With the 2014 NBA draft now in the books, the next big date on the offseason calendar falls at the end of the day Monday. That's when the league's fiscal year ends, which also means free agency negotiations can begin. With the accounting for the 2013-14 season just about complete, let's take a look at which team spent their dollars efficiently, and which ones did not. This ties into the draft as well.
A hallmark of teams that combine winning with financial prudence is that they have rotation players on rookie contracts who are helping add wins to the bottom line. As Kevin Pelton pointed out in his critique of the trade that sent Omer Asik from Houston to New Orleans, the biggest bargains in terms of pay-to-production ratio are almost always former first-rounders laboring under their rookie-scale contracts.
Amin Elhassan has discussed this topic as well. The methodology used mirrors what we used at Basketball Prospectus, which in turn was based on the influential work of late Baseball Prospectus writer Doug Pappas. I've used team salary figures compiled by ShamSports.com, which are updated through the end of the season but aren't final until the close of the fiscal year. The key measurement is marginal dollars per marginal wins (MDMW), or how much it costs a team to win a game. The notion of marginal efficiency is a better way to look at the subject than just dollars per win for a couple of reasons.
First, with the collective bargaining agreement mandating a salary floor for each team (this season it was $52,811,000), every team by definition is going spend at least that amount. Also, teams always will win some games no matter how bad they are. So the measurement we're making is the amount of money spent above the floor, against the wins those dollars purchased above minimum expectation of 10 wins. Using marginal factors in our analysis lets us isolate the efficiency of each team's spending.
That said, this is never a straightforward topic when it comes to the NBA. For example, sometimes teams intentionally take on bad contracts in order to acquire future assets, even though they are aware the extra money isn't likely to result in wins. There are other examples of skewing factors that can make a simple ranking of team spending somewhat misleading. To work around that, I've divided the teams into the eight possible "buckets" of spending efficiency, and you can see them listed below. The buckets are listed in order from most desirable (playoff teams below the salary cap) to least desirable (teams over the tax apron that managed to miss the postseason).
Bucket 1. Below cap | 2013-14 result: playoffs
Atlanta Hawks (marginal dollars per marginal win: $198,480; overall rank: fourth)
While the Hawks as constructed don't have championship upside, it's hard to imagine a more successful transitional roster than the one constructed by Danny Ferry last summer. It's no coincidence that Ferry once worked in the San Antonio front office, because even though Al Horford missed most of the season, the Hawks made the playoffs and pushed top-seeded Indiana to seven games on the basis of fairly valued assets, a clear style of play and talent that fit that style. Best of all, Ferry's efficiency means that Atlanta has all sorts of flexibility to build off last season. Ferry accomplished this even though recent first-rounders Dennis Schroder, John Jenkins and overseas stash Lucas Nogueira didn't do much to contribute.
Bucket 2. Above cap, below tax | 2013-14 result: playoffs
San Antonio Spurs ($203,246; fifth); Portland Trail Blazers ($224,736; sixth); Houston Rockets ($251,479; seventh); Indiana Pacers ($300,616; ninth); Charlotte Hornets ($302,005; 10th); Oklahoma City Thunder ($365,006; 12th); Dallas Mavericks ($370,999; 13th); Toronto Raptors ($416,445; 14th); Golden State Warriors ($455,119; 16th); Chicago Bulls ($480,152; 19th); Washington Wizards ($514,414; 22nd)
Really, this is the group any hopeful contender outside of the mega markets wants to be in. The champion Spurs are there, and are the model organization in all of sports right now. Sure, they owe a lot to the willingness of Tim Duncan to work for far less than his market value, which set the tone for fellow foundation players Tony Parker and Manu Ginobili. But let's not forget that budding All-Star and Finals MVP Kawhi Leonard still is on rookie scale, earning about $1.9 million last season. The open market value of Leonard's 8.4 WARP is about $16.7 million. Remarkable.
Bucket 3. Above tax, below apron | 2013-14 result: playoffs
Los Angeles Clippers ($422,336; 15th); Memphis Grizzlies ($477,081; 17th)
The Clippers haven't needed the draft to build an efficient roster. Los Angeles' top four -- Chris Paul, Blake Griffin, DeAndre Jordan and Jamal Crawford -- produced about $88 million of value in WARP, while earning a combined $51.3 million. Even better, the only poor-value contract for a player signed beyond last season is Jared Dudley, who could be a solid bounce-back candidate or, at least, retains some trade value. Because the Clippers have not burdened their roster with the poor-value veteran contracts of some of the other mega-market teams, the LeBron James scenarios connected with them move from impossible to merely unlikely.
Bucket 4. Above apron | 2013-14 result: playoffs
Miami Heat ($632,612; 26th); Brooklyn Nets ($1,471,090; 30th)
If you're going to fall into this class, you better win at a high level. That's why it's OK for Miami to be in this category, but not the Nets. The chief difference going forward is that while Miami's contracts have been structured to give Pat Riley some flexibility, the Nets are choked financially in the short term, and will be subsidizing much of the rest of the league with its massive tax payments. Tellingly, the best values on the Nets roster are recent draft picks -- Mason Plumlee and Mirza Teletovic.
Bucket 5. Below cap | 2013-14 result: lottery
Phoenix Suns ($25,642; first); Orlando Magic ($54,287; second); Philadelphia 76ers ($107,760; third); Milwaukee Bucks ($283,705; eighth); Utah Jazz ($307,711; 11th)
Rebuilding teams populate this bucket, and so you see four of the top five lottery teams from the draft listed here. These teams have plenty of good valued rookie contracts, and added some more during the draft. They just aren't winning yet. But if you're going to rebuild, this is the smart way to do it -- don't squander your owner's money and patience. The Suns are the exception in this group. Like Atlanta, Phoenix was able to use on-court fit, youth and style of play to stay competitive on the court, while taking huge strides in the big picture. You're reading the numbers right: Each marginal win the Suns achieved last season cost them just $25,642. That's why even as the Suns collected more long-term assets on draft night, they remain at least a dark horse in most big-ticket free-agent scenarios.
Bucket 6. Above cap, below tax | 2013-14 result: lottery
Detroit Pistons ($478,224; 18th); Denver Nuggets ($483,413; 20th); Minnesota Timberwolves ($511,460; 21st); Sacramento Kings ($559,481; 23rd); New Orleans Pelicans ($567,800; 24th); Cleveland Cavaliers ($581,231; 25th); Boston Celtics ($1,188,682; 27th)
You really don't want to be in this class. You've exceeded the cap, suggesting you want to win, but you didn't win, suggesting you don't know how. There are a number of possible foundation players in this group on rookie scale contracts: Ricky Rubio, Andre Drummond, Anthony Davis, Kyrie Irving. Their teams haven't yet capitalized on the flexibility created by having players that productive for that little money. That's why all of those teams except New Orleans have seen front-office shakeups in the past couple of years. The other exception is Danny Ainge in Boston, whose Celtics illustrate why you have to consider context when looking at spending efficiency. In order to transition from one great window of contention to another, sometimes seasons like the one just completed must be endured.
Bucket 7. Above tax, below apron | 2013-14 result: lottery
None.
Bucket 8. Above apron | 2013-14 result: lottery
New York Knicks ($1,304,071; 28th); Los Angeles Lakers ($1,428,173; 29th)
Finally, we have two of the league's flagship franchises, who threaten to become cautionary tales for NBA executives. These teams suggest that while the road of excess might lead to the palace of wisdom, it doesn't necessarily lead to the playoffs. However, there are big differences between the Knicks and Lakers. L.A. gambled with aging, Hall of Fame talent and was undercut by the injury pitfalls that come with that strategy. The Knicks, on the other hand, tried to spend their way to a roster worthy of Carmelo Anthony's talents, and the resulting mess is what Phil Jackson is currently trying to mop up. In the process, New York might lose the one player it was trying to please.