Here’s the first post in a series that I’ll complete before the start of the regular season. Essentially, what we’re doing here is borrowing some basic game theory and microeconomic concepts and applying them to the NBA. Through the prism of a game featuring repeat play, the goal here is to articulate a coherent strategy for teams in today’s NBA. As always, thoughts and suggestions are very much appreciated.
Part I. Introducing the Game.
The game’s objective is well known and straightforward: win the championship. This simple truth belies the game’s complexity. A labyrinth of rules and incentives both restrict and encourage certain types of behavior by the game’s players (i.e., its 30 teams). Still more nuance results from the fact that the game is also – perhaps even foremost – a business. This means that there is a second objective – make money, and lots of it.
Fortunately, these objectives are generally complimentary, not mutually exclusive. By winning, a player increases its odds of making money. The converse, though perhaps less obvious, is also true: by making money, a player increases its odds of winning.
Nearly all of the rules of the game are designed to level the playing field. Those rules now have teeth, thanks to the newish collective bargaining agreement. Like the game’s objectives, these rules fall into two categories: competitive rules, and financial rules.
Competitive rules punish winning and reward losing principally through the game’s redistribution mechanism, better known as the draft lottery. Financial rules punish spending and reward saving through several redistributive mechanisms, the most prominent of which is the now crushing consequences of the luxury tax. And like the game’s objectives, these categories are interdependent. Financial rules promote competition by discouraging spending beyond a common threshold (offering benefits to those who comply, e.g., only teams under the salary cap may bid for amnestied players), and competitive rules promote financial parity, insofar as better players and better play can be expected to bring increased revenue.
Underlying these rules is the rationale that parity, at least to some degree, is necessary to foster the best basketball product. (A valid argument can be made that all 30 teams need not, and indeed should not be roughly equal to promote the best product. The NCAA perhaps best exemplifies such a top-heavy model, with no competitive redistribution mechanisms. Conversely, the hard cap of the NFL exemplifies a league in which nearly any team can win from year to year.) In pursuit of that rationale, for better or for worse, these rules all attempt to draw the game’s outliers back into middle of the pack.
Enter the vortex of the middle. It is only by resisting this middling effect that teams can succeed. Accepting that premise means just two results should drive strategy for NBA teams: win big, or lose big. The pursuit of anything else is a waste of time. It will result in a loop of mediocrity. Middling teams receive middling draft picks, are likely to have middling cap space to sign middling free agents, and, well, you get the point.
This is not to say that a team must never find itself in the middle of NBA’s standings. Depending on the circumstances and strategic variations, a pass through the middle class might be both an inevitable and logical stepping-stone. It is to emphatically state that, once there, to combat the gravitational effect of the middle, a team must constantly be on a dramatic trajectory towards the top or the bottom. It is not enough to build or nip around the margins. A team’s trajectory must be its obsession. It must be manifest in its decision-making. From signings, to trades, to playing time, a team must either plan to win, or plan to lose.
The crucial decision facing a team thus becomes whether it should try to win big, or lose big. Since winning correlates with making money, it’s safe to assume that all else being equal, teams would prefer to win. So powerful is that preference that many teams have been blinded by it. Indeed, when deciding its trajectory, a healthy majority of the league charts the wrong course. Among this group, too many teams attempt to win big, when their focus should be just the opposite.
Removing the blinders, a level-headed assessment of any team’s roster yields a clear choice. For each team, the decision to win or lose can be distilled to one simple question: do we have one the fleetingly few players capable of leading a team to an NBA Championship?