Sunday, 24 January 2010

2010 Reload or Rebuild - NBA Edition

As mentioned before I have started to follow the NBA. The ability to reshape a team, almost overnight, is pretty interesting stuff.

However, I also follow it, in part, because I believe that the NBA's management know-how, when it comes to Cap managing a team at least, is far ahead of that of most NHL general managers. There are lessons there to be learned.

What Matters in the NBA

What matters are these four things (in order):

1. Acquiring superior talent;
2. Having money and spending it wisely;
3. Well rounded roster; and
4. Coaching well-matched to the talent

Not much different from any sport really (shoulda known!).

The Salary Cap and Luxury Tax issues only matter on the way to, and at the close of, the accomplishment of those four things.

One area where the two sports differ, markedly, is the extent to which the possession of superior talent affects the record of a team. Because the NBA game is only 48 minutes long and most starters play 30+ mins a night a top-tier player will affect as much as (and sometimes more) two-thirds of a teams 'game'.

In the NHL, other than the goalie (who plays the entire game), only a handful of players will log more than 25 minutes a game over the course of a season. Given an NHL game is 60 minutes long the math says that no matter how good a player like Ovechkin is he will put less time in on the ice than a Kobe or Lebron.

Which means that in the NBA there are few things more important than acquiring superior talent. #1 with a bullet.

Now We Talk Money

Much like in the NHL superior talent will only show up in one of three ways:

1. Top-end draft picks
2. Lucky draft picks
3. Smart, aggressive management with money

As the first two options are pretty standard I will spare a few more moments to discuss the last - smart, aggressive management WITH money.

The NBA Salary Cap sits around $57.3 million while the Luxury Tax kicks in (dollar for dollar) at roughly $69.9 million. The Luxury Tax threshold comes with an extra kick however - teams under the Tax get as much as $4.5 million as part of a share of the taxes paid by those over the Tax.

i.e. Salaries totalling $69.9 million have an effective cost of $65.4 million while Salaries totalling $70 million have an effective cost of $70.1 million.

That last $100k is a killer.

However. The correlation between paying the Tax and being a play-off bound team is pretty strong (I use hoopshype). Check the link.

Excepting the Knicks and the Wizards almost all the teams listed (15 in all) as paying the Tax are either IN the play-offs or probable for it.

Excepting the Raptors, Bobcats, Hawks, Blazers and Grizzlies most teams listed (15 in all) as not paying the Tax are out of the play-offs.

To be fair, that Western Conference is nuts.


Go back to what I said about smart, aggressive management with money.

Sooner or later one of the teams that doesn't like to, or cannot, pay the Tax will HAVE to dump a good player. And that is where a team WITH money can come in and get said player.

That isn't always easy however. The NBA has a trade kicker (actually, there are several) wherein salaries have to, more or less, match up. So the trick is being able to match up.

Much easier to do that if you are already spending more than you need to. The key is having expiring contracts available.

Expiring contracts - contracts that end in the current year - can have a lot of value in the NBA. Houston, a team that is paying Tracy McGrady $23 million NOT to play may be able to improve their team by trading him to Philadelphia or Chicago - teams that want to dump NEXT year's salary.

Want to build a winner in the NBA - spend the cash.

Reload or Rebuild?

Okay, granted, while the margin for error is much higher in the NHL (larger rosters, well paid middle class and no skater plays 60%+ of the available ice-time), the NHL isn't all that different from the NBA.

Next post will be the final one of this series.


Have a great evening everyone.


Scott Reynolds said...

This is a bit of a silly question but is there any actual cap on salaries in the NBA or can teams spend as much as they want so long as they're willing to pay the price? I don't really understand that 57.3M cap number. Some teams are spending less than that so it can't be a salary floor. What is it?

YKOil said...

The Cap is basically just a marker - pass that marker and you can't sign free-agents except by use of two exceptions:

-- mid-level (5.9 million)
-- bi-annual (1.9 million)

Have a salary budget below the Cap and you can sign free agents - except you have to watch out for cap-holds from your own free agents and draft picks.

Many teams may be below the Cap yet are too close for it to make a difference for free agent spending, in which case they just use the exceptions.


1. Next year the Cap is expected to be between $53 and $54 million.

2. Using the $54 million would see the Grizzlies, with $47.2 in committed salary, have $6.8 million in Cap space - which is better than using the exceptions (as they can't be combined)

3. HOWEVER that $47.2 is used on all of 11 roster spots. The CBA requires a roster size of approx 14 (it is more complicated than that but lets go with 14)

4. the extra 3 spots require a cap-hold of some $500k each...

5. which means the Grizzlies really only have some $5.3 million in cap space

6. and so they might be better off using the exceptions after all

Scott Reynolds said...

Thanks for the explanation. That makes some sense. I assume that players signed to extensions for their current club don't count as "free agents," so Lebron James, for example, could make more with Cleveland than he could anybody else. Correct? The trade rules seem pretty goofy to me. What are they supposed to prevent?

YKOil said...

Obstensibly I believe they are supposed to prevent teams from circumventing the Cap (salaries have to be close to matching) and help prevent competitive imbalance (meaning you can't just dump players and you have to try to match up equal values - as judged by pay anyways).

In reality they don't seem to mean much.

Large budget teams just spend the cash anyways and the good ones know full-well eventually they will get what they want.