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Re: Important Draft Consideration Regarding Value

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  • 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 1 of 3 , Jun 2, 2004
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      > 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 2 of 3 , Jun 3, 2004
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        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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