The NBA has a hard salary cap in place, which makes it a lot different than, say, Major League Baseball. The latter is typically dominated by big markets and organizations with owners who are willing to spend, and spend big. There's typically a direct correlation between spending to winning.
The NBA is also different from both MLB and the NFL in that the rosters are a lot smaller. This matters because when you have huge rosters and farm teams, you become less dependent on a single prospect (the exception here being an NFL quarterback). The NBA Draft is huge for this reason – one transcendent talent can transform your organization. You can only play five players at a time. That one player will have a greater opportunity to make a difference than a prospect in other sports.
This makes money management so important, and is why it’s almost a prerequisite to be a semi-expert in the NBA salary cap in order to write about the league. Winning in the NBA is not about how big you spend, it’s about how smart you spend.
Take a look at this table of how much each team last year paid for a single win.
The biggest spender, the Brooklyn Nets, is at the bottom of the list. The Lakers are even further below them, despite a $77 million payroll. The Knicks are right in between them at the bottom, even though they paid their players a whopping $88 million this year.
Again, it’s not how much you spend. It’s how smart you spend.
The Most Economically Efficient Teams
Which is why it’s no surprise to find the San Antonio Spurs at the top of this list. And what a feat this is – they not only had the best on-court basketball team in the league this year, but also the most economically efficient one. That's quite the combination, and speaks volumes of their leadership all around, from their owner, to their general manager R.C. Buford, and their coach Gregg Popovich.
The Suns are second on the list, and could have been first if they hadn’t traded Marcin Gortat for a first-round pick and Emeka Okafor's $14 million expiring contract. The Suns were able to achieve such economic efficiency by getting star-level production from non-star level contracts.
For example, Goran Dragic compiled 10.3 win shares on only a $7.5 million contract. Gerald Green had 6.1 win shares on a $3.5 million contract, Markieff Morris had 6.4 win shares on a $2.1 million contract, and P.J. Tucker totaled 6.1 win shares for less than $1 million. That is efficiency.
Rookie contracts are very valuable in the current NBA, and that's what made the Spurs so dangerous. They were able to add several key pieces like Patty Mills and Marco Belinelli this year because their best player, Kawhi Leonard (he had a team-high 7.7 win shares this season), only made $1.89 million.
The Least Economically Efficient Teams
Meanwhile, the Brooklyn Nets didn't have a single player compile 6.0 win shares last year, despite paying $21.5 million to Joe Johnson, $18.5 million to Deron Williams, $15.3 million to Paul Pierce, and so on. Their $102,828,064 total bill and 44 wins equated to a little over $2.3 million per win.
Interestingly, a lot of the historic franchises were at the bottom of the economic efficiency list and are probably in a tough spot if they want to get out of the hole.
As shown by the Spurs, Sun, and Blazers, it is immensely valuable to your organization to have a star-level performer on a rookie or low-level contract. That worth goes beyond just the contract itself – having it gives a lot of flexibility in able to spend elsewhere on your team. It allows you to hire specialists and build a bench that otherwise would be lacking because of spending on the stars.
And the teams at the bottom of the list compound their problems by giving up valuable draft picks – picks that turn into good rookies on, oh yeah, rookie contracts – to overpay veterans that cannot match in production what they’re paid in salary. Amar'e Stoudemire was a fantastic player at one point of his career, but was certainly not worth anywhere close to his salary of $21.7 million this year.
Teams that can find a way to get stars that will perform up to their contract, get a rookie or two that far exceeds his worth, and fill the rest in with good role players will find themselves year after year on the top of this list. Who will top it next year?