Human Victory Cigar

Introduction

This summer the unthinkable happened. The best starting five in the league, the 2005/2006 Detroit Pistons, ceased to exist. Pax and Skiles came a calling, and Big Ben went a walking. Ben Wallace. Joe Dumars. Mr. Davidson. Scott Skiles. John Paxson. Space aliens in braids. Pick any two, add the expletive of your choice in front of the names, and you too can post on PistonsForum.

NBA players are paid to produce on the court and to draw in fans. They either help their teams win and entertain the fan base or they are sent away. They are paid based on their past ability to produce, which can be measured, and their ability to fit in and make their teams better, which cannot be directly measured. However, given the number of players who are perceived as poisonous but still sign big contracts, it seems safe to say that owners and GMs place much more importance on the former and far less on the latter.

Besides entertaining loads of fans, this past Eastern Conference Finals featured four of the twenty most underpaid players in the NBA based on their regular season performance. (See the Rating Players section below for details of the methodology.) Dwayne Wade, Ben Wallace, Tayshaun Prince, and Chauncey Billups were underpaid relative to their on court production by a total of over $33 million. Udonis Haslim, Gary Payton, and Alonzo Mourning were also underpaid, by nearly $13 million. Balancing this out a bit was the trio of Shaquille O’Neal, Kelvin Cato, and Shandon Anderson, overpaid relative to their performance by over $23 million, all three in the top twenty five most overpaid players.

Let’s look at the four underpaid guys in a little more detail.

Dwayne Wade – the most underpaid player in the league based on 05/06 regular season performance
Actual salary - $3,031,920
Justified salary based on performance - $15,302,692
Gap - $12,270,772
Not to worry about Mr. Wade though. Besides being the dandy of Commish Stern, the Adonis of the court signed an extension this summer for four years and nearly $58 million, an average annual salary of $14,416,663. Dwayne is still a steal.

Ben Wallace – the fourth most underpaid player in the league
Actual salary - $6,000,000
Justified salary based on performance - $13,730,953
Gap - $7,730,953
Again, not to worry for the contract gods have been smiling on Big Ben. The new deal in Chicago is worth $60 million over four years, an average of $15,000,000 per. Chicago is obviously betting on the intangibles.

Tayshaun Prince – the ninth most underpaid player in the league
Actual salary - $1,763,115
Justified salary based on performance - $8,582,019
Gap - $6,818,904
Prince has already signed the big deal and is just waiting for it to start up. Beginning this season and continuing for the next five, Tayshaun is getting out the wheelbarrow in order to carry $48 million home. His 06/07 salary will be $7,933,884 still below his production level, but with raises the four year average salary will be $9,600,000 which is right in line especially if his game improves during the term of the contract.

Chauncey Billups – the thirteenth most underpaid player in the league
Actual salary - $5,909,800
Justified salary based on performance - $12,353,280
Gap - $6,443,480
Mr. Big Shot is still waiting for his slice of the pie. CB has one more year at $6.3 million and a player option at $6.8 million. Assuming at least as good a year this season as last, Chauncey should be looking for a four year deal right around the $50 million mark. Who is going to pay the man?

And thank goodness for Lebron’s new contract down in Cleveland. That pitiful $4.6 million just wasn’t getting it done for the high school phenom. His new extension starts at $12,455,000 next season. LBJ will just have to tough it out on the Nike deal this year. The four year extension averages $14.4 million, still $1.2 million below his justified salary. Lebron will be a steal for five more years.

With the salary cap, figuring out how to pay enough players to field a competitive team that will fill the arena and make the local advertisers happy without getting yourself fired by the owner requires the wisdom of Solomon, the toughness of a one-eyed alley cat with half an ear missing, and a boatload of luck. Following is a look at who’s on the top of their games from a GM and a player perspective.

Rating Teams

From a single season perspective, the worth of a GM is pretty easy to measure, at least from the point of view of the owner. “Build me a team that wins the most games for the fewest dollars.” In the table below is how much each team paid in salaries to win a game last season. The columns are…

1. Salary $ Per Regular Season Win – Total player salary paid divided by the number of wins
2. Salary Efficiency Rank - Rank by column 1. The Pistons ranked first by paying the fewest average dollars per win of any team. It cost Mr. Davidson just $867,565 for each win.
3. Salary Efficiency Index – The average salary dollars per win indexed to the average for the league. The Pistons average salary cost per win is 41% lower than the league average.

The top five teams stand pretty far in front of the pack. Detroit, Phoenix, Chicago, San Antonio, and Cleveland were all very parsimonious with the bucks. The next 23 teams are within basically 20% of the league average. The list is anchored by the two dogs, the Blazers and the Knicks. While the Blazers are at least within the ballpark, only 64% above the league average, the Knicks are off the charts, paying over three times the league average for a win, nearly twice as much as the second worst team.

Of course, things will change. The Pistons will add in Prince’s new contract next season as well as player raises, and a new Billups contract is looming on the horizon. The Cavs will begin paying Lebron soon as well as Gooden’s new eight mil per year deal and will fall into the pack. The Knicks will stay at the bottom though. Even if they double last season’s win total, they will still be at the bottom. The Knicks will need to win 74 regular season games next season just to get to the league average.

But, in theory you could put a team on the floor with fifteen minimum salary players for around six million dollars. And if you managed to win only about seven games, you would leap to the top of the ranking. Teams like Chicago look efficient on a dollars per win basis, but only won 41 games, so this ranking alone isn’t as good as it needs to be to evaluate how well teams do with their salaries. The table below adds three new columns, and ranks by the last.

• Regular Season Wins – The number of games won in the regular season.
• Wins Rank – Rank by number of wins. The Pistons won the most games of any team.
• Avg Rank – The average of the two rank columns. This is how teams would rank if average salary dollars per win and the number of wins were equally weighted.

By this ranking, Joe D. is still the man, ranking first in both dollars per win and number of wins. His old running mate, Isiah Thomas, is still at the bottom, ranking 30th in dollars per win and 29th in number of wins. The big losers in this new ranking are Charlotte, Chicago, and New Orleans who fall substantially in the Wins ranking. They aren’t paying too much per win, but then they aren’t winning all that many either. On the other end, Indiana, Miami, and Memphis all move up the chart, paying a fair amount for their talent, and getting a fair amount out of it.

Imagine what Chicago will look like next year with the new Wallace contract unless they substantially improve. They will need to win 57 games just to maintain their ranking. That’s a lot of pressure to put on an aging center and a bunch of kids.

Rating Players

For players we can look at how much they produce on the court versus how much they are paid. Sprocket points are used to measure how much a player produces, and salary dollars per sprocket point to measure the player’s monetary efficiency. This comparison includes players who played more than 820 minutes in the regular season, and played in more than 50 games. The selection is intended to only include guys who really play, and those who were not down with injuries for a majority of the season. Using this selection, the 25 most salary efficient players in the league are in the table below.

Prince shows up for the Pistons in the 17th spot. He will have to substantially increase his production next season to stay in the top 25 given the upcoming salary increase. It is interesting to note how many Heat players fall into the top 25 – Payton, Wade, and Mourning. Payton and Mourning show up for taking less money than they might have gotten elsewhere, Wade because he is still on his rookie contract.

More fun though are the guys at the bottom of the ranking. These are players whose salaries substantially outweigh their production on the court. The most salary inefficient player in the league is Keith Van Horn. Van Horn’s pay to produce a sprocket point is 68 times higher than Boris Diaw’s. Counting the number of Knicks in this list is too easy a shot to take.

But, the real fun comes when we estimate how much each player is worth based on his production. All told, the league paid about $1.7 billion in salaries last season. Across all teams players produced over 425,000 sprocket points. This makes the average salary cost to produce a sprocket point $3,987. Using this as the benchmark, we can multiply each player’s total regular season sprocket point count by $3,987 to project a fair value salary, based solely on what he produces on the court. This ranking includes players who played in more than 50 games regardless of how many minutes they played.

The top 25 underpaid players are listed below.

Dwayne Wade, if he were paid purely on performance, would have earned over fifteen million dollars last season. His three million rookie contract falls over twelve million dollars short. Wade was a serious deal. Ben Wallace was also a serious deal last year, underpaid relative to performance by nearly eight million dollars. Chicago paid almost exactly what he was worth, if, and it’s a big if, past performance is a good predictor of future production. Also note that Detroit is the only team with three players in the top 25 underpaid list (one signed, one gone, one still to come).

On the other end, it gets ugly quickly, especially if you’re paying the salaries for the Knicks. The table below lists the top twenty five most over-paid players based on performance.

Our buddy Keith Van Horn was overpaid by over thirteen million dollars last year. The Knicks have six players in the bottom 25, no other team more than two. Garnett’s $18 million and Shaq’s $20 million are salary levels that no player earns purely based on on-court performance. Based on performance the two highest paid players in the league ought to be Shawn Marion and Dirk Nowitzki each around $17 million.

The final table below aggregates the actual / fair value salary comparison to teams, including all players regardless of how often or how much they played. Phoenix is the most underpaid team, the Knicks the most overpaid. Detroit moves down in this ranking mostly due to the large contacts of Cato and Davis who were omitted from earlier rankings because they did not play significant minutes.