Michele Steele – the Sports Business reporter at Bloomberg Television – e-mailed on Monday with the following question: Who are the least efficiently run teams in basketball (i.e. the teams who spend the most wastefully above the luxury tax threshold)?
The answer to this question was reported by Michele this morning on Bloomberg TV.
And here are some details behind my analysis.
My answer began with 2010-11 payroll data from HoopsHype.com (this data – I believe – reflects the trades from this past weekend). This data was adjusted for the luxury tax (which was set at $70.307 million for this season). I then took each team’s efficiency differential (offensive efficiency minus defensive efficiency) to project each team’s final won-loss record for the 2010-11 season (numbers were as of games completed on Sunday). With data on payroll and final projected records in hand, I then determined how much money each team is projected to spend on each regular season win in 2010-11.
Here are some observations on this data:
- Although the initial question focused on the least efficient, the team that Michele focused upon in her report was the Miami Heat. This past summer the Heat committed millions to acquire LeBron James and Chris Bosh. Yet, despite this expenditure, the Miami Heat is currently the most efficient teams.
- This is a combination of a surprisingly low payroll and nearly 68 projected wins. This also reflects the fact that very productive stars – like LeBron James and Dwyane Wade – are really bargains. The NBA limits how much money a team can pay a player. For example, LeBron will be paid $14.5 million this year and is on pace to produce 18.3 wins. So LeBron’s cost per win is less than $1 million (below the league average). A similar story can be told about Dwyane Wade. He will be paid $14 million and is projected to produce 18.7 wins. So again, Wade’s cost per win is less than $1 million.
- If we project wins from current won-loss records, then the San Antonio Spurs – with a cost per win of $0.931 million –lead the NBA. Using current won-loss records also raises the cost of Miami’s wins to $1.139 million, a mark that would rank the Heat 4th in the league (behind Oklahoma City and Chicago).
- The Knicks – who have been wasting money for years — are not over the luxury tax threshold this year. And currently the Knicks are ranked fifth in cost per win (using efficiency differential to project wins). Part of this is due to the amazing Landry Fields (a very productive and cheap second-round draft pick).
- There are only seven teams that are supposed to be paying the tax according to HoopsHype. These include the LA Lakers, Orlando Magic, Dallas Mavericks, Boston Celtics, Denver Nuggets, Utah Jazz, and Houston Rockets. When we consider how much money teams spend per win in the NBA this season (about $1.71 million when we consider the luxury tax) and how many wins these teams are projected to get (given the team’s current efficiency numbers), the Magic are currently the least efficient luxury tax team. Right now the Magic are projected to spend about $2.1 million per win (the salary numbers are after the trades this weekend, the on-court numbers though are somewhat inflated since the recent trades probably left them worse off).
- Following the Magic on the list of inefficient luxury tax teams are the Nuggets, Mavericks, Rockets, and Lakers. The Jazz and Celtics — despite paying the luxury tax — are actually projected to get more wins per dollar spent than the league average.
- If we consider all teams, the least efficient (in terms of cost per win) are the Washington Wizards, Cleveland Cavaliers, Detroit Pistons, Golden State Warriors, and Charlotte Bobcats.
To add some perspective to this story, here is the same analysis for the 2009-10 season (payroll data taken from the website of Patricia Bender; the luxury tax threshold last year was $69.92 million).
And here are three observations regarding the analysis of the 2009-10 season:
- Last year the Knicks were one of the least efficient teams. Per projected wins (quick note: I am using projected wins because I am repeating the same analysis I did for this season) the Knicks spent $3.3 million. Of all the teams that surpassed the luxury tax threshold, the Knicks were the least efficient.
- As inefficient as the Knicks were last year, the Nets and T-Wolves were even less efficient. Washington — the least efficient team this year — ranked 27th in efficiency in 2009-10.
- The Trail Blazers were the most efficient last year, but not as efficient as the Heat are projected to be in 2010-11.
Let me close by thanking Michele for sending along the question. I certainly didn’t think Miami was the most cost effective team when I started looking into this yesterday afternoon. However, as noted, given how salaries are determined in the NBA this result isn’t that surprising.
– DJ
Wages of Wins Journal 
Kent
December 21, 2010
Dude what was your answer to the question? which team is the most inefficient spending this year?
dberri
December 21, 2010
The Wizards. It’s mentioned twice in the post and in the table. The Heat story, though, was more interesting. Apparently people aren’t quite as interested in the Wizards :)
dberri
December 21, 2010
And the Orlando Magic are the least efficient luxury tax team (as noted in the post as well).
Kent
December 21, 2010
Thanks very much. Good post.
nerdnumbers
December 21, 2010
Dr. Berri,
Awesome news story. So I see we’re upping our scope for insulting the Wizards :) Although Arturo mentioned on the podcast last night that the Wizards were one of the few teams Lewis was an “upgrade” for at the PF.
Also do you know if the next part aired and if there’s a link? Congratulations on the great plug.
dberri
December 21, 2010
I think they broadcast the same story again later in the morning.
And it does appear that the Wages of Wins Journal is insulting the Wizards again. Oh well. :)
Michael
December 21, 2010
What a turnaround for the Knicks!
Italian Stallion
December 21, 2010
>>What a turnaround for the Knicks!<<<
Wait until Eddy Curry's total waste of 11.5 million comes off the books and they can replace him with a productive player or two.
Leroy Smith
December 21, 2010
I’m wondering if all of the NBA “experts” on TV would still be dumping their Heat stocks today if Miami only missed 5 free throws instead of 8 against the Mavs last night.
Italian Stallion
December 22, 2010
OK, someone please talk me off the ledge before I do something crazy!
I was just listening to sports talk radio here in NY and they were talking about the various possible suitors for Melo. Obviously the Knicks came up. Chris Mullin hinted that he would give up Gallo, Chandler, Fields, trade Anthony Randolph’s contract for a #1 pick and throw in Eddy Curry’s expiring contract to get Melo.
IMO that eliminates Chris Mullin from any job in NBA other then hot dog vendor in second tier city, but the host was not arguing with that conclusion. I can also tell you from reading all the non stats based Knicks blogs that most fans and media types are on board with giving up anything and everything except Amare and Felton.
I’m far from a Melo hater and probably have a higher opinion of him than almost all advanced stats advocates, but the NY fans and media are mind boggling in their stupidity. One has to wonder how people like this even make it through life.
nerdnumbers
December 22, 2010
Italian,
Here you go. The Knicks plan B is apparently Iguodala or Varejo. So if the Knicks hold firm and keep Fields and Gallo and the Nets get Melo then you guys could have a line up of:
Felton, Fields, Gallinari, Varejo, Stoudemire. You guys get a bench (or Randolph comes back) and you guys go from bad (the last decade) to good to great in no time flat. Personally I hope you take Melo and Harrington for all of the stuff listed above :)
uber_snotling
December 22, 2010
Interesting analysis. Can you explain why you show the values using projected wins here rather than using the current standings, which you mention you generated? I’m leery of using projections when the real win-loss records for a decent sized sample of games are available.
Adam C. Morrison
December 22, 2010
What if they trade just one of Fields or Gallo? Then how do you feel?
reservoirgod
December 22, 2010
Miami Heat – saving the NBA in its darkest hour. Giving players & teams a model for cost-effective winning while increasing fan interest, publicity, ticket sales & TV ratings to give the league a stronger barganing position for broadcasting rights when the current contracts expire. The CBA negotiations should go like this…
NBA (to NBPA): You all need to agree to be more like the Heat players.
NBPA (to NBA): You all need to agree to be more like the Heat owners & management.
NBA & NBPA: Agreed. Done.
David Stern: Now let’s take our talents to the King of Diamonds!
Italian Stallion
December 22, 2010
Adam,
My feeling is that Chandler will probably be used in a trade anyway because he’s going to be expensive to resign next year and the Knicks are going to want to retain flexibility. Even though I like him because he’s improving, versatile, and a good two player, he’s a bit redundant on a team with Fields and Gallo.
So Curry’s contract + Chandler to improve the team is fine by me.
That won’t even be close to enough to get a Melo deal done.
I might be tempted to add Gallo to that (though it would break my heart), but that’s as far as I would go. IMO, Fields is going to be the best of the 3 players. IMO he is untouchable unless something exceptional comes along.
I also don’t want to include AR because I still think he has a lot of upside. Plus, if they add another young piece, the bench will be in even worse shape and they’ll have few assets or picks to rebuild it.
Adam C. Morrison
December 22, 2010
Do you agree (with general sentiment, I mean) that ‘Melo, when push comes to shove, will demand an extension (and therefore a trade) over signing w/ the Knicks in the off-season?
Do you think Curry’s contract, Chandler + 1st rounder is enough to get it done?
Hmm. Chandler over Favors? Does the Nets’ trade still include Favors? Would it need to if that was the best the Knicks offered?
Italian Stallion
December 22, 2010
>>Do you agree (with general sentiment, I mean) that ‘Melo, when push comes to shove, will demand an extension (and therefore a trade) over signing w/ the Knicks in the off-season?<Do you think Curry’s contract, Chandler + 1st rounder is enough to get it done?>Hmm. Chandler over Favors? Does the Nets’ trade still include Favors? Would it need to if that was the best the Knicks offered?<<
I think the Nets are still including Favors and adding in two #1 picks and cap relief (maybe even more). The Knicks can't compete with the Nets offer. But does Melo want to play and extend with a gutted out Net team? I don't think so. If he won't sign an extension the deal is a non starter.
Don't know if you saw the OKC game tonight, but the Knicks are looking more and more like they are for real. Good and improving team.
Italian Stallion
December 22, 2010
“Do you agree (with general sentiment, I mean) that ‘Melo, when push comes to shove, will demand an extension (and therefore a trade) over signing w/ the Knicks in the off-season?”
I’m sure he wants his cake and to eat it. I can’t look into his soul and know where his values are. If he wants the money most then I think he’ll stay with Denver or extend with someone else. If he wants to win and come to NY, then he should look at what the big 3 did in Miami. Adding Melo to the Knicks without any asset losses would be huge because it would open up a whole new round of trade possibilities to improve weaknesses and make the team a major player.
“Do you think Curry’s contract, Chandler + 1st rounder is enough to get it done?”
Probably not, but getting the first rounder is an issue because the Knicks traded away one 1st round pick in the Houston deal last year and I think that prevents them from trading some other picks. There was talk of trading AR for a 1st round pick, but then you are weakening the team further and I don’t like that. I’m the last Mohican in NY. I still think AR will be good. lol
“Hmm. Chandler over Favors? Does the Nets’ trade still include Favors? Would it need to if that was the best the Knicks offered?”
I think the Nets are still including Favors and adding in two #1 picks and cap relief (maybe even more). The Knicks can’t compete with the Nets offer. But does Melo want to play and extend with a gutted out Net team? I don’t think so. If he won’t sign an extension the deal is a non starter.
Don’t know if you saw the OKC game tonight, but the Knicks are looking more and more like they are for real. Good and improving team.
Philip
December 22, 2010
IS,
I can see being concerned with being able to re-sign Chandler, but how does having having Fields and Gallo make him redundant? They all play 30+ minutes a game for starters, so it’s not like the Knicks are overloaded with wing players and don’t have enough minutes to spread around, like the Blazers did last year (when they were healthy, for about 4 games) or the Suns did this year (until the trade). From what I’ve seen, they’re pretty flexible position-wise; Chandler is a 3/4, Gallo is a 3/4 and 5 in a pinch, and Fields is a 2/3.
bigleagues
December 22, 2010
I’m a pretty rational guy who has really come to appreciate advanced metrics in pro sports. However, I’m at a loss with your Team Efficiency table.
1) How do you factor “Projected Wins”?
2) Why wouldn’t you simply employ a straight projection based on Won/Lost now that most teams have passed the 1/3 mark of the season? In that scenario, the Heat would be on pace for a more realistic 59 Wins (38-15 from Dec 19th on) and a $1.107 CPW.
3) Why should anyone place any significance on a table of calculations when one of the main components of the formula is based on win assumptions that appear purely fictitious? (You explain everything except the methodology behind your win assumptions).
Kent
December 23, 2010
How about a post on whether Larry Brown was the problem with the Charlotte Bobcats coach? They did get rid of Felton before the season, maybe the fault of the GM.
arturogalletti
December 23, 2010
bigleagues,
There’s a well understood correlation between Point Margin and wins. Efficiency differential is point margin adjusted by schedule and it’s very predictive (more so than wins to date). The equation used is:
+1 Points = 2.57 wins over .500 (43.57 wins)
+10 Points = 25.7 wins over .500 (66.7 wins)
Italian Stallion
December 23, 2010
Philip,
“I can see being concerned with being able to re-sign Chandler, but how does having having Fields and Gallo make him redundant? ”
Redundant was probably a poor choice of words.
If they trade him, I’m assuming either another SF (Melo?) or a big man will be brought in. If it’s Melo, then it’s a swap. If it’s a big man then Amare moves to the PF full time and Fields and Gallo handle the wings.
By the way, if they move Chandler it will be a sad day for me.
I’ve probably been his most vocal supporter on a number of Knicks blogs. In fact, my undying love and defense of him was a contributing factor to getting barred from one blog where he was quite unpopular when he was more prone to poor decision making and poor shooting. :-)
Now that he’s developing his shot, making fewer mistakes, and becoming the versatile two way player I foresaw a couple of year ago I’d hate to see him go.
stephanieg
December 23, 2010
Arturo says: “Efficiency differential is point margin adjusted by schedule…”
I’m confused. Efficiency differential is ORtg – DRtg.
Kent
December 23, 2010
Happy Holidays and thank you Mr Berry for another year of a good blog.
todd2
December 24, 2010
The Knicks need someone to defend the post. A light, 34yo Kevin Garnett had no trouble posting them up. They also need to upgrade their perimeter defense (Azubuike may help). Does Carmelo fill a need or are they simply chasing a star?