## A sports draft without tanking Russell Degnan

The odd thing about sports drafts is that, as currently constructed, they are really about who is bad. Because the best picks go to the worst teams, they reward and even encourage poor play; particularly at the back-end of the season, but increasingly across multi-year rebuilding strategies, across a whole season.

Needless to say, owners who aren't bad don't like it. Partly for financial reasons: in an NBA environment where 5 or 6 teams are tanking, a fifth of regular season games are pointless, which hurts teams both good and bad. Partly for fairness, as the draft is increasingly perceived as a lottery: a way to beat the sensible construction of a team by throwing the dice.

Tanking itself, does and doesn't work, depending on the specific situation.

Deliberately losing games (either by resting players or odd rotations) at the tail-end of the season will work a bit: it improves draft position which is worth more wins (though not necessarily a lot more), and if young players are tested, it improves knowledge of a roster's capability.

Drafting players who can't play - as the Sixers have - with the aim of staying early in the draft for multiple years probably can work, if the right players turn up. But it is unlikely trading good contracts for cap space (through short-term bad contracts) improves wins in the future. Free agents rarely provide more wins than their contracts, and a bad team is much more likely to have to over-pay than one in contention.

Unless you are Cleveland. Cleveland's third lottery victory in four years is the other driving force behind proposed changes to the NBA Draft. LeBron may of returned without Wiggins, but it made it an sensible choice for a player looking to escape from an old team to one he could build on. The combination of repeatedly making poor draft choices, and poor trade choices, and an unusual streak of luck sits poorly with NBA owners. And not because hey believe in competitive balance, but because they don't - and nether do fans.

When the league talks about competitive balance, they want every team to be a possible contender every year. Baseball almost gets to that, but basketball isn't close, and is unlikely to ever be close, because there just aren't enough star players. But like the concept of equality - on which it is based - it isn't true that owners want balance. They want dynasties and the chance to prove they are the smartest and canniest owners. In other words, not equality of outcomes, but equality of opportunities.

Any solution that encourages a team to play badly has a downside. It isn't clear that the current weighted odds are optimum. But as Zach Lowe points out, playing with the percentages of lottery odds on the margins incentives a different set of teams to play badly. But the alternative proposal, of a wheel that gave each team a set rotating pick, isn't necessarily better either, because it defeats the reason he draft exists in the first place: teams are not born equal.

Teams are unequal for many reasons: big markets have more cash, even with a salary cap limiting their options; teams with better players and coaches can attract better free agents; some teams are in better cities to live in. The point of the draft is to mitigate those effects by helping teams that are struggling (ie. losing). But helping down the track is a second order effort, equivalent to providing welfare, but no education. The alternative to a draft that incentivizes losing, is one that mitigates the effect of the most important starting assets: cash and draft picks.

Read Wages of Wins and it will tell you that wins are poorly correlated with spending. This is not because in a free market the biggest team couldn't buy titles - football proves they certainly can - but because in the NBA the market for players is distorted by rookie and maximum contracts and the salary cap, so a lot of the money goes to players providing fewer wins than they ought. Nevertheless, you can measure those distortions, and by extension, calculate which teams have benefited from circumstance, and adjust the lottery accordingly.

Big market spending is the easiest to calculate, because it basically comes to how much a team has spent over and above the salary cap. Every $1.6 million corresponds to one extra win, and therefore can be offset against expected value in the draft lottery. The Draft is an uneven distributor of talent, because some years are better than others, but on the average, the value of each pick over and above their salary can be modelled, and adjusted over the previous four years. Both Arturo Galletti and Nate Silver both calculated similar numbers for the value of each pick: around$30 million over 4 years for number 1 picks, and \$2-4 million for number 30 picks. Traded picks would still apply to the original team, as the trade was valued at the pick (presumably). That's the tedious but easy part.

Star players limited by max contracts, on the other hand is more complex, because although the number of wins earnt above their salary can be calculated, not all players in this category are on the max (LeBron for example) and a team shouldn't necessarily be penalised for finding the right guy. One option is to just ignore it, as it affects relatively few players (albeit the most important ones); another would be to apply it to designated players (either designated or acquired through trade) at the difference between the maximum 25% and the players salary. This is, broadly speaking, close to the expected difference in value, and subtly penalises teams with star players.

Playoff revenue advantage is the final piece. Teams earn more for making the playoffs, as well as gaining a free market advantage. At the same time, excessive offsets here would provide incentives to miss the playoffs. Keeping every team in the lottery means every team would look to make the playoffs, but adjusting for series played, reduces the advantages gained by being consistently good. Technically this money isn't used unless it goes into salary spending, but it covers teams who have attracted stars at below maximum salaries, closing a potential loophole.

Put it together and it produces something like this[1]:

The draft rank comes out roughly where it should, given the recent history of those teams: Utah, Philadelphia, Atlanta and Milwaukee have neither picked early, nor spent heavily, nor had deep playoff runs, and therefore find themselves high in the draft. Future years would see them drop, effectively replicating the wheel system for teams spending near the cap.

Conversely, it would be a difficult system to game, as there is a lower limit to improving draft lottery position: not making the playoffs, not exceeding the cap, not having a designated player. Many teams are in that position, so there is no value in completely blowing up a side to chase the number one pick. For borderline playoff teams like Atlanta, the value in reducing salary slightly, or skipping the playoffs would be a half a percent improvement in lottery odds. Not nearly enough to play for.

Equalization involves adjusting the lottery odds to offset the expected deficit from spending and recent drafts. Nine teams last season exceeded the average value of a draft selection, and therefore fall out of the lottery. The remaining teams have between a one and nine percent chance of winnings, as follows:

In the long term, such a selection would encourage teams to stay close to the cap, unless they can win - which is broadly what the NBA wants - and even out draft picks, rewarding teams who picked well, and giving no solace to those who don't. Teams would have a pretty good idea of their draft position several years in advance, because they would know their salary, their likely playoff position, and their previous picks. Trading for picks becomes slightly dangerous, because it allows the trader to up their salary without consequence. Or traded picks would likely be protected at both ends.

There is no perfect draft method, but this one would at least end tanking, and reward sound management. Which for owners, who are in the game to prove their savviness, and for fans, who want their team to win, not to lose, would be a big improvement.

[1] Draft value is taken from Nate Silver's piece, divided by four, for a yearly value. Designated players are listed in Larry Coon's cap FAQ. Team salaries from Story Teller.

Basketball 3rd August, 2014 14:23:15   [#] [0 comments]