse the $11.6 million his employer will be paying Ms. Sanders (assuming the appeal process does not alter this decision). I wish to go beyond Kawakami and Ziller, who each listed the blunders, by trying to quantify the amount of money Isiah has already cost his employer.
Let me start with the collection of talent that took the floor in 2006-07. The Knicks website at NBA.com noted that “every player on the Knicks’ roster has been acquired during Thomas’ regime.” So the team we saw last year was chosen by Isiah the general manager, and coached by Isiah as well.
For each of these players we wish to look at two issues. First, what did Isiah and the Knicks pay the player? And second, what was the value of the player’s production?
Salary we can get from a variety of sources, and I am using the numbers reported by the USA Today. For the value of a player’s production we need to know how many wins the player produced (or his Wins Produced) and how much each win was worth.
Wins Produced I have already calculated. For the value of a win I am going to return to the same approach I took in early September when I looked at which players in the NBA were overpaid last year. In this discussion I noted the following:
According to the USA Today, players were paid $1.818 billion in 2006-07. And these players must have produced 1,230 wins (41 wins multiplied by 30 teams). So each win must be worth about $1.478 million (I would note that this is just a crude estimate, and if I were writing an academic article – which I am not – I would try harder to measure the value of a win).
Yes, $1.478 is not precise, but let’s go with it.
Okay, with numbers in hand, let’s turn to the Knicks in 2006-07.
Table One reports the salary paid to each Knick player, his Wins Produced, the value of this production, and how much the player was overpaid or underpaid.
There were fifteen players who played for the Knicks last season. Of these, eleven were paid a salary that eclipsed the value of the player’s wins production. Topping the list of overpaid are many of the players identified by Kawakami and Ziller.
For example, Stephon Marbury’s Wins Produced was 4.0 last season. If each win is worth $1.478 million, he created nearly $6 million in value. He was paid, though, $17.18 million. This means that Marbury alone – a player Isiah chose to put on this team and coached – cost the Knicks nearly as much as they will pay Ms. Sanders.
Moving down the list we see six names: Steve Francis, Malik Rose, Eddy Curry, Jerome James, Channing Frye, and Jamal Crawford. These six players were paid $45.7 million last season but combined to produce -0.6 wins. In other words, that was $45.7 million for nothing, nada, zilch.
And this is just what the Knicks did last year. If we look at 2005-06 we see a similar story. Marbury was paid $16.45 million that season, but his 4.2 wins was only worth about $5.6 million (a win was slightly less valuable in 2005-06). So again, he cost the Knicks nearly $11 million. Looking over the rest of the 2005-06 roster we see that James cost the Knicks $7.4 million ($5 million in salary for a -1.8 wins) and Curry cost the Knicks $4.8 million ($7.4 million for 1.9 wins). And then we have Maurice Taylor, who was paid $9.1 million to produce -3.2 wins. So Taylor cost the Knicks $13.4 million in 2005-06.
The decisions of Isiah have not all been blunders. He did draft David Lee and Renaldo Balkman. These players were paid only $2.1 million in 2006-07 and combined to produce 19.4 wins. So these two generated $26.6 million beyond what they were paid.
But despite an ability to find productive talent in the draft, most of the decisions Isiah has made have proven quite costly to the Knicks. Just going with the salary numbers from USA Today (which understate the true roster cost because players not on the active roster at the end of the season are not counted) the Knicks have paid $268 million in salaries the past three seasons. Across these three seasons the team has won 89 games. Given the value of a win in each season, these 89 wins are worth $124 million. So the combined roster across the last three seasons has cost the Knicks $144 million.
And that is the bill as it stands today. As Kawakami and Ziller note, many of the overpaid players are scheduled to be collecting paychecks from the Knicks into the future. And that includes Zach Randolph – Isiah’s latest acquisition — who is unlikely to produce enough to generate the $51 million he is currently guaranteed.
All of this brings us to the point of the story. Is the Sanders case likely to teach Isiah a lesson? Isiah did something wrong and as a consequence, someone else is going to pay $11.6 million. In his tenure as general manager of the Knicks, though, he has done many things that are wrong and someone else has paid much more than $11.6 million.
To answer the question, we turn to economics (surprise). Economics teaches that people respond to incentives. If a person does something good and receive a reward, we can expect the good behavior to happen in the future. If the person does something bad, though, and nothing happens; well, then we shouldn’t expect any lesson has been learned. At least, that‘s what economics tells us.
Our research on the NBA was summarized HERE.
The equation connecting wins to offensive/defensive efficiency is given HERE
Wins Produced and Win Score are discussed in the following posts