Salary Concentration Refresh: Modern Era. Can you win with a ton of your hard cap tied up in a small number of players?

[pacers]

Salary Concentration Refresh: Modern Era. Can you win with a ton of your hard cap tied up in a small number of players?

11 seasons ago, I did this analysis of salary concentration: viewtopic.php?p=8825 (original post date: 4/18/24; note to graders, please use this as my first article and original content bonus!). The objective of this analysis was to answer the question: Can you win with a ton of your hard cap tied up into a small number of players?

I wanted to refresh this analysis, as GMing behaviors and trends have changed significantly in the last 11 seasons as teams have gotten more comfortable with different team-building constructions (building teams around 1-2 great players on rookie deals, building teams around one albatross deal a la Kevin Durant, navigating RFA, etc).

As a reminder on methodology:

• I (manually) gathered the salary structures of all the champions and runners up from creation to now. This now totals 54 total teams, as the data from the ‘98 season is still missing.
• For each team, I counted the number of players with salaries >$25m in that year, >$20m, >$15m, and >$10m
• For each team, I also calculated how “concentrated” or “top heavy” the team’s salary structure was by using the Herfindahl-Hirschman Index (HHI), a metric usually used to calculate competition/concentration in a certain industry, with an HHI of 100% meaning the entire industry is dominated by one company (or in the SLN case, one player on the team makes $85m), and a low HHI meaning that the industry is evenly distributed (or in the SLN case, all 12-15 players on the roster make the same amount of money). I calculated HHI both against the team’s total salary structure and the $85m Hard Cap.
• For the purposes of this analysis, I designated the 1996-2012 seasons as the “old era” and the 2013-2023 seasons as the “modern era”.

That led to this dataset:


Aggregate Analysis Across All Eras

• Of the 54 champions and runners up since the start of SLN:
  • 7 teams have had a player making >$25m
  • 24 teams have had a player making >$20m, including 3 teams with 2 players making >$20m
  • 53 teams have had a player making >$15m, including 39 teams with >2 players making >$15m
• The 10 most top-heavy teams:
  1. 2022 Hawks
  2. 2021 Hawks
  3. 2023 Bullets
  4. 2012 Rockets
  5. 2020 Hawks
  6. 2017 Suns
  7. 2005 Hornets
  8. 2019 Hawks
  9. 2016 Pacers
  10. 2006 Raptors
• The 10 most evenly-distributed teams (not counting the first 6 years (‘96-’01 seasons) given the salary parity coming out of creation draft):
  1. 2015 Nets
  2. 2008 Grizzlies
  3. 2002 Pacers
  4. 2003 Celtics
  5. 2006 Sonics
  6. 2013 Pistons
  7. 2002 Jazz
  8. 2004 Grizzlies
  9. 2011 Bulls
  10. 2010 Bulls

Comparing Eras: How the Game Has Developed

• Multiple albatross contracts:
  • In the Old Era, ZERO champions or runners up had >1 player making >$20m. In the Modern era, three teams had 2 players making >$20m (2017 Suns, 2020 Hawks, 2020 Jazz).
  • In the Old Era, also zero champions or runners up had >3 players making >$15m. In the Modern Era, 1 team (the 2017 Raptors) had 4 players making >$15m.
• More top-heavy teams:
  • Average number of players making >$20m: Old Era 0.25, New Era 0.73
  • Average number of players making >$15m: Old Era 1.72, New Era 2.58
  • Average number of players making >$10m: Old Era 3.45, New Era 3.25
  • Average HHI salary concentration: Old Era 0.1488, New Era 0.1731
• In conclusion:
  • The league has gotten more comfortable managing around highly-paid players, including multiple highly-paid players on the same team, though the data is somewhat skewed by the ultra-successful KD teams.
  • That said, even if you take the 6 KD teams out of the analysis, the trend still holds, with the average number of players per team making >$20m more than doubling (0.25 to 0.56), the average number of players per team making >$15m increasing significantly as well (1.72 to 2.50), and the average HHI going from 0.15 to 0.16.
  • So, building a team around the right 1-2 highly-paid players can work and is more viable strategy now than it was in the early days of SLN. This may be even more true as we enter the era of fake players, as no info from real life means more draft variation, meaning more contributors taken in the mid-to-late first round, meaning more good-to-great teams who are "on the cusp" of championships being able to complement their highly-paid stars with rookie-scale pieces found in the draft.

That's all for now. As always, would love your thoughts and feedback on this content. Thanks all!

[GX.]

So you can win with a top heavy team if that team has KD. Noted

[Merv]

If this was expanded to conference finalists, I wonder if the data would be consistent.

Feel like as a league we have gotten better at not handing out absolutely god awful deals

[Joe]

Grade: 950RP
Quality content bonus: 100RP
Total 1050RP