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April 7, 2010
Winning at the Margins
Spending in the NBA

by Kevin Pelton


On Monday, I spotlighted the Oklahoma City Thunder reaching the playoffs with the NBA's youngest rotation. The Thunder's youth, however, is not the only thing unusual about the team's surprising season. Oklahoma City also boasts the league's lowest payroll, coming in slightly below the NBA's $57.7 million salary cap. While team salary is hardy a perfect predictor of team performance in the NBA, the Thunder has won the most games of any team under the cap since the 2001-02 Detroit Pistons went 50-32 and won the Central Division.

Naturally, Oklahoma City tops this year's list of leaders in terms of fewest marginal dollars spent for each marginal win. The statistic, derived from the one pioneered at Baseball Prospectus for the MLB by the late Doug Pappas, measures how much teams are spending above the NBA's salary floor (75 percent of the cap) for each win above what a replacement-level team could muster.

The latter number, 10 wins over the course of a full season, looms large this season because the New Jersey Nets (in large part because of bad luck, as my colleague Bradford Doolittle explained last week) have barely surpassed it. As a result, the Nets sit at the opposite end of the marginal dollar/marginal win spectrum and have the worst mark since I began tracking payroll efficiency early this decade.

This year's complete list, using payroll data from ShamSports.com:

Team             Win%     Payroll       M$/MW
Oklahoma City    .623   $55,160,121   $  289,274
Portland         .610   $57,993,422   $  367,777
Memphis          .506   $57,644,298   $  456,284
Atlanta          .636   $65,059,897   $  516,818
Utah             .654   $71,913,766   $  656,431
Milwaukee        .558   $68,332,456   $  700,790
Phoenix          .649   $74,929,189   $  732,431
Denver           .649   $75,303,687   $  741,096
Charlotte        .532   $68,405,616   $  747,401
Cleveland        .782   $84,720,835   $  765,757

Team             Win%     Payroll       M$/MW
Toronto          .494   $67,748,238   $  802,191
Orlando          .701   $82,087,014   $  817,405
Houston          .506   $69,047,876   $  818,394
Miami            .558   $72,752,050   $  824,395
Chicago          .481   $67,665,634   $  828,430
L.A. Clippers    .351   $59,159,990   $  845,756
San Antonio      .623   $78,773,781   $  864,012
New Orleans      .449   $69,566,598   $  980,371
Detroit          .312   $58,597,137   $  983,197
Boston           .623   $83,875,420   $  988,181

Team             Win%     Payroll       M$/MW
L.A. Lakers      .714   $91,341,066   $  990,073
Dallas           .649   $87,707,016   $1,028,091
Indiana          .377   $66,914,689   $1,130,328
Sacramento       .308   $60,651,909   $1,139,021
Philadelphia     .338   $64,474,649   $1,196,639
Washington       .312   $68,192,430   $1,598,911
Golden State     .299   $66,490,911   $1,599,112
New York         .364   $84,564,917   $2,080,306
Minnesota        .195   $62,653,235   $3,235,098
New Jersey       .143   $61,039,789  $10,292,462

Let's take a look at the five best and worst teams by this measure.

1. Oklahoma City ($289,274 M$/MW)
Over the last five years, just two teams have been more efficient with their money than this year's Thunder squad (the 2006-07 Charlotte Bobcats and 2005-06 New Orleans Hornets). Neither of those teams made the playoffs, however. Oklahoma City's payroll looks even better when you consider the team is getting officially charged for Matt Harpring's entire contract after taking on Harpring midseason to pick up rookie Eric Maynor. The Thunder actually paid only about $1.7 million of Harpring's salary, with insurance picking up the rest.

2. Portland ($367,777 M$/MW)
This figures to be a short-lived appearance at the top of the financial leaderboard for the Blazers, who were waiting for Raef LaFrentz's contract to expire and Steve Francis' salary to come off the books a year ago. Next season, Portland's payroll will go up considerably when extensions for LaMarcus Aldridge and Brandon Roy kick in. Still, to see the Blazers considered a model of fiscal responsibility for any period of time would have been unimaginable at the start of this decade. Portland used to pay nearly as much in luxury tax as its entire payroll now. Credit Kevin Pritchard with getting the books in order and doing so without sacrificing wins.

3. Memphis ($456,284 M$/MW)
Last summer, Michael Heisley claimed to have found a money-making formula by being conservative with the team's spending. This season, the Grizzlies added success on the court to that, threatening for a playoff berth in the West with the league's second-smallest payroll. Now, Memphis will face a tough decision on whether to match offers to restricted free agent Rudy Gay, the most likely RFA to be overpaid in my view.

4. Atlanta ($516,818 M$/MW)
When I looked at combined marginal dollars per marginal win from 2005-06 through 2008-09, the Hawks ranked third, and they continue to succeed with a relatively modest payroll this season. Atlanta doesn't have any particularly bad contracts, but has probably benefited from the fact that the team's lack of depth in spots 9-12 on the roster hasn't been exposed by injuries.

5. Utah ($656,431 M$/MW)
Say what you will about the Jazz's decisions to sell off Maynor and Ronnie Brewer during the season, but it's hard to imagine Utah playing any better than it has over the second half of the schedule. Meanwhile, those moves have maneuvered the Jazz within shouting distance of the luxury tax. No legit contender has a smaller payroll. Utah was able to survive the losses of Maynor and Brewer in large part because the front office locked up Ronnie Price and Wesley Matthews as cheaper replacements.

At the other end of the spectrum ...

30. New Jersey ($10,292,462 M$/MW)
One of the reasons we look at marginal dollars and marginal wins is to emphasize just how poorly money is spent in the case of a team like the Nets, who have been nearly twice as inefficient as the next highest M$/MW total in recent memory (the 2005-06 Knicks). At the same time, the Nets are poised to leap up these charts next year when $35 million worth in salaries expire. That's the odd thing about applying this logic to the NBA financial system--payrolls can change virtually overnight. Given the emphasis New Jersey has placed on the summer of 2010, it would be a reach to say Rod Thorn and Kiki Vandeweghe have really mismanaged things. And, of course, no one is more optimistic about the Nets' future than I am.

29. Minnesota ($3,235,098 M$/MW)
The Timberwolves are lucky we use wins and losses to measure team performance and not point differential. New Jersey's differential is now marginally better than Minnesota's despite the fact that the Timberwolves have four more wins. Also, while the Nets have a clear plan to get better, Minnesota's future remains murky after a lost season where the personnel David Kahn brought in did not evidently match Kurt Rambis' coaching philosophy.

28. New York ($2,080,306 M$/MW)
Even if the Knicks strike out badly in free agency this summer, I confidently predict they will get out of the bottom five in this measure for the first time since ... well, I'm sure it's happened at some point, but it was before I first calculated marginal dollars per marginal win for the 2002-03 season.

27. Golden State (1,599,112 M$/MW)
The Warriors might have the league's most screwed-up salary structure. They've gotten good production from D-League call-ups Chris Hunter, Anthony Tolliver and Reggie Williams, who have combined for 3.1 WARP while making barely a million dollars. Meanwhile, Andris Biedrins, Vladimir Radmanovic and Raja Bell have been paid more than $20 million to combine for 0.3 WARP. Corey Maggette is probably the only player on a veteran contract whose salary makes sense.

26. Washington ($1,598,911 M$/MW)
When you start the season with a payroll well over the luxury tax and end it with fewer than 30 wins, it's safe to say you have not maximized your money. The Wizards did manage to avoid paying the tax thanks to Gilbert Arenas' suspension and their pre-deadline moves, and fortunately they have cleared most of their worst contracts away, but this is something of a scorched-earth rebuilding process.

The Contenders
Last year, Orlando, San Antonio, the L.A. Lakers and Boston all ranked in the league's top 10 in marginal dollars per marginal win. The arms race has made things more costly for several of these teams, with the Lakers and Magic going deep into luxury-tax territory. If either team wins a championship, that payroll will pay for itself, but there are going to be questions asked if they fall short.

Follow Kevin on Twitter at @kpelton.

Kevin Pelton is an author of Basketball Prospectus. You can contact Kevin by clicking here or click here to see Kevin's other articles.

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Prospectus Roundtable (04/07)
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