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Authored by Andrew Perna - 17th January, 2008 - 6:54 pm
The NBA set its salary cap at $55.63 million heading into the 2007-08 season, but teams still have the ability to spend what they wish. The New York Knicks ($85.6M) have spent nearly thirty million more than the cap figure this season while the Philadelphia 76ers have been the league’s shrewdest franchise this year ($46.2M).
The league recognizes a soft cap which allows teams to exceed the limit under certain conditions. Only six teams have elected not to spend more than the cap figure: Memphis, Atlanta and Charlotte, Golden State, Minnesota, and Philadelphia.
Thanks to the NBA’s increasing revenue stream, resulting from television contracts and other various returns, the modern salary cap, which began in 1984-85, has increased by an average of $2.3 million a year over the last two decades.
If a team decides to exceed the cap number, like 24 franchises have done this season, they could end up paying a substantial amount in luxury tax. Heading into the season the tax threshold was set at $67.865 million, which means that any team whose payroll surpasses that mark will have to pay a penalty. The penalty is computed on a dollar-for-dollar basis, meaning that a team $10 million over the tax figure would have to pay an additional $10 million in penalties.
Historically, free spending has seen varying results.
For example, the New York Knicks have been well-over the salary cap in recent years but have failed to enjoy even the tiniest bit of success. On the other hand, teams like the Utah Jazz and Toronto Raptors have enjoyed both playoff and regular season success while pinching pennies at the right times.
I took each team’s payroll for 2007-08 and divided it by their projected win total through Wednesday, Jan. 16’s games (this was calculated by multiplying their win percentage by 82). The New Jersey Nets , for example, have a payroll of $66.7 million. I divided that number by 39, their projected win total for the season (once again, through Jan. 16). Therefore the Nets are spending roughly $1.72 million per victory in 2007-08, which turns out to be just slightly above average.
Author’s Note: The payrolls that were used do not include buyouts or other players no longer on the active roster. For example, the contract of Steve Francis was not counted against the numbers for the Trail Blazers. This was done to stress what each franchise is getting out the money they spent to put their current roster on the floor.
The calculation is rather elementary, but it helps evaluate how teams spend their money effectively. It’s easy enough to call the Knicks an expensive bust and the New Orleans Hornets an overachieving bargain, but the simple formula has opened my eyes to some of the other payroll highlights throughout the league.
Here’s what I found:
(League Rank, Team, Payroll Cost Per Win)
The Top Ten
1. New Orleans Hornets - $1.04M
2. Detroit Pistons - $1.07M
3. Boston Celtics - $1.08M
4. Golden State Warriors - $1.09M
5. Portland Trail Blazers - $1.17M
6. San Antonio Spurs - $1.18M
7. Los Angeles Lakers - $1.19M
8. Orlando Magic - $1.21M
9. Dallas Mavericks - $1.25M
10. Phoenix Suns - $1.26M
The Celtics, Spurs, Mavericks, and Suns are the only teams in the top ten that are also among the NBA’s ten highest payrolls this season. Boston’s historic record has allowed them to pay just $1.08 million for each victory despite the fact that Danny Ainge has assembled a roster worth $73.9 million (fifth in the league).
The Pistons and Spurs both have rich histories of economic success. The Pistons (thirteenth) and Spurs (tenth) fall within the top half of the total payroll pack, but their on-court success has helped nullify their above-average payrolls.
The Lakers are an interesting case. They play in a huge market but have spent relatively reasonably this season. Their salary cap number $68.8M is just the eighth-highest in the league. That might be part of Kobe Bryant’s discontent, but L.A. is over-achieving with a 0.703 winning percentage so far in 2007-08. Had the Lakers played like the mediocre team many thought they would be this season, they would have fallen much lower on the list.
The Magic and Hornets appear among the top teams on my list thanks to their extremely young and talented rosters. As you’ll see in Christopher Reina’s aptly named ‘Reina Value’ both teams have stars that are among the very best in the league in terms of on-floor production. Orlando and New Orleans have the luxury of paying Dwight Howard and Chris Paul much less than they are actually worth at this point in time.
Portland ranks highly despite paying Darius Miles an exorbitant amount of money. Remove his contract from their payroll, and the Blazers cost per win would be the lowest in the league.
The Middle Fourteen
11. Utah Jazz - $1.29M
12. Atlanta Hawks - $1.33M
13. Toronto Raptors - $1.40M
14. Philadelphia 76ers - $1.46M
15. Houston Rockets - $1.52M
16. Washington Wizards - $1.53M
17. Charlotte Bobcats - $1.61M
18. Denver Nuggets - $1.69M
19. New Jersey Nets - $1.72M
20. Cleveland Cavaliers - $1.77M
21. Indiana Pacers - $1.79M
22. Milwaukee Bucks - $1.85M
23. Sacramento Kings - $1.92M
24. Chicago Bulls - $1.93M
The middle fourteen, as I have labeled them, are all basically in the same boat right now. The Jazz and Bulls, representing the top and bottom of this section, are separated by a mere $640,000 in terms of cost per victory.
The Hawks really stand out on this list. They’ve enjoyed some success this season despite playing with one of the league’s youngest rosters. Joe Johnson is the only player that Atlanta pays more than $6.3 million per year. They are also unique in that they’ll be a fixture atop this list next season, as well. They have roughly $40 million locked up for 2008-09, with a majority of the core still under contract.
The Nuggets, Cavaliers, and Wizards are all among the league’s ten highest payrolls but make up for that with winning records.
The Bottom Six
25. Los Angeles Clippers - $2.40M
26. Memphis Grizzles - $2.55M
27. Seattle Supersonics - $3.27M
29. New York Knicks - $3.30M
28. Miami Heat - $4.29M
30. Minnesota Timberwolves - $4.57M
The Clippers appear in the bottom six thanks to their dismal 0.324 winning percentage, and the same goes for the Grizzles and Supersonics, who could easily glide up the list with a couple of extra victories in the second half of the year.
It wouldn’t have been too hard to predict that the Timberwolves would have the league’s highest cost per win average this season, having dealt Kevin Garnett in the offseason. No matter how good of a package you get in return for your franchise player – there is always going to be a lull following their departure. With the high contract of Theo Ratliff coming off the books this summer, look for Minnesota to be much more cost-effective in 2009.
Miami’s eight wins, ‘good’ enough for second-worst in the league, is the reason they are paying $4.29 million for each win this season. The high contracts of Shaquille O’Neal and Dwyane Wade don’t help, but the Heat (fourth highest payroll) have more problems than just their eight high-priced victories.
The only team in the NBA that can make Miami look like a tropical paradise is the Knicks, who were assembled by the notorious Isiah Thomas. New York has the highest payroll in the league which combined with their 0.316 winning percentage explains their ranking on the list.
The Knicks are paying six players more than seven million dollars this season, including the combined $32.3 million that Stephon Marbury and Zach Randolph are making this year. Even if the Knicks were able to up their efforts slightly and match last season’s win total of 33, their cost per victory would still be $2.59 million, sliding them up just two spots on my list.
How much would you pay for a win? Andrew.Perna@RealGM.com |
