NBA HD: Beating the Market

Over the past few weeks, I’ve been updating the free agent market value for a win, measured by Kevin Pelton’s WARP2.  Today, I’d like to apply the same method to a retrospective look at last season’s production.

Given the general rate for wins, who were the best bargains in the game last year?

In my salary research using Patricia Bender’s salary index, I found that teams “paid” approximately $2.25 million per WARP2 last season.  I framed that with quotation marks because for the most part, teams do not purchase players every summer but rather in contract intervals.  The $2.25M pricetag a quick and dirty rule of thumb when you’re looking at player worth.  The price reflects what I found researching the contracts handed out this summer as well.

So who were the best bargains last year?  To find out, I converted each player’s WARP2 into a dollar amount by multiplying their production (WARP2) by the price for that production ($2.25M).  Team loses on their investment if they pay more than what they receive in production.  On the flipside, teams enjoy a profit or surplus of value if their player provides more production than they were paid.  So if the general market rate for wins is $2.25M per win, how much surplus value did teams receive on their investments?

I present the 20 biggest bargains of last year:

I’m guessing most people would argue that Kevin Durant is by far the biggest bargain in the game. But even though LeBron gets paid $11 million more than Durant, he still provides about $5 million more in surplus value.  The difference of $11 million would generally buy about 5 wins on the open market so the 7.1 extra wins that LeBron produced wins out.

Rondo was the most valuable player on the Celtics last year and that’s even before we look through the bang-for-your-buck lens.  Remarkably, the Celtics paid Brian Scalabrine 50 percent more than they paid Rondo and yet, the latter produced nearly 15 wins more.  And next year, Rondo will still only rank as  the fourth highest paid Celtic.

How about geezers Jason Kidd and Steve Nash? The Mavericks and Suns have gone the extra mile to make sure these two players, 37 and 36 years old respectively, can stay on the court and the dollar investments have been absolute steals.

Notice the surplus value of rookie contracts.  Several of these bargains are still under the pay scale of their first NBA contracts.  This is why the draft and player development are the lifebloods of shrewd franchises.

Brandon Roy missed 17 games last season but still measured out as one of the best values of last year, getting paid $3.9 million for almost 10 wins of production.  Impressive.

In next week’s edition, we’ll take a look at the biggest wastes of 2009-10.  Any guesses?

Thanks again to Kevin Pelton for his player metric.  Be sure to get the new Pro Basketball Prospectus when it comes out in early spring.  Now that’s a bargain.

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