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Posted by Kevin Arnovitz
Doug Pappas, a mainstay at both the Society of American Baseball Research, then Baseball Prospectus before his death in 2004, devised the "marginal dollar per marginal wins" metric, a system that measures how efficiently each of baseball's front offices spends on salary. Pappas' data underlie a lot of Michael Lewis' conclusions in Moneyball.
Kevin Pelton is an admirer of Pappas' work, and began to apply it to the NBA about five years ago. Unlike baseball, the NBA has a salary cap, which makes it a somewhat inefficient market. The existence of a max salary means that superstars are paid below their market value. Can you imagine what LeBron James' next contract might look like if there was a free bidding war for his services? Various other limitations and artifices [Bird rights, rookie scales] contribute to this inefficiency, but by and large, a pretty fair measurement of NBA teams can be made -- and Pelton has the numbers at Basketball Prospectus.
Which GM's are using their recession dollars efficiently this season?
Who would have guessed, when the Magic signed Rashard Lewis to a lucrative deal and extended Jameer Nelson's contract, that a season later they would be the most economically efficient team in the NBA? Yet with the pieces fitting together perfectly and Orlando getting production from bargain youngsters like Courtney Lee and Marcin Gortat, GM Otis Smith has put together a championship contender for a payroll that comes in right around average. The other three elite teams in the league are all well into luxury-tax territory, though the Lakers and Boston have still spent their money very effectively, all things considered.
Few teams manage their cap better than the Jazz does, although that position may be tested when Paul Millsap hits the free-agent market this summer and Carlos Boozer has the option of joining him. San Antonio has also done a great job of winning championships without breaking the bank. Having Tim Duncan, Manu Ginobili and Tony Parker all on reasonable contracts has helped that process.
Pelton points out that the system isn't a perfect one. For instance...
[T]he Oklahoma City Thunder, for example, have a payroll around $68 million this season. GM Sam Presti has maneuvered the Thunder in position to be under the cap starting this summer, but because the contracts of players like Malik Rose, Donyell Marshall and Joe Smith are still on the books (the latter two players having been bought out), Oklahoma City technically has an average payroll.
The most efficient teams in recent memory are the 2007 Charlotte Bobcats [only $79,909 per marginal win], and the 2006 New Orleans Hornets [$148,308 per marginal win]. To iron out some of those previously-mentioned inefficiencies, Pelton combines the last four season to come up with a moving average, of sorts. The top of the heap:
Charlotte $ 313,755
New Orleans $ 426,128
Atlanta $ 520,246
Detroit $ 525,177
San Antonio $ 542,044
More interesting Pelton conclusions:
The surprise here is that Minnesota snuck in as the second-worst spenders of the last four years, ahead of only the Knicks. They've been bad without ever being able to cut their payroll a la Memphis or Atlanta. Something similar is true of Milwaukee, while Philadelphia has had above-average payrolls without above-average results before this season.