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Important Draft Consideration Regarding Value

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  • tajallie@hotmail.com
    Its important to remember that the economics of the NBA are much different than MLB. With the exception of the top 10 picks, rookies are often overpaid for the
    Message 1 of 3 , Jun 2, 2004
      Its important to remember that the economics of the NBA are much
      different than MLB. With the exception of the top 10 picks, rookies
      are often overpaid for the thier production when compared to the what
      low level exemption can bring you on the FA market. In baseball young
      players are locked up for so long that a team can benefit from the
      production over the cost analysis. The NBA draft - rookie scale
      historically has had that advantage for NBA teams

      The only time you really get a good dollar to player investment
      return is when a player develops into third option or better as a
      late round pick or if you draft a star, usually in the the top 10
      picks. There are always a a bunch of relatively inexpensive vets like
      Jimmy Jackson, Veshon Leonard, Gary Trent, Jon Barry, Mark Blount,
      James Poseys, Raja Bell, Stephen Jackson, Antonio Daniels, Calbert
      Cheney etc to be signed for $1-2 million that mid to late first
      rounders get with more certainity of production. These economic
      factors probably encourage you to take more risk for upside to
      maxmimize the value of the pick rather than trying to find a solid
      contributor.
    • Kevin Pelton
      ... With all due respect, this attitude simply isn t supported by the evidence I ve seen. The best comes from DanR s paper It doesn t pay to be young in the
      Message 2 of 3 , Jun 2, 2004
        > Its important to remember that the economics of the NBA are much
        > different than MLB. With the exception of the top 10 picks, rookies
        > are often overpaid for the thier production when compared to the
        > what low level exemption can bring you on the FA market. In
        > baseball young players are locked up for so long that a team can
        > benefit from the production over the cost analysis. The NBA draft -
        > rookie scale historically has had that advantage for NBA teams

        With all due respect, this attitude simply isn't supported by the
        evidence I've seen.

        The best comes from DanR's paper "It doesn't pay to be young in the
        NBA" (http://www.uncg.edu/bae/people/rosenbaum/youngnba1.pdf)

        Dan summarizes:

        "Using this data, I describe how the last two collective bargaining
        agreements have resulted in an annual transfer of $200 million from
        non-veteran to veteran first round picks. I find that this transfer
        cannot be explained by declining relative productivity of non-veteran
        first round picks, as measured by their playing statistics."

        It's pretty clear from the numbers that DanR presents -- as well as
        intutively -- that teams would be willing to pay a lot more to their
        draft picks were it not for the rookie scale that's in place.

        I took a more theoretical look at the issue and produced this chart
        of rookie production vs. salary:

        http://www.sonicscentral.com/rookiecontracts.jpg

        I don't recall doing the specific calculation, but it looks like
        teams are receiving about twice as much value as they're paying for
        from these players. Now, my study does have the problem of being
        based off a linear weight measure that doesn't appropriately account
        for the fact that young players are likely worse at defense, but half
        is a lot of value to account for. They ain't that bad at defense.

        From a logical perspective -- if players on rookie contracts weren't
        systematically underpaid, why would there be a need for a rookie
        scale? Teams wouldn't be willing to pay them any more anyway.

        > There are always a a bunch of relatively inexpensive vets like
        > Jimmy Jackson, Veshon Leonard, Gary Trent, Jon Barry, Mark Blount,
        > James Poseys, Raja Bell, Stephen Jackson, Antonio Daniels, Calbert
        > Cheney etc to be signed for $1-2 million that mid to late first
        > rounders get with more certainity of production.

        I think you're dramatically underrating the variability in
        performance for veteran players.

        Let's look at the players you listed:

        - Blount improved from 43.2% shooting to 56.6% from the field. (He,
        incidentally, is a good bet to be a free-agent bust based on that two-
        point percentage variability information I mentioned earlier.)

        - Posey improved his true shooting percentage from 51.9% to 61.4%
        while increasing his share of possessions.

        - Bell boosted his per-minute scoring from 9.4 points per 48 minutes
        to 21.7 points per 48 minutes without a noticeable drop in efficiency
        (50.9% ts% to 50.0%)

        - Daniels improved his assist rate from 4.7 per 48 minutes to 9.5 and
        his assist/turnover rate from 2.66 to 4.89

        Together these players averaged $1.8 million in salary last year, but
        I assure you that if teams knew the kind of production those four
        players would put up -- as well as Jackson, whose performance wasn't
        really a surprise, but whose performance was also considered anything
        but certain entering this season -- they would be making
        significantly more.

        It's easy to say those guys are bargains after the season is over,
        much more difficult to do it beforehand.
      • tajallie@hotmail.com
        Kevin, I don t think these positions are incongruent. Overall, I think there is a transfer of wealth from veterans to rookies . . .ie the reason why there are
        Message 3 of 3 , Jun 3, 2004
          Kevin,

          I don't think these positions are incongruent. Overall, I think there
          is a transfer of wealth from veterans to rookies . . .ie the reason
          why there are decent value underpaid vertrans such as Rob Strickland,
          Chris Whitney, Robert Pack or Derrick Martin and the others
          mentioned. I believe two factors explain this:

          1) Bargining power for a 1st draft pick does not equal production bcs
          of the additional costs to a team not to sign its top draft choice;
          and
          2) The picks that do perform are vastly underpaid. Top performing
          picks such as Anthony, Wade, and James would certainly be worth
          multiples of there rookie wage scale (as would steals like Josh
          Howard).

          However, in 15-28 range it is really a crap shoot and as a result you
          often overpay for production. Glancing at the @ 2002 draft included
          Dickau, Jefferies, Frank Williams, Q Woods, Ryan Humphrey, Curtis
          Borchard, and Nachbar who I would guess were overpaid for their
          production, a number of players that probably came close to their
          value (Rush, Dixon, Welsch, Jacobsen, and Salmons), one incomplete
          (Kristic) and one excellent return (Prince). The 2001 draft had two
          major "Home Runs" (Parker, Randolph) and few decent value picks
          (Dalembert, Haywood, Tinsley and Collins). I could be wrong but
          Hunter, Haston, Bradley, Forte, Saasser, Amstrong, and Wallace
          probably didn't produce at the level equal to what a $1 million could
          have got for a veteran player, and one incomplete (Lopez).

          My point being there is an incentive take a risk on big upside (note
          that two of the "home runs" were 18 and 19 years old), bsc then you
          do get a steal in value. Late round pick, pick on potential bcs you
          can find a average role players so why add someone when limited
          upside?

          -Brendan-

          PS Even the role players that improved (Posey, Daniels, Blount, Bell)
          were servicable role players without the improvement. That's why they
          were signed at reasonable prices. Thier overperfomance was just a
          bonus. Just compared to the 50/50 chance of getting nearly nothing at
          the bottom of the draft pretty much there is always a $1 million vet
          you could sign for 8-10 man performance. I am sure you could get
          Doleac, Bowen or Andersen off the Nugs this year and be assured of at
          least a minimum level of production @ ~ 1 million or less each.

          PPS Yea, I think Blount will be oversigned, but if you want a min
          wage body in the middle instead of $750K for a Brian Cook, how about
          Michael Stewart or if you want to invest a little more how about a $1
          for Samaki Walker?

          --- In APBR_analysis@yahoogroups.com, "Kevin Pelton" <kpelton08@h...>
          wrote:
          > > Its important to remember that the economics of the NBA are much
          > > different than MLB. With the exception of the top 10 picks,
          rookies
          > > are often overpaid for the thier production when compared to the
          > > what low level exemption can bring you on the FA market. In
          > > baseball young players are locked up for so long that a team can
          > > benefit from the production over the cost analysis. The NBA
          draft -
          > > rookie scale historically has had that advantage for NBA teams
          >
          > With all due respect, this attitude simply isn't supported by the
          > evidence I've seen.
          >
          > The best comes from DanR's paper "It doesn't pay to be young in the
          > NBA" (http://www.uncg.edu/bae/people/rosenbaum/youngnba1.pdf)
          >
          > Dan summarizes:
          >
          > "Using this data, I describe how the last two collective bargaining
          > agreements have resulted in an annual transfer of $200 million from
          > non-veteran to veteran first round picks. I find that this transfer
          > cannot be explained by declining relative productivity of non-
          veteran
          > first round picks, as measured by their playing statistics."
          >
          > It's pretty clear from the numbers that DanR presents -- as well as
          > intutively -- that teams would be willing to pay a lot more to
          their
          > draft picks were it not for the rookie scale that's in place.
          >
          > I took a more theoretical look at the issue and produced this chart
          > of rookie production vs. salary:
          >
          > http://www.sonicscentral.com/rookiecontracts.jpg
          >
          > I don't recall doing the specific calculation, but it looks like
          > teams are receiving about twice as much value as they're paying for
          > from these players. Now, my study does have the problem of being
          > based off a linear weight measure that doesn't appropriately
          account
          > for the fact that young players are likely worse at defense, but
          half
          > is a lot of value to account for. They ain't that bad at defense.
          >
          > From a logical perspective -- if players on rookie contracts
          weren't
          > systematically underpaid, why would there be a need for a rookie
          > scale? Teams wouldn't be willing to pay them any more anyway.
          >
          > > There are always a a bunch of relatively inexpensive vets like
          > > Jimmy Jackson, Veshon Leonard, Gary Trent, Jon Barry, Mark
          Blount,
          > > James Poseys, Raja Bell, Stephen Jackson, Antonio Daniels,
          Calbert
          > > Cheney etc to be signed for $1-2 million that mid to late first
          > > rounders get with more certainity of production.
          >
          > I think you're dramatically underrating the variability in
          > performance for veteran players.
          >
          > Let's look at the players you listed:
          >
          > - Blount improved from 43.2% shooting to 56.6% from the field. (He,
          > incidentally, is a good bet to be a free-agent bust based on that
          two-
          > point percentage variability information I mentioned earlier.)
          >
          > - Posey improved his true shooting percentage from 51.9% to 61.4%
          > while increasing his share of possessions.
          >
          > - Bell boosted his per-minute scoring from 9.4 points per 48
          minutes
          > to 21.7 points per 48 minutes without a noticeable drop in
          efficiency
          > (50.9% ts% to 50.0%)
          >
          > - Daniels improved his assist rate from 4.7 per 48 minutes to 9.5
          and
          > his assist/turnover rate from 2.66 to 4.89
          >
          > Together these players averaged $1.8 million in salary last year,
          but
          > I assure you that if teams knew the kind of production those four
          > players would put up -- as well as Jackson, whose performance
          wasn't
          > really a surprise, but whose performance was also considered
          anything
          > but certain entering this season -- they would be making
          > significantly more.
          >
          > It's easy to say those guys are bargains after the season is over,
          > much more difficult to do it beforehand.
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