NBA’s never-ending lottery experiment

“You have it all wrong. Your incentives are completely backward. You’ve created an incentive for teams to be bad,” the economists say,
May 20, 2014

 

 

PHILADELPHIA — Like every good organization, the NBA periodically brings in outsiders to study its operation and make suggestions with fresh eyes about ways the business model could be improved. Marketing specialists, economists, labor consultants and advertising geniuses are trotted through and the NBA listens carefully to their thoughts. Sometimes, of course, the league executives know what’s coming.

“I always get a kick out of when the economists first come in,” commissioner Adam Silver said recently at the MIT Sloan Sports Analytics Conference. “We say, ‘Take our current CBA, our bylaws, our constitution, our guidelines on how we operate.’

“They go away, and they’re academics, so they say, ‘We’ll study this, and we’ll come back and we’ll present some ideas for you.’ And it always happens ... they go away, they come back, and you can tell — they sit down with you and they’re very excited. They want to tell you something.”

The NBA guys are ready for this revelation.

“You have it all wrong. Your incentives are completely backward. You’ve created an incentive for teams to be bad,” the economists say, according to Silver.

“And that, course, is what the draft is,” Silver said. “And why we have a draft lottery.”

Indeed it is, and on Tuesday night, for the 30th consecutive year, the NBA will try to offset its inherent disconnect with a lottery that keeps the worst teams in the league from being guaranteed the best draft selections.

The system is far from perfect and there is still a statistical incentive for rebuilding teams to attack that process by putting together a roster that, in any given season, will not win a whole lot of games. Many teams have gone that route, but few with the thoroughness and zeal the 76ers applied in the season just past.

The Sixers, who opened the season with a mediocre roster and then decimated that at the February trade deadline, finished with a 19-63 record. Even with that effort, they were only the second-worst team in the league, failing to underperform the 15-win Milwaukee Bucks, who didn’t have all that bad a roster, but were buffeted by numerous injuries and then slid listlessly to the end of the season.

Still, when the lottery process takes place on Tuesday, the Sixers will be right where they wanted to be, with a better than even-money chance of getting a top three pick in what is considered a deep draft, and guaranteed no worse than the fifth pick.

Owner Josh Harris declared the 2013-14 season a “huge success” for the franchise, an assessment that rankled some within the league office who prefer that teams attempting to game the system accept their win-by-losing gains with slightly more circumspection.

“Yes, it’s a concern from a perception point,” Silver said, “which is why I responded on several occasions to say that at, at least the way I’ve always understood, tanking is the intentional losing of games either by coaches or players. What is going on is legitimate rebuilding of franchises. The fact that fans may see it another way is very (much a) concern to me.”

The league is all about how things look and how those perceptions might affect business, so it is a growing probability — thanks largely to the way the Sixers conducted their season — that the NBA’s competition committee will recommend this summer that the lottery be tweaked yet again.

“We talk among ourselves about the different ideas we think might help,” said Rod Thorn, the former Sixers’ general manager who is now the league’s president of basketball operations. “I agree there has definitely been more chatter this year (about tanking) than most years I can remember. It’s supposed to be a strong draft class, particularly when you talk about the top three picks, and I think that created a lot of the chatter, but it has been more than any time recently.”

TWEAKS AND CHANGES

The philosophy of having a draft for incoming talent is the same across all the major leagues in North American sport. The teams that need help get the top picks, almost universally in the reverse order of where they finished in their respective league.

What makes basketball unique is that the fortunes of a team can be affected by the addition of one very special player more than in any other sport. The history of NBA champions is essentially a biography of their rosters and can almost always be distilled down to one or possibly two dominant players.

Either Michael Jordan, Kobe Bryant, Tim Duncan or LeBron James have been on the championship team in 17 of the last 23 seasons. There are other ways to win the title, but having a supreme talent has always been a handy starting point.

From 1966 to 1984, the first pick in the draft was decided by a coin flip between the worst teams in each conference, with the remaining selections going in reverse order of finish. This went along well enough, or at least without those perception problems the league abhors, until the Houston Rockets won the flip for the first pick in 1983 and, despite getting the NBA’s rookie of the year from the fruit of that draft, center Ralph Sampson, managed to lose 53 games the following season and again won the flip for the top pick. This time they took Hakeem (nee Akeem) Olajuwon and the rest of the league was not amused at all.

The Rockets didn’t leave much to chance in their pursuit of Olajuwon. In the next-to-last game of the season, coach Bill Fitch left 38-year-old Elvin Hayes — playing the next-to-last game of his career — on the court for every minute of an overtime loss to San Antonio.

New commissioner David Stern spearheaded an effort by the competition committee and the league’s board of governors to change the system and construct a lottery that would make tanking a less certain advantage heading into the draft.

Starting with the 1985 draft, the non-playoff teams — there were seven at that time — were placed in an equally weighted lottery. The New York Knicks won the first one and the Patrick Ewing Sweepstakes, leading to speculation that the league, wanting to help one of its signature franchises, had frozen the envelope containing the name of the Knicks so Stern could pull the proper winner from the drum.

That version lasted three years, and was altered so that the first three positions were the only ones up for grabs in the lottery, assuring the worst team of no worse than the fourth pick. It was tweaked again in 1990 when the envelopes were discarded in favor of ping-pong balls and the lottery was weighted, although not to the extent it is today.

After the 1993 lottery, in which the Orlando Magic came away with the first pick despite a 41-41 record and only a single ping-pong ball in the drum, the weighting was increased again in favor of the poorer teams and the percentages have stayed about the same since.

It is reasonable to ask why the NBA, which started the lottery to dissuade teams from tanking, has progressively made tanking more attractive with each tweak. The answer is that parity is good for the league and, most of the time, tanking is difficult to both identify and quantify.

“It’s hard to know when you’re looking at a team if it is losing because it is trying to lose or losing because they don’t know what they’re doing,” said David Berri, a professor of economics at southern Utah University who has written regularly about the NBA and coauthored The Wages of Wins, a study of competitive balance issues in professional sports.

“If they want to end (tanking speculation), they can end it by changing the incentive,” Berri said. “But it’s got to get to a point where they actually see a decline in interest. The things I have suggested for the league, from a general manager’s perspective, are more distasteful than living with the perceptions.”

TANKING PERCEPTION

And about those perceptions. Are they usually nothing more than that, even this season?

“If you look at the records for the bottom four or five teams this year, I’d bet their combined record is pretty comparable to the bottom four or five for the last 10 or 15 years,” Thorn said. “It would be interesting to look.”

Well, it was. The bottom five teams in the NBA played to a .261 winning percentage in 2013-14, with a combined record of 107-303. In the previous 20 seasons, the winning percentage of the bottom five teams was .263, or an average yearly record of 108-302. In 12 of the previous 20 seasons, the winning percentage was lower than .261, so this season — the one that has engendered all the chatter — is way above the median for that period of time.

The relative strength of the draft class up for grabs doesn’t appear to have had any effect on the results, either. The lowest combined winning percentage for the bottom five teams was .200 in 1998, when the top two picks in the draft were Michael Olowokandi and Mike Bibby. The highest combined winning percentage was .329 in 2007 when Greg Oden and Kevin Durant, both considered game-changers, were at the top of the board.

Those results suggest that tanking is either inefficiently done, or usually done as gently as possible to avoid alienating the fan bases involved. The results also suggest that in any given season, some teams stink because they stink, despite the honest effort of lousy managements.

The seasons even out statistically, even if there is a difference of opinion about the strategy that helps create the wins and the losses. The 2013-14 season, from that standpoint, was as normal as could be.

So why all the chatter about tanking this year, and why will the lottery likely be changed again as a result? Basketball fans in Philadelphia had a courtside seat to the answer .

PROPOSED FIXES

Those who believe the system is broken have put forward a number of interesting proposals as to how it should be fixed. David Berri, the economist and author, has written that any NBA general manager who doesn’t get his team to the playoffs in a three-year span should forfeit his job and have to leave his organization.

“It’s not that hard to make the playoffs,” Berri said. “And when a team is clearly angling back into the lottery, that’s a problem, forcing fans to go through that. If a team is at 20 wins, it is a long way from 60 wins. It’s not just one lottery pick.”

That suggestion won’t happen, but one or more of the others might.

Stan Van Gundy, recently hired to coach the Detroit Pistons, thinks the league should negotiate for a hard salary cap, like the one in the NFL, allow all incoming rookies to be free agents — no draft at all! — and get rid of maximum salary restrictions.

“You’d literally have 30 teams that would have a legitimate chance to win the championship,” Van Gundy told the Orlando Sentinel, “and they’d have no incentive for losing and you’ve see much better games on a nightly basis.”

With a hard cap, the better teams would be unable to stockpile talent, including the rookie stars of the future, particularly if the league were able to also negotiate an end to the rookie wage scale.

A change that radical is unlikely, as is the institution of “The Wheel,” an idea put forward by Boston Celtics assistant general manager Mike Zarren. Under Zarren’s proposal, during a 30-year span each team in the league would pick in every slot of the first round, 1-30. The picks are randomized, but each team would be guaranteed a top 6 pick every five years and so on.

Better yet, or worse, all of the first-round picks would be laid out in advance for those 30 years. Teams would know exactly where they would pick every year. Critics point out that the incoming rookies would know, too, and a top pick might forego coming out of college a year in order to wait for the team of his choice. Maybe, but a top pick would be risking an awful lot to do so.

And there have been other suggestions. Perhaps a one-and-done tournament among the lottery teams, with the champion getting the top pick (although the logic of players competing hard so the organization can get better talent to replace them is faulty). Maybe a return to a totally unweighted lottery in which all 14 nonplayoff teams have an equal chance at the top pick.

If the current lottery system has many problems, there have been just as many fixes brought forward. Thorn has seen them all.

“The competition committee will be meeting in July and maybe make a suggestion to the board of governors for a change. There’s a possibility it will be tweaked,” Thorn said. “But whether it’s something where they really make a radical change, it’s too early to tell. I doubt it.”

Who’s No. 1?

That is for the future. What will happen on Tuesday is the right now. Representatives of the 14 teams will observe a process in which four of 14 numbered ping-pong balls, representing 1,001 possible four-ball combinations, will be drawn from a drum three separate times.

Each team, based on its record, is assigned a certain number of combinations. The Sixers, for instance, have 199 combinations in the drum.

The three drawings determine the top three picks in the draft and the rest are placed in order of reverse record. The Sixers can drop to no worse than fifth with their own selection. They also own the pick of the New Orleans Pelicans from the Holiday trade, but won’t get that pick if the Pelicans, the 10th-worst team in the league, beat the odds and get one of the top three picks. New Orleans has a 3.98 percent chance of having that happen.

After the drawings, the results are placed in envelopes and another set of team representatives sit on stage for the televised broadcast — allegedly unaware of what happened in that other room. Whether the NBA confiscates everyone’s cellphone to prevent happy-face texting is unknown.

There will be winners and there will be losers among this pack of, well, losers. Some of them will keep losing for years and keep returning to the lottery like becalmed ships to a windless sea. Some of them arrived on purpose and hope to stay only as long as necessary.

The difficulty is telling one from the other, and determining which get to leave first.

The lottery doesn’t know. It only knows who gets to pick first.

 

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