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

[pacers]

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

Inspired by the conversation on the latest Many Men pod and @Joe's question on the thread, I’ve analyzed the rosters and salary construction of each champion and runner up from creation to now to answer the question: Can you win with a ton of your hard cap tied up into a small number of players? I probably should have done this analysis before trading for player making $98m over the next 4 years, but so it goes.

Dataset and methodology:

• I (manually) gathered the salary structures of all the champions and runners up from creation to now - 32 total teams, because for some reason the historical data from the ‘98 season didn’t work

• 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.

This led to this dataset:


Key takeaways:
- To answer the question originally posed, YES you can win with a >$20m of the hard cap tied up in one player, or even >$25m. But if you're going to do so, you need to have at least 2 major contributors on rookie or significantly below-market deals. This has been true for every champion or runner up team with a >$20m player since creation with the exception of the ‘12 Rockets, who had TMac >$25m but "only" Blake on a significantly below-market deal.


- There has never been a champion or runner-up with >1 $20m player or >3 $15m players.
- Of the 32 teams who made it to the finals:

• 3 teams have had a player >$25m

• 8 teams have had a player >$20m (5 incremental to above count)

• 31 teams have had a player >$15m (lone exception was the ‘08 runner up Grizzlies, with Marbury as the highest player at $14m)

- The first appearance of a $20m player in the finals was Steve Nash on the ‘04 Hornets

• Thereafter, 8 of the 18 finals teams from '04-’12 had a player >$20m

- 5 most top heavy teams

• 2012 Rockets Winner

• 2005 Hornets Winner

• 2006 Raptors Runner up

• 2012 76ers Runner up

• 2009 Sonics Winner

- 5 most evenly distributed teams, not counting the first 6 years (‘96-’01 seasons) given the salary parity coming out of creation draft

• 2003 Celtics Runner up

• 2007 Grizzlies Runner up

• 2002 Pacers Runner up

• 2008 Grizzlies Runner up

• 2004 Grizzlies Runner up

Applied to today’s teams:
I then applied the above methodology to this year’s top 6 competitors: last year’s 4 final teams (Rockets @nolan, 76ers @Dmo, Bulls @Matt, Nuggets @Kipke), last year’s highest win total team otherwise (Blazers @quady ), and the Pacers (wow, what a team).

• On total-salary HHI basis, the 2013 Rockets would have the second highest salary concentration when compared vs all historical champions and runners-up, after only the… 2012 Rockets

• 76ers, Pacers, and Bulls would be in the top third of salary concentration.

• Blazers and Nuggets, depending on the measure, would be middle-to-bottom of the pack.

If you’d like me to run the salary concentration metrics for your team, just hit me up!

Ideas for future extensions:

• Attaching with player performance data - e.g. PER, VORP, etc - to analyze salary-weighted value

• Broadening this to more teams and doing a more fulsome correlation of win percentage to salary concentration

Thanks for reading, and as usual, hope you found this informative and let me know if you have any feedback!

[Clinton]

Top tier info

Well deserved RP

[Josh]

vancouver is all about even distributions. there's a canada socialism joke in there somewhere.

awesome article tong!

[Merv]

So if you have the guy on a rookie deal, don’t be afraid to go for it

[pacers]

So if you have the guy on a rookie deal, don’t be afraid to go for it

Exactly!

[pacers]

So if you have the guy on a rookie deal, don’t be afraid to go for it

That's also a good follow up analysis idea - how many champions/runners-up had a guy on a rookie deal as a top 3 player on the team? My guess is a lot of them.

[SoNicks]

Let tonger cook holy shit! Muadib!

[Hoff]

I remember the days when a young Pau and Eddy went up against Yao and Primoz in the final

[jwoo]

just got very wistful thinking about Lou Williams on his rookie contract

[Joe]

This is amazing analysis - so glad somebody dug into this. 1 million RP