Monthly Archives: November 2011

The Freaky Part of the Lockout

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Check out Freakonomics for a guest post by none other than our esteemed General Manager David Berri.

Monopoly vs. Monopsony: The Economic Battlefield of the NBA Lockout

Dave reviews some of the problems in the lockout including.

  • Monopolies vs. Monopsonies: As Patrick went over a while back the NBA players have a Monopoly on the talent and the NBA owners have a Monopsony, which means they are the primary buyer of the good. It’s hard to know who will win when these two sides clash but a lot of it has to do with making sure to bargain and leverage correctly, which the players have not been doing.
  • Big Markets vs. Small Markets: As we’ve said the real problem between big markets and small markets is not competing on the field of basketball, it’s in earning money. Dave reviews that in MLB the big market teams decided to subsidize the small market teams. In the NBA the owners are instead asking the players to pick up the check. The players are not happy about this.
  • The Fans Come Back: Finally Dave reminds us that he and Martin Schmidt found out that the fans comeback after work stoppages. So at the end of the day the real losers of this lockout are the fans.

You should hop over to Freakonomics and read the rest. If you really enjoy it make sure to let them know in the comments that Dave should write more stuff for them.

-Dre

The win exchange rate

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All wins are not created equal. When we say Kevin Love is worth $45 million and Kobe Bryant is “only” worth $20 million, we leave out the fact that wins are worth more in Los Angeles than Minnesota. This didn’t sit well with Arturo, our Director of Analytics. He decided to break down the difference in the value of a win for each market. It turns out that not all markets are created equal. For example here’s LeBron James’ value across markets.



What’s the value of a win?

Arturo did an estimate of each team’s net operating income. This is basically how much money the team brings in (from ticket sales, TV deals and main revenue streams) minus the cost of the players salaries. Using this number as a baseline Arturo estimated how much a win was in each market and there were some pretty big differences.


Summing up

The most interesting thing to me is that the large market teams are getting a huge discount. Even up against the hard cap, the Lakers are essentially paying half price for their wins. At the same time various small market teams (sorry New Orleans, Charlotte and Indiana) are in major trouble unless they are a contender every year. The big market teams have a major advantage against the small market teams. It’s not that they can buy more wins; in fact, the numbers show spending is a very poor predictor of winning. No, the major advantage that the big market teams have is that they can afford to lose. Small market teams don’t have the same luxury.

If we ask who the salary cap helps it turns out it is the big market teams. The fact that any big market can only spend around $90 million means that as long as they produce pedestrian basketball (see New York) they’ll be fine. The “competitive balance” myth we keep hearing about and the “need for salary control” might just be rhetoric by big market teams that want to get an even bigger discount. This will come at the cost of the small market teams and the players, who may very well go along with it, believing that it’s for the best.

-Dre

Why Owners are worse than they think they are

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I was watching a great talk from Christopher Chabris, author of The Invisible Gorilla and Other Ways Our Intuitions Deceive Us. As with other scientists who study the brain, he revealed our brains may not work as well as we think they do. Some of his points actually explain how NBA management, despite being full of successful business people and former players, can be as bad as it is. It breaks down to two simple truths:

  1. We’re bad at judging our own abilities
  2. Being good at one thing does not mean we’re good at everything.

We’re Bad at Judging Our Own Abilities

Check out the video at 42:30 to see the specifics on this.

When analyzing basketball players a common theme comes up. People say it is hard to get a real objective measure of a player because of different variables and intangibles including:

  • Clutch
  • Leadership
  • Different Teams
  • Defense
  • etc.

While I feel that these factors are overestimated, it’s true that basketball is not played in a vacuum.  Let’s consider instead the gold standard of rating systems: chess. Chess is a one-on-one game. The rating system adjusts for your skill and the skill of your opponents and estimates your odds of winning against any given opponent. In short, the chess rating system is what we dream of when we look at pro sports. So what happens when you ask chess players about this perfect in a vacuum rating system?

They estimate that they are twice as good as they really are!

Yes, when you ask chess players to rank themselves, it turns out that they think they would win against themselves twice as often as their rating says. This feature of human cognition is especially important in a competitive field: most management thinks they are better than they really are. This explains how so many can be upset at their inability to win or make money–they think they should be making more or winning more because they aren’t good at judging themselves. Dave Berri has also pointed out that former players when given management roles may overvalue their old skills and look for similar players (with disastrous effects)

Good at One Thing Does Not Mean Good At Everything

Check out the video at 44:00 to see specifics on this.

Chabris performed an experiment in which participants were asked to draw a diagram of a bike. Many people failed miserably at this. More impressive was that even the people who rode their bike every day still had problems with the task. Likewise, players might assume that because they played ball for ten years they’ll be good at management. Owners might assume because they ran a successful company that running a team will be easy. But all the evidence indicates that it just doesn’t work that way. Being an expert at one aspect of something does not mean you’ll be great at related but different tasks. What’s worse is that your experience will cause you to overrate your skills in the related field!

Why This is Bad

These problems are not unique to chess players or NBA owners. The general trend in behavioral economics is that we have many flaws that prevent us from acting rationally. Normally when people are bad at judging their abilities it’s not a problem. If a chess player says they are twice as good as their rating it doesn’t mean they win more often. If an avid bike rider tries to get a job as a bike mechanic they’ll probably be shown the door without more training. However, with the owners things are different. When they fail, rather than leave, they have the option of being destructive. They can lock out the league and demand rule changes that may be detrimental in the long run. So the lesson is that we shouldn’t let the people making the decisions also be the people to judge those decisions. Unfortunately in the NBA that is exactly what has happened and as a result we all lose.

-Dre

The All-Time Spurs Team

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Back again to list my starting five and sixth man for the San Antonio Spurs. Basic rules:

  • Pick any player that played one or more complete seasons for the Spurs from 1978 on
  • Pick players based on their “prime” or top three complete seasons with the Spurs
  • Pick the best player for each position as well as a sixth man.

With that here are your all-time Spurs!

Point Guard – Johnny Moore

  • Wins Produced: 38.7
  • WP48: 0.247
  • Minutes Played: 7535
  • Top Seasons: 1982, 1983 and 1985

Johnny Moore was putting up over ten assists and almost three steals for the first half of the 80s. Sadly by 1986 he had started fading. Still, he is easily the best point guard the Spurs have seen and an easy pick for my team.

Shooting Guard – Manu Ginobili

  • Wins Produced: 43.6
  • WP48: 0.322
  • Minutes Played: 6509
  • Top Seasons: 2007, 2008 and 2010

Manu averages over 20 points on 58% true shooting to go along with over five assists and five rebounds per thirty six minutes. My only complaint is his playing time, which has been far too low for his production. Manu has been under-appreciated his whole career, which is why he was an easy pick ahead of a few other shooting guard greats in the Spurs history.

Small Forward – Dennis Rodman

    • Wins Produced: 46.7
    • WP48: 0.492
    • Minutes Played: 4557
    • Top Seasons: 1994 and 1995

Dennis Rodman only lasted two seasons in San Antonio. That said they were amazing seasons where Rodman focused on what he did best: rebounding. He did this while keeping his fouls and turnovers low and his shooting percentage high. He was also versatile enough to play both the small and power forward so I’ve bumped him down to add him to my team.

Power Forward – Tim Duncan

  • Wins Produced: 69.8
  • WP48: 0.363
  • Minutes Played: 9236
  • Top Seasons: 2002, 2003 and 2007

No surprises here. His three top seasons earned him two MVPs and two titles. The Spurs have gotten two of the greatest number one picks in the history of the draft. Tim Duncan has kept the Spurs a contender his entire career. We’ll have to see how much longer he can keep it up.

Center – David Robinson

  • Wins Produced: 80.4
  • WP48: 0.423
  • Minutes Played: 9116
  • Top Seasons: 1990, 1991 and 1996

I hope I don’t surprise anyone by saying not only is Robinson the greatest center the Spurs have ever seen, he is also the greatest Spur the Spurs have ever seen. You’ll notice one of Robinson’s accomplishments is that he was great right from his rookie season. What else can I say about a guy that could bring down 30 points, 13 rebounds and over four blocks a night without breaking a sweat?

Sixth Man – George Gervin

  • Wins Produced: 44.3
  • WP48: 0.245
  • Minutes Played: 8679
  • Top Seasons: 1978, 1979 and 1980

There was no way I could leave the Ice Man off the list. One of our pet peeves around here is players rewarded for high points on poor shooting. As such George Gervin is definitely a favorite as he was pulling down close to 30 points a night on great shooting.

Sixth Man – Artis Gilmore

  • Wins Produced: 44.0
  • WP48: 0.278
  • Minutes Played: 7587
  • Top Seasons: 1983, 1984, 1985

On most teams being a center putting up numbers like Gilmore did and you’re the starter without question. On the Spurs Gilmore is demoted to the bench. I couldn’t decide between Gervin and Gilmore and decided to throw them both on the team. Gilmore is another favorite as he put up numbers like Kareem did in the 80s but didn’t get the recognition. Well here you go Gilmore.

Summing Up

These are a lot of fun and I may keep doing them if the lockout persists and there’s fan interest. As we’ve mentioned the lockout has definitely let us talk a lot about tax rules and competitive balance but we do enjoy straight up basketball. If you’ve got any interesting stats stories you’d like us to look into drop us a comment, it’s not like we’ve got basketball to watch instead.

-Dre

All-Time NBA Teams So Far:

Some Good Looking Links

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Here at the Wages of Wins our analysts’ opinions are highly valued. Our resident General Manager and expert Sports Economist David Berri has been answering questions about the lockout and beauty all over the web.