An immodest proposal to ameliorate the NBA’s competitive-balance issues—and end tanking—by removing the cap on individual player salaries.
If you want to understand the modern NBA, this is a good place to start: The league doesn’t have a tanking problem. It has a competitive-balance problem.
Entering each season, only a handful of the Association’s 30 teams have any realistic hope of hoisting the Larry O’Brien Trophy in June. This feels true intuitively and appears so empirically. Since the Philadelphia 76ers won the 1983 NBA Finals, only eight franchises have claimed the 30 titles awarded in the interim.
By comparison, eight different NFL teams have won the Super Bowl in the past 10 years. Major League Baseball has to look back only 12 seasons to find its last eight champions.
Economists have developed the Noll-Scully metric for articulating this very thing: the level of competitive balance within sports leagues. By this measure, the NBA comes out as the least balanced of the four major North American sports, well behind the NFL, NHL and MLB. And it’s not even close.
“The NBA, with the highest year-to-year consistency, shows the lowest parity,” Michael Lopez, a PhD candidate in biostatistics at Brown University, wrote on the Sloan Sports and Analytics Conference’s blog after performing an analysis similar to Noll-Scully.
“Moreover,” he added, “NBA teams’ performances from one year to the next appear to be growing more consistent in recent seasons.”
A source of this calcifying imbalance—i.e. the reason your team has no chance of winning, ever—is the NBA’s salary structure. The league places a limit on what individual players can make, and for superstars this cap is well below the value of their on-court production.
Consider: LeBron James was paid $17.5 million last season, but, according to Wages of Wins author and Freakonomics contributor Dave Berri, during that time he produced $32.5 million worth of victories for the Miami Heat.
Not a bad deal for Miami, right? Exactly. And the latter figure actually understates LeBron’s value, as it doesn’t incorporate playoff contributions, the higher marginal return of a win for contending teams, publicity and other factors.
Writing for Bleacher Report last year, Jared Wade considered a few of these components and made a more holistic judgment of James’ value. He estimated LeBron is worth about $65.7 million—nearly four times what he was paid by the Heat last season.
This is a problem because there are obviously only so many LeBrons in the NBA—and so a lucky handful of teams get to reap the extraordinary benefit of playing and underpaying them. The unfortunate majority of the Association is left to play the clumsy foil, the backdrop against which these fortuitous few compete for championships.
And here’s the thing: Players, especially superstar players, want to compete for championships. In their world, that is currency. Respect, historical standing, greatness. This is an honorable impulse, but given the league’s salary structure, it creates a feedback loop that exacerbates the imbalance. If there’s no meaningful difference between what the Milwaukee Bucks can pay you and what the Heat can offer, why not join LeBron in Miami and chase titles?
“Think about college basketball,” Berri wrote in an email. “The NCAA prevents teams from paying more than the cost of a scholarship. This means that athletes have to consider something besides salary in choosing a school. Often—as the Kentucky recruiting classes seem to illustrate—that ‘something’ is whether or not a team will win.
“The same seems to be true in the NBA. The maximum salary prevents teams from bidding more for the services of players like LeBron James. That leads him to consider something else. And that ‘something else’ seems to be the identity of his teammates. This is why the Heat were able to sign LeBron and Dwyane Wade to the same team.”
All of which puts the NBA’s also-rans in an impossible Catch-22: The only way to win is to have superstars you can underpay, and the only way to get superstars you can underpay is to win.
To square this circle, a few organizations have turned to tanking, purposely constructing teams that will lose in the hope of improving their lottery standing and landing a difference-maker in the draft. In doing so, they’re trying to create a winner out of thin air.
There is some disagreement over whether tanking actually works as a team-building strategy—Berri is among the skeptics—but what’s abundantly clear is that it is a scheme many organizations resort to.
Of course, the fact that many of these tankers have title chances that are effectively rounding errors softens the sting of the mounting losses. Their options are grim: perpetual purgatory, the treadmill of mediocrity or tearing things down in the interest of building a winner. The smarter organizations are increasingly choosing the latter.
A handful of proposals have been floated to rectify this situation, to disincentivize deliberate losing, most recently “The Wheel,” the brainchild of Boston Celtics assistant general manager Mike Zarren. Grantland’s Zach Lowe detailed the idea in December:
Each team would simply cycle through the 30 draft slots, year by year, in a predetermined order designed so that teams pick in different areas of the draft each year. Teams would know with 100 percent certainty in which draft slots they would pick every year, up to 30 years out from the start of every 30-year cycle. The practice of protecting picks would disappear; there would never be a Harrison Barnes–Golden State situation again, and it wouldn’t require a law degree to track ownership of every traded pick league-wide.
This would be an improvement over the current lottery system—teams would no longer throw entire seasons on purpose—but it’s flawed. Rather than encourage a fairer, more meritocratic NBA, it merely establishes an arbitrary award system. It addresses a symptom of the problem, tanking, while ignoring its root cause, competitive imbalance.
Why not go to the source?
Pay the Man
Imagine an NBA without a strict limit on the salaries of individual players, but with the team cap intact. Teams can pay players whatever they want, but they only have so much to spend. Suddenly, the Heat—or the Chicago Bulls, the New Orleans Pelicans or Your Favorite Team—can have LeBron James, but there’s a catch: They have to pay him what he’s worth.
With, say, $50 million of a $60 million payroll going to LeBron, there isn’t enough money left over to add another superstar, which would have the effect of encouraging those other superstars to find different homes around the league. Immediately, or rather as soon as such a plan could be implemented, the gap between the Association’s haves and have-nots would shrink. The superteam would be dead.
The players, even those for whom winning is the whole purpose of sport, would likely respond to this. Sure, LeBron, Dwyane Wade and Chris Bosh are willing to take lesser salaries to join forces in Miami now—when the cost to each of them is a few million over the lives of their contracts—but would James make the same bargain if the difference was between making $20 million in South Beach and $55 million in Detroit?
(Well, fine, maybe if it was Detroit.)
He wouldn't. James himself conceded as much on March 28 when he told ESPN's Brian Windhorst in the aftermath of the Detroit Tigers' Miguel Cabrera's 10-year, $292 million extension that he would jump at the chance to tear up his contract and ink that kind of deal.
"I would do it this summer for sure," James said. "I'd opt out for that."
This new distribution of the league’s talent would have a secondary effect as well: It would lead to a more innovative sport. Rather than bland juggernauts like the 2010-11 Heat running roughshod over the rest of the NBA—bludgeoning teams with the blunt force of their superior talent—franchises would have to get creative. Really creative.
Say Chris Paul’s next team is willing to pay him $40 million a season then fill out the rest of the roster on the cheap. Wouldn’t it be fascinating to see a team that’s built, elementally, around Paul’s unique strengths and weaknesses? What sort of personnel and coaching decisions would such an arrangement necessitate?
The new scarcity would give rise to a flowering of different styles of play. Necessity birthing invention.
As fans, we’d get to witness basketball played in all of its possible permutations, at the highest possible level. It would be great theater and a welcome antidote to concerns about creeping stylistic homogeneity—driven in large part by the forming consensus that playing fast and shooting a ton of threes is, mathematically, the only way to go—that are cropping up in some corners.
While radical, the idea has drawn support around the league. In an October interview on The Dan LeBatard Show, Stan Van Gundy—hardly a progressive—brought it up (h/t Henry Abbott of ESPN):
I’ve argued for a long time here ... that I think that one of the things that is absolutely killing parity is the individual maximum salary ... so you’re limiting LeBron James in what he can make ... that is the only reason that the Heat can have he, Bosh and Wade together ... if you still had the same luxury tax, the same salary cap set-up, but within that every individual can earn whatever they get in the market, there’s no way you could put three stars together.
Now, such a solution wouldn’t be a panacea.
For starters, it’s not obvious that jettisoning the individual max would eliminate the gap between the NBA’s rich and poor, or even the parity gap between the Association and other sports leagues. Berri, for his part, maintains that most of the competitive imbalance in pro basketball stems from a “short supply of tall people”—the fact that there just aren’t enough really tall, athletic, coordinated men on the planet to keep 30 franchises evenly stocked with them.
The discarding of the individual max could also, without corresponding adjustments, actually further incentivize losing. In a league where top players make $40-50 million, the lure of a top college talent on a cheap salary could be even more seductive to would-be tankers.
Coupling the elimination of the individual max with something like “The Wheel,” a non-weighted lottery (i.e., one where all teams have an equal chance at getting the No. 1 pick) or the outright dissolution of the draft would address this.
There would be losers in this deal, too. The NBA’s middle class would get squeezed. As symbolism, given the rising inequality in America and elsewhere, this is problematic. But as a practical matter, morally serious people shouldn’t lose much sleep over men who are accustomed to making, say, $5 million a year to play a game getting their salaries halved. There are still orphans who need to be adopted.
Should the NBA Take Steps to Encourage Competitive Balance?
The death of the superteam itself may also be a bigger loss than we realize. Without the pull of juggernauts like the "Showtime" Los Angeles Lakers, Jordan’s Chicago Bulls or LeBron and the Big Three Heat, would the league have a tough time getting the casual fan to tune in?
Maybe. Some close observers argue it’s unclear if parity is quite the boon to business it’s made out to be. While the NBA appears to believe competitive balance is in its best interest, Berri maintains that the link between parity and financial health is weak, citing a study between competitive balance and attendance in baseball that failed to find much of a connection between the two.
“The NBA has historically not had much balance,” he added. “And fans don’t seem to mind.”
The fans probably shouldn’t mind—though “mind” isn’t quite the right word. Basketball is a beautiful sport, and the league where it’s played at its highest level, the NBA, is in fine shape.
Revenues hit $4.6 billion last season, according to Forbes, and the average value of an NBA franchise has jumped 25 percent in the last year. Kevin Durant and LeBron James, the game’s two biggest stars, are each submitting historic seasons. The state of the union is good.
But it could be better.
Imagine an NBA where each and every season the fans of all 30 franchises could muster an iota of hope, however scant, that when it all ended, when the confetti fell and Queen played and oversized T-shirts were slung over sweat-soaked jerseys, their team would be the one standing in the middle of the court, raucously celebrating and crying and holding the people they love.
Imagine a league that does everything in its power to create conditions where basketball can flourish; where creative, innovative, competitive hoops becomes a fixture of NBA life not occasionally—basketball Brigadoon—but for eight months a year. For all 30 franchises.
It can happen. By paying the people at the top more, the NBA can go a long way toward solving an inequality issue that’s long been a thorn in its side.