Value of a Draft Pick and Changing Value in the NBA draft

Posted on 07/24/2010 by

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Quick note the Free Agent Guide is updated

I originally had a long post on the Worst Team since the merger but events and a computer crash have forced me to delay that for this weekend. However, I have a goal. 365 days, 365 posts. To that end I will move up a post on answering some followups from my draft posts ( here and here)

Reader BPS caught an error in one of my posts and as a result won a no-prize. What that entails is that he gets to call his post. His request?

The thought I had when looking at this chart was to try and figure out the monetary value of a draft pick. Since the pay scale is fixed, and we have a rough idea of the expected production of each pick, and a value of a win per year…

This is a perfect question  and one that naturally comes up when looking at NBA draft data. What is what is the value of a draft pick. What’s the most advantageous position for my team? To answer this I built the following chart:

You're damn right this was a lot of work.

The table uses the compiled draft data, a value per win based on the 09-10 payroll of $1.7 million per win and the rookie salary scale for 09-10. The results are very surprising. If I rank the top 10 picks in order:

  1. Pick 1
  2. Pick 3
  3. Pick 5
  4. Pick 9
  5. Pick 4
  6. Pick 2
  7. Pick 7
  8. Pick 11
  9. Pick 10
  10. Pick 24

Pick 1 is still the best value but Pick 2 is all the way down at number 6. This happens because not only is incoming talent evaluation an inexact science (even more so than existing talent) but salaries matter. A 9,10,11 or 24th pick is much less costly than a 2nd pick.

One other interesting point about the draft is the presence of impact players.  What are the chances of drafting a star or a superstar and has that changed over time? Was the draft better in the past? Given the data set we can definitely chart this up. Some ground rules first. A .100 WP48 player who plays 2000 minutes will generate about 4 wins (4.167). We will look at each draft and divide it up into 5 groups of interest:

  • Produced <= 0 Wins a year (The Losers)
  • Produced > 4 Wins a year (Better than average)
  • Produced > 8 Wins a year (Star)
  • Produced > 12 Wins a year (Superstar)
  • Produced > 16 Wins a year (All Time Great)

Using these parameters the draft classes look like this:

1984 was a watershed draft class for the NBA (Barkley,Jordan,Hakeem and Stockton that almost enough for an all time team). But recent classes have not been bad (1999,2004 and 2005). But rather than individual years we want to see the draft over time. If we take this a step further and look at percentages and do a sliding average at a period of 5 years:

And the accompanying chart:

What we can see paints an interesting picture. Of note:

  • The probability of getting no value or negative value from a draft pick fluctuates around 30% , peaking at close to 40% in the period of 1987 to 1991 which interestingly coincides with the well know drug problems in the league.
  • Value peaks in the 82 to 86 period and tails off to a low in the mid 90′s but it’s picking back up in the most recent samples.
  • Impact players (Superstars & All time greats) are coming into the league at an increasing rate. This would help explain the fact that the quality of basketball seems to be at it’s highest levels in recent years (see here)

So what conclusions can we reach from this analysis? The draft is a high stakes lottery but it’s a rigged game for the owners. Salaries are fixed at a discount  and the risk of utter failure is relatively low (30%). Given the rising tide of talent that the data seems to point to, a small market gm hoping to stay competitive can use picks rather than free agents as the way to keep your team successful both on the court and in the bottom line (See San Antonio and Oklahoma City).

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