Andres Alvarez – of Nerd Numbers and the Automated Wins Produced – sent along the following observation: 

Kyle Lowry’s game on Sunday night was the 15th best of the season and better than any Derrick Rose has put up so far this season. Additionally, since the New Year, Kyle Lowry has put up .25 more wins than Derrick Rose in 50 less minutes of play time.  Lowry also the most wins on his team (and once again, has been playing better than Rose for the last 3 months).   So should he be considered a serious MVP candidate?

Okay, this is just silly. Derrick Rose is clearly one of the best players in the game.   Afterall, Rose

• was the first player taken in the 2008 NBA draft
• was voted as a starter in the 2011 All-Star game
• scores 24.8 points per game, a mark that ranks 6^th in the NBA
• leads the Chicago Bulls – the team currently on top of the Eastern Conference standings – in Wins Produced
• stars in television commercials

In contrast, Lowry

• was the 24^th player taken in the 2006 NBA draft
• prior to this season, has only started 21 games in the NBA (and may have seen an All-Star game but certainly has never been asked to play)
• scores only 13.2 points per game, a mark that ranks 70^th in the NBA

Obviously Lowry can’t be compared to Rose. 

Then again….

Let’s go back to that Wins Produced story.  As noted, Rose leads the Chicago Bulls in Wins Produced.  After 69 games, Rose has produced 9.8 wins.  And his WP48 [Wins Produced per 48 minutes] is 0.184.  So Rose is above average (average WP48 is 0.100).

Now let’s look at Lowry.  After 71 games, Lowry has produced 8.1 wins. This mark leads the Houston Rockets.  And his WP48 of 0.172 is actually quite comparable to what we see from Rose.  In other words, if Lowry and Rose switched places, the fate of each team would be quite similar (and before you say the Bulls need Rose to take all those shots, take a look at what I wrote a few weeks ago at The Huffington Post). 

Obviously Lowry doesn’t score as much as Rose.  So what makes Lowry so productive?

Wins in the NBA are driven by a team’s ability to gain and keep possession of the ball (i.e. rebounds and turnovers) and how well the team can turn possession of the ball into points (i.e. shooting efficiency and the ability to get to the free thow line).  When we look at Lowry’s stats – reported below — we see that his career numbers (these are the career numbers before the 2010-11 season) indicate Lowry was below average with respect to shooting efficiency from the field.  But his ability to get to the free throw line and grab rebounds allowed Lowry to be above average. 

This season, Lowry has been a more efficient scorer.  He is also getting more assists while cutting down his turnovers.  As a consequence, Lowry is now offering nearly as much are Rose.

And just like Rose – as the following indicates — Lowry is the most productive player on his team.  

The Rockets’ record is 37-34 after 71 games, a mark that ranks last in the Southwest division and leaves this team currently on the outside of the top eight spots in the conference.  When we look at efficiency differential (offensive efficiency minus defensive efficiency), though, we see a mark of 1.7.  This is consistent with a team that would win between 39 and 40 of their first 71 games; or about 45 wins across an entire season.  And those marks would actually rank 8^th in the Western Conference.  So the Rockets are not a “bad” team.

Why are the Rockets “not bad”?  As noted in early February, the Rockets have been able to find a collection of above average performers.  Beyond Lowry, the Rockets are currently employing – as part of their rotation – the following above average players:  Kevin Martin, Chuck Hayes, Chase Budinger, and Patrick Patterson.  And Luis Scola, Courtney Lee, and Brad Miller are close to average. 

So why aren’t the Rockets as good as the Bulls?  The above average players on the Rockets all have WP48 marks below 0.200.  In other words, the Rockets don’t have anyone who is twice as good as average.  In contrast, the Bulls employ Carlos Boozer [0.201 WP48], Ronnie Brewer [0.236 WP48], and Joakim Noah [0.264 WP48]. 

In sum, Rose simply has somewhat better teammates than Lowry.  And that means Rose gets to experience more wins.  When we add in Rose’s scoring (driven by Rose’s propensity to take many shots), it is easy to see why Rose is considered an MVP candidate.

Of course, Lowry is nearly as productive.  So should Lowry get some consideration for the MVP award?

Well, not exactly.  There are still several players who offer more than Rose and Lowry (see Dwight Howard, LeBron James, Chris Paul, etc…).  In fact, Howard, James, and Paul offer more than Lowry and Rose combined.  And that means Lowry shouldn’t be an MVP candidate.  But then again, Derrick Rose really shouldn’t be getting any votes either.

- DJ

Well, that didn’t take long.

According to Marc Berman of the New York Post, some problems have already appeared with respect to Carmelo Anthony’s behavior in New York.  Here is some of what Berman had to say about Melo.

Anthony’s pouty behavior in Friday night’s 99-95 loss to the Pistons, his bad oncourt body language, his failure to join a timeout huddle when not in the game has raised red flags about his readiness to handle the pressure for being a basketball star in New York.

…. Earlier this week, Anthony questioned the Knicks’ defensive schemes after the Indiana losses.

The Knicks have played 14 games with Carmelo Anthony, and the team’s record has only been 7-7.  When we look at Wins Produced, though, the team appears a bit better than a 0.500 team.

Since the trade, the Knicks’ players have produced 7.5 wins, which translates into nearly 44 wins over an 82 game season.  The source of these wins, though, may be surprising to those who see Melo and Amare Stoudemire as the star players on the Knicks.  As the following table indicates, both Anthony and Stoudemire have been below average across the past 14 games (average WP48 – or Wins Produced per 48 minutes – is 0.100).

Although the “stars” have come up short, the guards on the team are saving the Knicks.  Specifically, Landry Fields, Toney Douglas, and Chauncey Billups are producing 74% of the team’s wins since the trade. 

In looking at these numbers, one wonders if this trio should be pouting.  After all, if Melo and Stoudemire were as good as people believed, this team – with Fields, Douglas, and Billups producing as we have seen — could already be a title contender.

Of course, Melo and Stoudemire are not quite as productive as their reputations suggest. They are also not quite as bad as their numbers after 14 games suggest.  In other words, 14 games is a very small sample; so we should expect to see more production from the Knicks’ stars.  And one should quickly note….we also should expect to see less from Douglass.  Last season Douglas posted a 0.083 WP48.  And prior to this trade his WP48 mark was 0.085.  These numbers suggest that Douglas is probably not as productive as he has appeared across the last 14 games.

Although 14 games is a small sample, we do have a larger sample from Melo’s career that allows us to conclude the following:

• Carmelo Anthony is really not as productive as his scoring and corresponding reputation suggest.
• The acquisition of Carmelo Anthony is not going to transform the Knicks into a contender.
• That means the Knicks are not going to win as often as their fans and Carmelo Anthony will like.
• But because both the fans and Melo think Anthony is  a star, neither the fans nor Melo will ever blame Anthony for the failure of this team to win as often as they would like.

And that means, expect to see Melo to continue to pout, his fans to make excuses, and other people (like Coach D’Antoni?) to eventually take the blame. 

- DJ

If it’s the weekend, it’s time for another Wages of Wins Network podcast  (click on the link to listen!!)

On Friday the cast was as follows:  

• Mosi Platt from the Miami Heat Index
• Andres Alvarez from NerdNumbers
• Arturo Galletti from Arturo’s Amazing Stats
• and me (from this forum)

Mosi moderated the podcast and prepared the following review of our discussion.

Collective Bargaining and Socialism in Sports

Mark Cuban wrote a blog post last year about collective bargaining in the NFL. It seemed his basic point was that the CBAs for the NBA & NFL are flawed because they result in the owners assuming 100% of the risk. According to Cuban:

 ”The hardest job in professional sports is the assessment of  player skill. The second hardest job is determining how to allocate salary to players in a manner that builds a championship team.”

 The players get to benefit from this problem but never have to give back salaries or contribute capital to make up for losses:

 ”You can’t ignore risk. Nor can you assume 100pct of the risk and hope the real bad stuff never happens.  The NFL and its owners, since we are using them in our example, are assuming 100pct of the risk of the economy falling again. They are assuming 100pct risk of their bigggest TV customers having their primary delivery systems eliminated. They are assuming 100pct of the risk of trying to convey money from big markets to small markets to try to compensate for an irrational cap system. They are assuming 10opct risk on the capital invested in their franchises, PLUS capital they may have to add to cover any losses.

The players side? While individual NFL players take on significant risk, the players as a whole take on ZERO risk.  If their membership just shows up for games, 53 guys on each team are getting paid.  They never have to give the money back or contribute capital to make up losses.

The solution? Its a system where risks and rewards are allocated properly. Owners should take on more risk than players because they have more upside from franchise appreciation. They shouldnt take on all the risk. Nor should players be excluded from sharing in the upside of equity appreciation. Im not saying that for example players earn a share of the sale price when an NFL franchise is sold. There are a variety of ways to track or index appreciation of franchises that rewards players that can work better and more efficiently.  When the index appreciates the economics available to players appreciate. When the index depreciates, the amount available to players should be reduced as well.”

Dave and my understanding of the NBA CBA is the owners did negotiate some controls over their risk with the escrow system that tries to ensure salaries & benefits do not exceed a designated percentage of basketball-related income (BRI – see the work of Larry Coon for more on this). I believe the NFL has a similar mechanism that takes money from the pool available for player salaries to build stadiums.

Do Cuban’s comments change how the owners’ demand for the players to give back money should be viewed (whether it’s $1 billion or $500 million)?

Cuban’s assertion is that the owners need to protect themselves from Black Swan events (in this case, he cited the FCC ruining the NFL’s biggest customers’ ability to broadcast NFL games). Dave said, “No,” unless the owners are willing to make the players partners and share the profits with them.

 Dave also thought the following points needed to be made:

1. NFL players do take risk since their contracts are not guaranteed.
2. Although NFL players are cut for not performing or getting hurt, there is no mechanism for increasing pay if a player does better than expected.  And since performance in the future can’t be forecasted very well in the NFL, teams are often benefitting from increased production from players were not expected to be that good.
3. Assessment of player skill in the NBA is a challenge when looking at the draft.  But veterans in the NBA — relative to the NFL — seem relatively easy to evaluate.  Of course, it helps if you are not spending $100,000 per year on a model that doesn’t work.  In other words, Cuban made his job more difficult by hiring the wrong people.

 I would also add that relative to Europe, there is less risk in North American sports.  The North American leagues maintain monopoly power in each market.  So even if a team is bad, they still can sell tickets because there are no other teams to watch.  Plus they reward the losers, which also minimizes the downside of bad decisions.

 Forbes’ Michael Ozanian wrote:

“National Football League and National Basketball Association collective bargaining battles are about the same thing: reducing player costs from about 50% of total league revenue (before revenue deductions for costs specified in the football and basketball CBAs) to roughly 40%. If NFL owners are victorious the subsequent increase in operating income would result in an aggregate $15 billion gain in value for the 32 teams. If the NBA owners get what they want even the downtrodden franchises would increase at least 30% in value (~$2.7 billion).”

Mosi asked Dave if there’s a magic number for splitting revenues between the owners and players. Dave explains how it’s handled in other industries and what a good model could potentially be for the NBA.

• Dave wrote two articles this week discussing examples of socialism and corporate welfare in professional North American sports that dovetail nicely with the discussion of risk and Collective Bargaining (see HERE and HERE). It appears Cuban, and owners like him, would argue the NBA needs socialist practices to mitigate the risk they assume by owning professional sports franchises. Dave says that contradicts some of the basic tenets of capitalism.
• Mosi & Dre asked if the problem is bad incentives. For example, if there’s a lower risk associated with trying to lose than trying to win, then doesn’t that ruin competitive balance? Does the Short Supply of Tall People incentivize losing or justify the owners’ argument that they need to reduce their financial risk?
• Arturo said the competitive balance argument is a myth and Dave agreed.
• Dave conceded that if teams began evaluating players properly, then the NBA would still need to do something to compensate teams that suffer from the Short Supply of Tall People.

March Madness Moneymakers

• Let’s end on a more fan-friendly topic – March Madness. Last year, Dave wrote about the impact a Final Four appearance can have on a prospect’s draft position (it improves by about 12 spots.
• Dave picked San Diego State, UNC, Kansas & Pittsburgh to make the Final Four this year (for the Wall Street Journal via a blind bracket). Which players from those teams are likely to cash in on their appearance in the next NBA draft?
• Dave picked Harrison Barnes as the player most likely to profit from going to the Final Four
• Arturo said he hasn’t run any numbers but thinks Kenneth Faried has a real chance to benefit the further Morehead State advances on the back of his 17-rebound games. Dave said they’ve got a good chance to make the Sweet 16 since Richmond upset Vanderbilt.
• Mosi & Dave said Kyle Singler could benefit if Duke makes it to the Final Four. Kyrie Irving could help in that regard if he can be as productive as he was in his first eight games.
• Dre makes his Final Four picks, but no moneymakers, so Mosi questioned his “unhealthy” dedication to ESPN Radio’s Mike & Mike in the Morning Show.
• Mosi admits he may have an unhealthy dedication to Allen Iverson and, surprisingly, Dre admits that he enjoyed watching Iverson play! He does watch games!
• Mosi picked University of Washington’s Isaiah Thomas and Georgetown University’s Chris Wright as potential moneymakers from his biased (and flawed) brackets. Dave said he hopes that’s the case and the Knicks end up picking him in the NBA draft in a moment of confusion.

The podcast ends with a suggestion that someone studies whether Gus Johnson is fixing games with a Buffalo Wild Wings button.

- Mosi Platt

Why would the Maloof brothers take the Kings from Sacramento – and reportedly some of the best home fans in the NBA – and move to Anaheim?  After all, fans in the LA area are not known for their passion.  For an answer (that goes beyond what I said earlier in the week), let’s look a bit closer at the Los Angeles Clippers. 

The Clippers came to Los Angeles in 1984.   In the 26 years since arriving in LA, the Clippers have made the playoffs four times.  And their very best season – in terms of regular season wins, efficiency differential (offensive efficiency minus defensive efficiency), and the playoffs – was 2005-06.  In that season, the Clippers won 47 games, posted a 1.66 differential, and advanced all the way to the second round of the playoffs (the only time they got out of the first round).  In sum, the Clippers at their best, were really not that great.

This season we see a story consistent with this history.  The team’s efficiency differential is -3.3, and that mark is consistent with a team that would between 27 and 28 games across their first 69 games (or 32 or 33 games across a complete season).  If the Clippers remain in the negative range (and that seems likely), this will mark the 24^th time the LA Clippers failed to post a positive efficiency differential.

When we move from efficiency differential to Wins Produced we can see why this team has once again struggled.

As the above table indicates, the Clippers are led by Blake Griffin (no surprise). The team is also getting above average contributions (average WP48 – or Wins Produced per 48 minutes – is 0.100) from Eric Gordon and DeAndre Jordan.  This trio has combined to produce 23.1 wins.  And that means, everyone else on this team has only produced 4.3 wins.

Now where did the team acquire Griffin and Gordon?  Gordon was the team’s lottery pick in 2008, or the team’s reward for only winning 28 games in 2007-08.  And Griffin was the team’s reward for missing the playoffs in 2008-09.  In sum, the NBA draft lottery– which rewards losers — allowed the Clippers to acquire the most productive players on their roster.  The non-lottery draft choices, free agent picks, and trade acquisitions haven’t done much to help at all.  And that suggests, left to their own devices (i.e. no NBA socialism), the Clippers would be offering even less to their fans.

The NBA, though, doesn’t leave the Clippers to their own devices.  The NBA keeps rewarding the Clippers with high draft choices.  And every once in awhile, the Clippers turn these picks into players like Griffin and Gordon; two players who produce wins very cheaply.  Of course, the Clippers haven’t shown the ability to capitalize on this good fortune.  And this year, the Clippers have already sent their lottery pick to the Cavaliers in an effort to save some money (and increase the team’s profits).

This means that the Clippers are going to have to rely on their young players getting better.  And yes, that can happen.  But what if it doesn’t?  Well, it turns out that doesn’t matter much.

To see this, consider some basic financial information on the Clippers.

According to ESPN.com (who tabulated the attendance data) and Forbes.com (who tabulated the financial information that sports economist Rod Fort gathers), the Clippers have actually done quite well off the court in recent years.  Although the team only earns about $30 million each year at the gate, the team’s non-gate revenue is about $70 million per year.  Consequently, with player expenses of only about $62 million per year, the Clippers appear to have a positive operating income (appears is the word, since non-player costs in professional team sports are not always as clear as we would like) from 2005-06 to 2009-10.

In looking at these numbers, remember the Clippers had their best season in 2005-06.  But even after the Clippers returned to form on the court, the team’s operating income has remained positive.   In other words, despite losing on the court, the Clippers are not actually losing money.

Forbes.com doesn’t just report basic revenue and cost data.  They also attempt to estimate franchise values.  And according to their estimate, the Clippers are worth a bit more than $300 million today.  Donald Sterling bought this team in 1981 for $13 million.  So if we focus just on the change in franchise values (and ignore yearly profits), Sterling has earned about an 11.5% annual return on his investment.  Remember, the Clippers have been losers in virtually every season Sterling has owned the team. Yet despite being unable to give his customers a very good product, Sterling is still making a healthy return on his investment.

Now let’s look at the Kings.  Forbes.com reports that the Maloof brother purchased the Kings in 1998 for $156 million.  Today Forbes.com says the team is worth close to $300 million.  Such an increase in value suggests an annual rate of return of about 5.5%.  In other words, the Kings in Sacramento – despite having more success on the court than the Clippers (not much more, but more) – are escalating in value at about half the rate we see for the Clippers.

One suspects the Maloof brothers look at this data and guess they can do better than Sterling (one suspects, almost anyone could do better than Sterling).  Hence the allure of moving to Anaheim.   

Yes, the Maloof brothers could earn a profit in Sacramento.  All they would need to do is have a winning team.  But in Anaheim, the Maloof brothers might do better financially even if they never have a winning team.  This is why Sacramento – despite having much more passionate fans – might be losing their team to Anaheim.

Let me close by noting that what we see in North American professional team sports is not seen in Europe.  In European sports, the Clippers would no longer exist.  Perhaps a post on this subject would be worthwhile.

- DJ

How the Sacramento Kings Hope to Win While Losing is the title of my latest for the Huffington Post.  The Kings have seen total revenue decline across the past few seasons.  This decline – as I note in the article – is tied primarily to a decline in gate revenue.  And the decline in gate revenue is at least partially about the decline in the team’s fortunes on the court. 

To offset this decline, the Kings have two choices.  The choice they prefer is to move into a new arena that will allow the team to extract more revenue from the fans still showing up to see the Kings play bad basketball.  The other choice is to provide a more competitive team on the court.

The following table helps illustrate this point.

On the left we see what the Kings could have expected to do given what the veterans the Kings employed did in 2009-10 (rookie performance is simply taken as given).  As one can see, the Kings could have expected to win about 27 of their first 65 games in 2010-11.   On the right we see the team – given their performance this season (i.e. the team’s efficiency differential or offensive efficiency minus defensive efficiency) — could have expected to win about 20 or 21 games.

The team has actually won 16 games.  So they are not quite as bad as their record suggests.  And they would be better if Tyreke Evans and Samuel Dalembert gave the team what they offered in 2009-10.  But even if Evans and Dalembert reverted to what we saw last year, this would still be a below 0.500 team.  And the Kings would still be struggling at the gate.

So what’s the solution? The Kings need more productive players.  But this team is now on pace to miss the playoffs for the fifth consecutive season.  One would think that in five years the Kings could have found some productive players.  But this hasn’t happened.  And until it does, the Kings should continue to have a hard time attracting fans.

At least, I think the Kings “should” struggle to attract fans.  There is a movement in Sacramento that is attempting to change how Sacramento is reacting to all this losing.  The Here We Stay campaign is doing everything in their power to keep the Kings in Sacramento.  And part of “doing everything” is making an effort to boost ticket sales.

Although I am sympathetic with the desire of people in Sacramento to keep their basketball team, there is something wrong with a  process where the NBA takes away a team unless

a. the community offers the team a taxpayer subsidy and/or

b. the community buys tickets to support a team that isn’t winning

Capitalism is about rewarding winners and punishing losers.  There are good reasons why such a system generates positive social outcomes.  But the NBA (and this is true for the other professional sports leagues in North America) want a system where even losers earn a positive profit.  And if that doesn’t happen, communities like Sacramento lose their team. 

Tournament Thoughts

As I noted, the Kings are essentially exploiting the fans of Sacramento.  And many of the “student-athletes” in the NCAA tournament are also exploited.  At least, they are generating more revenue than they are receiving from their school.  Although this issue is important, I thought I would offer a few different tournament thoughts (how is that for a transition?).

A number of people have noticed that Erich Doerr’s analysis of the NCAA tournament was not offered this year (Erich didn’t have time this year).  Ty Willihnganz did look at a bunch of numbers and offers some picks.  So if you haven’t filled out your brackets, it might help. 

Andres Alvarez – of NerdNumbers (which is on-line again) – sent along a link to a website called Win That Pool!.  The website helps you fill out your bracket by taking into account how other people are likely to fill out their brackets.  So that is fun!

As for my bracket…still haven’t done this (will do it after this is posted).  Yes, I know.  We now have four early games.  For my pool, though, those are going to be ignored.  My pool consists of my wife and two daughters.  My oldest daughter is picking Duke (she does that every year because she was told a few years ago by my wife that Duke is good).  And apparently I am picking San Diego State to reach the Final Four.

At least, that is what I told the Wall Street Journal.  Jared Diamond sent me the blind bracket the Journal created.  The purpose of this exercise was to see what would happen if people had some basic information about each team but didn’t have the team’s name.  When I did this – as the Wall Street Journal reported today – I ended up with a Final Four of Kansas, Pittsburgh, San Diego State, and North Carolina.  Although I doubt this will happen, I will keep this Final Four for the bracket I am completing in the family pool.  And this means I am probably not going to win the pool.  That’s okay, though.  I am a fan of whoever does win the pool J

- DJ