FanPost

Playoff Teams and the Salary Cap: Do You Get What You Pay For?

Sean_Corp recently wrote a great article that examined why the NBA salary cap may increase significantly in the future and how this will affect the Pistons. This post also looks at the cap, but instead gazes back at last season. Specifically, I wanted to see how the playoff teams managed their salaries in comparison to draft lottery teams like the Pistons.

After perusing the salary data (taken from ShamSports.com), I’ve chosen to present and analyze it in respect to each playoff team’s total salaries, their top 5 salaries, and the number of their players who were making $10M or above. I organized the teams by their won-loss record for 2012-13, and I also computed what each of their wins cost them in player salaries. By that standard, Denver, Memphis and OKC got the most bang for their buck – 1 win for every $1.1M spent. Among playoff teams, the Lakers paid the most per win - $2.2M apiece. Sadly, the Pistons paid even more per win – $2.4M. But we weren’t the worst! Orlando’s 20 wins cost them $3.3M each.

I also computed averages in all these categories for the 16 playoff teams, did the same for the 14 lotto teams, and included the Pistons’ figures for comparison. Granted, I’ve only done this study for one year. It’s certainly possible that comparing team salary data over a period of several years might reveal more or different insights. But with that caveat, what can we learn about how to manage the salary cap from the teams that made the 2013 playoffs? As a general rule, I’d say that teams do get what they pay for. The average total salaries for playoff teams were over $10M more than they were for lotto teams. But the key is not just the extra money they spent, but how they spent it. On average, playoff teams spent $13.7M more on their top 5 players. They also had an average of 2.6 players making $10M or more, while the lotto teams had an average of just 1.1 players making that sum. So playoff teams spend more of their money on stars.

If we look at specific teams, we see that only Houston and Milwaukee made the playoffs (both as 8th seeds) with less than 2 $10M+ stars. In Houston’s case they had a star player (James Harden), but his max contract extension didn’t kick in until 2013-14. Milwaukee just barely made it into the playoffs last season with their one well-paid pro (Monta Ellis).

I think it’s no accident that the top 3 teams by won-loss record each had a “Big 3” of players making $10M or more. The NBA is a star-driven league, and it’s clearly difficult to put a top team on the court without paying for it. But of the 16 playoff teams, 10 stayed under the luxury tax threshold of $70.3M for 2012-13. Two teams (Boston and Chicago) were just a few million dollars into the cap. While Miami was well over the cap, the 5 next best teams all kept their salaries under $70M. So it’s possible to contend for a title without breaking the bank.

Going forward, what does this data tell us about how the Pistons should manage their salary cap? I see several lessons we can learn:

First, if we want to contend for titles, we will have to pay for top talent. We shouldn’t worry about whether we can afford to pay 3 star players (i.e. Drummond, Monroe, Smith). Given the high cost of losing ($2.4M per win), I don’t think we can afford not to pay for star power! (Whether our current “Big 3” are the best recipients of our present and future largesse is a debatable issue, of course.) While the popular assumption is that only places like Los Angeles, Miami and New York can attract top talent, a careful review shows that this isn’t true. For one thing, there is a limit to how many top players a single team can afford to pay for with the new luxury tax scale. It’s also clear that teams like Houston, OKC and San Antonio have attracted and kept star players. If they can do it, I think the Pistons can, too.

Second, building a contender while avoiding the luxury tax requires careful spending on our complementary players. While the only player currently on our roster making over $10M is Josh Smith, we can anticipate giving Greg Monroe (2014) and Andre Drummond (2016) max deals. Assuming there are no big changes to the salary cap (currently $58.7M), we can expect that we’ll be paying our “Big 3” about $43M for 2016-17. That would leave us $28M to spend before we exceeded the current luxury tax threshold of $71.7M. On average, playoff teams spent $53.6M on their top 5 players last season. So we’ll need to be careful about how much we pay for our next 2 starters and key reserves. Fortunately, if Kentavious Caldwell-Pope is our starting SG in 2016-17, we’ll owe him just $3.7M on the last year of his rookie deal. So if we paid our starting PG (Knight? Dragic?) $8M per year, our top 5 would cost us $54.7M.

Third, playoff teams don’t overpay for their bench. If our top 5 players were to cost us $54.7M in 2016-17, that would leave us with just $17M to spend on up to 10 other players. This may sound like a difficult challenge, but on average last season’s playoff teams spent only $18M on those “less essential” players. Contrast this with the lotto teams, which spent $21.3M on those guys. And last year’s Pistons spent $24.5M on our “bottom feeders.” But we’re headed in the right direction, because for 2013-14 the cost of our 10 lowest salaries is under $19M.

Fourth, if the salary cap rises significantly in coming years, that will only benefit us with our current contracts. Unless the NBA mandates that a special “bonus” be granted to existing deals, they will all become more affordable if the cap goes up. But this will only be a short-term help to us. Since the 2011 CBA stipulates that a max contract is 25% of the salary cap, having more money to spend will eventually lead to having to spend more money. Under the current cap, a max contract for 4 years is $58M. If the cap increases, so does the amount of a max deal. (If I’m Andre Drummond, I’m hoping Sean_Corp’s projection of a much larger cap kicks in before I negotiate my extension!) Then in the years to come, other new contracts will most likely reflect that higher figure. And if the salary cap jumps appreciably before Monroe signs an extension next summer, we will receive little if any benefit from the higher cap.

Here’s the table of information on which I’ve based my observations. (All dollar figures are in millions.) I look forward to reading and responding to your comments!

TEAM 2012-13 REC. 2012-13 SAL. TOP 5 $10M+ COST/WIN
Miami 66-16 $83.4 $62.1 3 $1.3
Oklahoma City 60-22 $68.2 $54.7 3 $1.1
San Antonio 58-24 $69.6 $50.8 3 $1.2
Denver 57-25 $64.0 $45.3 3 $1.1
LA Clippers 56-26 $69.6 $51.7 2 $1.2
Memphis 56-26 $63.2 $48.0 2 $1.1
New York 54-28 $78.8 $61.6 3 $1.5
Indiana 49-32 $66.8 $48.7 3 $1.4
Brooklyn 49-33 $83.2 $72.3 4 $1.7
Golden State 47-35 $69.7 $50.3 3 $1.5
Chicago 45-37 $74.2 $61.0 4 $1.6
LA Lakers 45-37 $99.9 $82.5 3 $2.2
Houston 45-37 $55.6 $32.0 0 $1.2
Atlanta 44-38 $66.5 $44.0 2 $1.5
Boston 41-40 $71.9 $53.7 3 $1.8
Milwaukee 39-43 $61.7 $38.5 1 $1.6
PLAYOFF TEAM AVG. 51-31 $71.6 $53.6 2.6 $1.4
LOTTO TEAM AVG. 30-52 $61.2 $39.9 1.1 $2.0
DETROIT 29-53 $69.1 $44.6 2 $2.4

FanPosts are user-created posts from the Detroit Bad Boys community and do not necessarily reflect the opinions of all fans or the staff at DBB. The DBB staff reserves the right at any time to edit the contents of FanPosts as they reasonably see fit.

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