The Childress Revolution

Posted on July 23, 2008 by

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Josh Childress – the most productive player on the Atlanta Hawks in 2007-08 – is leaving the country. When I first heard this story I thought (and so did JC Bradbury): “What a great story for The Wages of Wins Journal.” 

But as someone noted (and I forget who), I have a job and a blog, not a job to blog.  So I was not able to drop everything today and get my take on this story 0n-line. 

In the meantime, two people at ESPN whose job it is to cover these events – John Hollinger and Henry Abbott – did comment on this story.  And their analysis was excellent.

Hollinger’s Focus on the Hawks

Hollinger’s post — Childress’ move to Greece hurts Hawks on many levels – reviewed how this move impacts the Hawks.

First and foremost, obviously, it deprives the Hawks of one of the best sixth men in the game, a guy who could make a huge impact without needing any plays run for him because of his ability to attack the glass, score in transition and play off the ball.

It also leaves them scrambling to fill out the roster, with most of the offseason’s top free agents already claimed by other teams. Atlanta has only eight players under contract at the moment, and two of them (oft-injured Speedy Claxton and oft-inactivated Solomon Jones) barely count. Even if the team can re-sign Josh Smith, the Hawks are still paper thin.

But the real damage here isn’t immediately visible. Nothing could do more to perpetuate the Hawks’ standing as one of the league’s worst-run organizations than to have a player they desperately wanted to keep bolt for another continent. The stink from that will linger long into the future — affecting other free agents’ decisions to join the Hawks and/or remain with them — until there comes a time when the organization can prove it has its act together.

Abbott Focuses on the NBA

The Hollinger column was less than 1,000 words.  Henry Abbott (of TrueHoop) wrote nearly twice that amount in a wonderful post — Say Goodbye to Josh Childress, Say Hello to Some NBA Soul-Searching – detailing the impact of this move on the NBA.

Abbott begins by noting – contrary to what many might think – that this move is ultimately good for the NBA.  Childress has demonstrated that a European team can offer a competitive contract to a legitimate NBA player.  This means the NBA now has competition.  And as Abbott observes (something economists have noted for a few centuries), competition is good. Specifically competition forces a firm to be efficient.

Of course this means that the NBA – which has not faced competition since the days of the ABA – is currently inefficient.   And how is it inefficient? Abbott offers three examples:

1. The NBA is not necessarily open to new ideas:

There is a vast “boys club” that manages many NBA teams. You know the names. Once you are in the club of people who make big NBA basketball decisions, you’re in whether you’re particularly good at your job or not. Meanwhile, there are all kinds of people who were born to do the work, but are locked out because they lack the basketball pedigree. (Sometimes a Jeff or Stan Van Gundy, Lawrence Frank, Ed Stefanski, etc. will buck the trend.) If, as an NBA owner, you’re competing strictly against other teams that select their leaders from the same small pool of candidates, then you’re probably not going to suffer too much from recycling the same coaches and GMs again and again. But if some teams are really casting a wide net and finding better coaches, better front office people, better trainers, better player development people, and better players from all over the world then that brings around a level of basketball that is just higher, and that is good for us fans. This Childress move is a step in that direction, as in some small way, a real deal NBA player signing in Greece tells us that NBA teams are, in fact, competing with Euroleague teams in ways we had not thought they ever would. (One of Childress’s agents, Lon Babby, said today that when the negotiations were unfolding, the Hawks organization “obviously never contemplated that we’d go outside the NBA.”) There have been lots of reasons for smart NBA people to learn from Europe, and vice-versa.

2. The NBA overemphasizes scoring:

The NBA has a deeply entrenched superstar system, built around those who score the most points. Despite what the League might tell you, the stars get the calls, the stars get the ball, and the stars get the marketing dollars. The stars can even get coaches fired. There are reasons for all of that. But the truth remains that, if it’s just about winning basketball games, that star system, and an obsession with points, can be a burden. (A lot of “stat geek” work is really the quest to isolate what, beyond obvious stuff like points, really matters to winning.) Childress made clear that in his conversations with Olympiakos, and with other people knowledgeable about European basketball, he learned that the system was different in Europe. “I assumed that I’d have to go average 20, 22 points a game here,” he explains. “But the Euroleague MVP most years averages like 12 points, five rebounds, and five assists. It’s an award that the guy who actually helps his team win the most wins. … My coaches here just want me to be versatile, and to play four positions, and to help the team win as many ways as I can.” Some of that mentality wouldn’t hurt the NBA any.

3. The NBA’s collective bargaining agreement restricts the free market

The NBA’s collective bargaining agreement includes a ton of complicated clauses. Each serves a purpose, and you can make a case that, all told, it’s a good and fairly fair system. But regulation is always burdensome, and this league, famously run by lawyers, is knee-deep in legalese. In this instance, those rules created a really weird deal. According to Josh Childress, there were championship-contending NBA teams that were willing to pay him more than the Hawks would. A sign-and-trade couldn’t be worked out, so Childress was stuck. But that makes a situation where here’s an employee, a place that wanted to employ him, and an agreed upon price. In normal human life, that’s all you need to make a deal. You can only tinker with the free market so much before it starts depressing normal economic activity. This is one of those cases. A rule (essentially, the salary cap) designed solely to keep NBA teams competitive with each other now ends up helping a whole different league. Will the NBA change the salary cap in some profound way to address that? (Lon) Babby (the agent for Childress), for his part, says that he would “never underestimate the capacity of the NBA to respond to market trends.”

Before I offer a few comments on what Abbott (and Hollinger) have said, let me repeat Abbott’s conclusion:

But now Josh Childress — an open-minded and intelligent Stanford guy — is sending out a piece of news that he has done his homework, he has checked out the scene in Europe, and he finds the situation to be … extremely nice. Nice enough that it’s worth comparing the apples of an NBA contract with the oranges of a Euroleague contract.

That’s a new way of thinking to Josh Childress’s contemporaries, who are some of the best players in the world. If he ends up reporting that life continues to be nice in Athens, well then that has to change how almost everyone in power in the NBA thinks about things. They have to think globally, and be the best at what they do not just out of thirty teams, but anywhere in the world.

The NBA has a HUGE head start in that effort. NBA teams are, currently, the best (although who would be shocked if teams like CSKA Moscow steal a game or two against NBA competition this coming preseason). NBA teams have deep pockets, a business model that drives profits to most teams, and a brand that continues to have tremendous value in the minds of nearly everyone.

But what the NBA does not have, anymore, is a free pass to supremacy. And if you’re a fan of good basketball, that’s a good thing.

Some of My Thoughts: Ending Monopsonistic Power?

Okay, that’s quite a bit to chew on.  After reading Hollinger and Abbott I realized that each had made most of the points I was going to originally offer when I first heard about this story.  Although what each said is quite insightful, I would build upon one observation Abbott made. 

The NBA’s collective bargaining agreement has rules that confer monopsonistic power to teams.  What does this mean?  A monopoly is a single seller of a good.  A monopsony is a single buyer.  When the population of buyers or sellers in a market is restricted, market power tends to get transferred to the smaller population. 

In the case of the NBA, Childress had trouble finding another buyer for his services in the NBA.  This is probably because other NBA teams figured the Hawks would match an offer for Childress, and hence it was not be worth the effort to open negotiations.  When offers are restricted, monopsonistic power develops and the buyer can make the purchase with less money.

And it’s important to note, that is the purpose of these rules.  The NBA limits the free market for a player’s services to transfer money from players to teams.  It’s not about competitive balance.

Of course all this will only work if you can maintain monopsonistic power.  What Childress has demonstrated is that European basketball teams – who are not part of the NBA’s collective bargaining agreement – are potential buyers of top basketball talent. 

With European teams entering the market, the NBA’s ability to exploit (i.e. pay workers less than the revenue the worker generates) professional basketball players is mitigated.  And this means the NBA is going to have to either

a. live with players like Childress emigrating to the Europe.

b. devise new rules so that NBA teams can pay wages that are closer to what the player is worth.

More Thoughts: The Value of Childress

Now if the NBA changed its rules, would Childress get what he’s worth?  Before I answer this question, let me post links to three columns I have written that describe the value of Childress:

The Underrated in 2007-08

So How Much did Atlanta Improve?

The Underrated Josh Childress

As these articles note, Childress does produce wins.  But he doesn’t produce points.  And as Abbott noted, the NBA does over-emphasize scoring in the evaluation of players.  Consequently, Childress is probably going to produce more revenue (from his wins) than he is paid by an NBA team.  And although he claims it’s different in Europe, I suspect (although I don’t know for sure) that European teams also over-value scorers.  In sum, as long as decision-makers in basketball – wherever they might be – overvalue scoring, players like Childress will not get paid what they are worth.

At least, that would be my guess about European decision-makers.  Let me close by noting that Childress is not the only NBA player moving to Europe.  Both Hollinger and Abbott observe that the following five players from the 2007-08 NBA season will not be in the Association in 2008-09.

Josh Childress: 2,274 minutes played, 9.8 Wins Produced, 0.206 WP48

Carlos Delfino: 1,928 minutes played, 6.6 Wins Produced, 0.165 WP48

Juan Carlos Navarro: 2,117 minutes played, 0.6 Wins Produced, 0.013 WP48

Bostjan Nachbar: 1,660 minutes played, -2.8 Wins Produced, -0.082 WP48

Primoz Brezec: 475 minutes played, 1.9 Wins Produced, -0.189 WP48

An average player post a WP48 [Wins Produced per 48 minutes] of 0.100.  Obviously Navarro, Nachbar, and Brezec were below average last year and hence are not really a loss to the NBA.  Childress and Delfino, though, were productive players.  It’s interesting to note that Delfino – like Childress – is a productive non-scorer.  So perhaps Europeans can teach the NBA something about evaluating professional basketball players.

– DJ

The WoW Journal Comments Policy

Our research on the NBA was summarized HERE.

The Technical Notes at wagesofwins.com provides substantially more information on the published research behind Wins Produced and Win Score

Wins Produced, Win Score, and PAWSmin are also discussed in the following posts:

Simple Models of Player Performance

Wins Produced vs. Win Score

What Wins Produced Says and What It Does Not Say

Introducing PAWSmin — and a Defense of Box Score Statistics

Finally, A Guide to Evaluating Models contains useful hints on how to interpret and evaluate statistical models.