The Dollars and Cents of the NBA Draft, Pt. 1

It seems like whenever I read any analysis on whether or not players should stay or go with regards to the NBA Draft, the author tends to focus mainly on intangible aspects.

They question whether the player can improve their draft stock, if they can potentially win a conference or national championship, whether they enjoy the college experience, or for any number of other reasons.

This is all well and good, but it doesn't really tell us anything meaningful about whether the player will, or should, enter the NBA Draft.

The question is, why the need for all of these difficult to measure qualifiers when we have quantifiable data in the form of the guaranteed pay for each pick in the NBA Draft.

This brings us to the Pay Comparison Matrix*:

Pay Comparison Matrix In the NBA Lottery: Percentage Increase/Decrease over pay received in 1st Year at that position in the draft
Pick #	1	2	3	4	5	6	7
1	0.0%	11.8%	24.5%	38.0%	52.4%	67.8%	83.9%
2	-10.5%	0.0%	11.4%	23.5%	36.4%	50.2%	64.5%
3	-19.7%	-10.2%	0.0%	10.9%	22.5%	34.8%	47.7%
4	-27.6%	-19.0%	-9.8%	0.0%	10.4%	21.6%	33.2%
5	-34.4%	-26.7%	-18.4%	-9.4%	0.0%	10.1%	20.6%
6	-40.4%	-33.4%	-25.8%	-17.7%	-9.2%	0.0%	9.5%
7	-45.6%	-39.2%	-32.3%	-24.9%	-17.1%	-8.7%	0.0%
8	-50.2%	-44.3%	-38.0%	-31.2%	-24.0%	-16.4%	-8.4%
9	-54.2%	-48.8%	-43.0%	-36.8%	-30.2%	-23.1%	-15.8%
10	-56.5%	-51.4%	-45.8%	-39.9%	-33.7%	-27.0%	-20.0%
11	-58.7%	-53.8%	-48.6%	-43.0%	-37.0%	-30.6%	-24.0%
12	-60.7%	-56.1%	-51.1%	-45.8%	-40.1%	-34.1%	-27.8%
13	-62.7%	-58.3%	-53.6%	-48.5%	-43.1%	-37.4%	-31.4%
14	-64.6%	-60.4%	-55.9%	-51.1%	-46.0%	-40.5%	-34.8%
	8	9	10	11	12	13	14
1	100.7%	118.3%	129.8%	142.0%	154.7%	168.1%	182.2%
2	79.6%	95.3%	105.6%	116.5%	127.8%	139.8%	152.5%
3	61.2%	75.4%	84.6%	94.4%	104.6%	115.4%	126.7%
4	45.4%	58.2%	66.5%	75.3%	84.5%	94.2%	104.4%
5	31.6%	43.2%	50.8%	58.7%	67.0%	75.8%	85.1%
6	19.6%	30.1%	36.9%	44.2%	51.7%	59.7%	68.1%
7	9.2%	18.7%	25.0%	31.6%	38.5%	45.8%	53.5%
8	0.0%	8.8%	14.5%	20.6%	26.9%	33.6%	40.6%
9	-8.1%	0.0%	5.3%	10.8%	16.6%	22.8%	29.2%
10	-12.7%	-5.0%	0.0%	5.3%	10.8%	16.6%	22.8%
11	-17.1%	-9.8%	-5.0%	0.0%	5.2%	10.8%	16.6%
12	-21.2%	-14.3%	-9.8%	-5.0%	0.0%	5.3%	10.8%
13	-25.1%	-18.6%	-14.3%	-9.7%	-5.0%	0.0%	5.3%
14	-28.9%	-22.6%	-18.6%	-14.2%	-9.7%	-5.0%	0.0%

Don't be intimidated, once you understand how the table works, it's really quite simple. For example, say that I am a power forward who will be picked at no. 10 in the draft this year, but I could potentially move up to be the sixth overall pick.

If I go to column 10, row six, I'll see that this would be a 36.9 percent increase over the pay I'd receive If I could move from the tenth to the sixth pick overall.

However, it's also possible that because of a crowded incoming class of big men, I can fall to the 14th overall pick. This would mean a loss in pay of 18.6 percent for falling from tenth to 14th.

So what should I do? Assuming that its equally likely that I could rise to sixth overall than fall to 14th, I should wait one more year as the potential upside outweighs the downside.

Obviously, there are a number of limitations to this analysis. For example, anyone familiar with economics knows that every additional dollar earned is not quite as valuable as the previous dollar.

This means that if I receive a $1000 raise this year, and a $1000 raise next year, the second year's raise will not bring me nearly as much increased utility as the one in the first year.

It is more likely that players have a minimum amount of money they're willing to settle for, and each additional dollar above that point has a diminishing return (or in clearer language, each dollar has less utility than the last).

Additionally, it is much easier to fall in the draft than rise; its pretty clear that there is a limit to how much one can rise in the draft, but no real limit on how far a player can fall (which the injured Shaun Livingston knows all too well).

Despite the pay matrix's shortcomings it is still a useful tool, and we'll get a chance to see it in action in Part two with a case study on the draft prospects of USC guard OJ Mayo.

*Generated in Microsoft Excel through original research. Anyone is welcome to use, but please link if you do.