Sports Nut

How to Stop Tanking in the NBA

A plan to fix pro basketball’s perverse incentives.

Photo illustration by Derreck Johnson. Photos by Grant Halverson/Getty Images; Mike Stobe/Getty Images.

The NBA’s anti-competitive incentive problem is reaching a critical level. One of the things a person comes to know from a lifetime of competing in tabletop baseball games is that a reverse-order draft can rip a league apart. Competitiveness is essential to competition: A league cannot survive with teams actively trying to lose. A reverse-order draft gives the biggest prizes—that is, the best players coming into the league—to the teams with the worst records. This creates an incentive to lose. In an eight-team league in which the futures of players are known, a reverse-order draft will destroy the league. In any season, only two or three teams will have a real chance to win. The other teams are best served by losing as many games as possible. What will happen in an APBA league or a Strat-O-Matic league is that you will have two teams trying to win wind up with records like 53–7 and 48–12, and then you will have four teams wind up with records like 11–49 and 16–44. You have a lot of games that don’t mean anything and a large number of meaningless games absolutely will destroy a league, whether it is a baseball simulation league or a league with real athletes and real fans and really big money.

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The NBA has used a reverse-order draft for nearly 70 years, granting the most valuable draft picks to the worst-performing teams. This has historically not been an immense problem, but the chickens is comin’ home to roost. The recent resignation of Philadelphia 76ers’ general manager Sam Hinkie is an illustration of this, although that is not the real problem. The real problem is that the NBA completed its season with teams that had absurdly good (the 73–9 Warriors) and absurdly bad records (the 10–72 76ers). When you have teams with tremendously good and comically bad records, you have meaningless games. When you have meaningless games—and lots of them—you have a problem.

Hinkie, in resigning, left us with a 13-page meditation on the problem of behaving rationally in an irrational world. A GM being forced out is not the problem; GMs are going to be forced to resign in any system no matter how it is set up. I thought it was a good letter. Hinkie was abused on the sports talk shows, it seems to me, for showing excessive intelligence in the face of defeat. Well, OK, I understand a little better than that what his critics are attacking him for. There is a perceived lack of humility attached to comparing yourself to a young Warren Buffett when you have been just been kicked to the curb. People like to instruct others on the value of humility; I suppose it makes them feel better about their own failures.

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Hinkie wrote five paragraphs under the heading of “The Importance of Intellectual Humility.” I think these five paragraphs are key to the misunderstanding that followed his resignation and which, frankly, has dogged me throughout most of my career. Intellectual humility is the acceptance that that which we believe may be wrong. But people like Hinkie and myself don’t just think that we may be wrong; we tend to think the whole world is probably wrong about 80 percent of the time—the whole world, including you. We tend to think about 80 percent of what people believe to be true is just agreed-upon nonsense. We’re not intending to be arrogant; we are intending it as a form of humility, an acceptance of own ignorance. It doesn’t usually come across that way. You tell people that 80 percent of what they believe is nonsense, they tend to take offense.

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In a sports franchise, the field-level coach or manager is supposed to push for immediate results, and the general manager or executive-level manager is supposed to take a longer-range view; that is how it is supposed to work. Hinkie was trying to be the person who had the longest-range view of anyone in the room, anyone in town, and that was a problem for him. Think it through: If you have a longer-range view of the problem than anyone else does, that means that you haven’t taken people with you. You haven’t taken the fans with you; you haven’t taken the owners with you. It’s a leadership position. In a leadership position, you have to take people with you. You can’t hide your light under the basket; you have to draw others toward your vision.

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Hinkie, who managed to acquire a huge number of high draft picks, including this year’s No. 1 selection, leaves the Philadelphia 76ers poised for an immense leap forward that will rescue his reputation, and I will root for that to happen. But the fact is 20 other NBA GMs are dealing with the same problem—the perverse incentives problem—and it is my opinion this is going to get worse. A team that is 35–47 now, they can’t get to the level of the Golden State Warriors by taking small steps each day to get a little bit better. They can’t get to the level of the San Antonio Spurs by doing that. Their incentive is to go for the long bomb, a football analogy based on a military analogy.

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Over time, people adopt logical strategies, although many times it takes decades for this to happen. In baseball, relievers throw harder than starting pitchers for the same reason that sprinters run faster than marathon runners. There is a competitive advantage to using more relievers, even though it creates an ugly, annoying game with constant late-inning delays. It took 100 years and more for strategy in baseball to coalesce around that advantage—but it eventually did.

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In basketball, it was always apparent that the percentage move was to shoot more threes, because the points per shot were always higher on the three than on the two. (This discrepancy actually understates the advantage of shooting threes. The advantage grows when you switch to points per possession, rather than points per shot.) There was strong resistance to basing an offense around threes, and it took decades for strategy to move in that direction—but it eventually did.

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I am not alleging that NBA teams are trying to lose, but some of them aren’t trying very damned hard to win. For many NBA teams, it is logical for them to try to lose. Strategy is drifting in that direction, and it will continue to drift in that direction as long as there are perverse incentives in the system.

But what can we do? There is only one Ben Simmons to go after. Cloning Ben Simmons would be an ideal solution but the technology is slow and unreliable, and sometimes you wind up with a defective Michael Keaton. I was talking about this with a friend from the NBA, and his solution was to create a “draft wheel” in which the first draft pick rotates on a long schedule. I don’t see that being a workable plan. It anticipates things evening out over 30 years, but over 30 years everything changes. Expansion franchises are added. Teams move, owners die, small cities become large cities. It is not practical to try to even things out over a period of time greater than the length of a career.

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A reverse-order draft has two purposes. First, the one they tell the fans, is to preserve competitive balance, by giving the weaker teams a shot at the best incoming players. The other purpose is to save money for the teams by preventing bidding wars for rookies.

In baseball, the reverse-order draft for free agent amateurs was established 100 percent to prevent bidding wars, although it has had some effect in helping competitive balance as well. In basketball, I don’t really know why the draft was implemented; that happened before I was born. Doesn’t matter.

Anyway, the draft is helping NBA teams avoid insane bidding wars. What would happen, if there was no NBA draft? Ben Simmons would be asking for a billion dollars—literally, a billion. He wouldn’t get a billion, but he would ask for it, and he’d get more than $100 million. With no draft, 15 NBA owners would be determined to get Ben Simmons and turn around their franchises now, and he’d rake in an immense amount of money.

The system may well be working on that level, but is it working on the level of “creating competitive balance”? Very obviously it is not. It is beating competitive balance over the head with a rusty tire iron.

Here’s my solution. Create a system in which:

  1. Each NBA team has an agreed-upon amount of money that it can use to sign players coming into the league, and
  2. Each player may be drafted not by one team, but by three teams.

In other words, permit a bidding war—thus permitting competition—but a limited bidding war. The bidding war is limited because:

  1. Only three teams can participate for one player, and
  2. Those teams have a limited amount of money that they can spend.

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How would this work in practice? Let’s say that each team has a “rookie fund,” and there are limits as to how much each team can put into that fund ($7 million in one year, $25 million over four years) and limits as to how rapidly they can spend out of that fund ($20 million in one year, $45 million over four years). Don’t focus on the precise dollar amounts; that would require negotiations among the teams. The key is each player can be drafted by three different teams. If there are five “special” players in the draft, there aren’t five teams that have a shot at them; there are 15—and really, it is more than 15, if we assume that draft rights can be traded or sold. Let’s say you have a franchise that is determined to acquire, let’s say, Brandon Ingram. In the current system the only way you can take a shot at him is to acquire one of two draft picks—the first, or the second. What if there were six shots instead of just two?

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If there were six teams that were going to get a chance to draft Brandon Ingram, two or three of them would put that opportunity on the market, and offer to trade the rights to an Ingram draft pick in exchange for some other package of talent. One of the six worst teams is going to say, well, OK, we have the right to draft Brandon Ingram, but there is no way we can sign him because

  • We don’t have enough money in our account.
  • We play in Portland, Oregon, and we don’t think he wants to come to the West Coast.
  • We already have a player at that position that we like better.
  • Our scouts don’t think Ingram is as good as he is believed to be.

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Some team is going to put its rights to Brandon Ingram on the market for some reason. And what that means is, if you’re the general manager of an NBA team that is 35–47 or 38–44 or something, you don’t have to ruin your team in order to position yourself to get a really good player. There is another pathway open to you.

Look, the problem is that the draft system creates a huge reward for having a bad team. What I am proposing is to break that one huge reward down into a system of much smaller rewards that go to many more teams. The team that finishes 29–53, out of contention … it still gets compensation for its failures. It gets one of the six tickets for Ben Simmons or Brandon Ingram. It can cash in that ticket for an immediate payoff or it can actually try to sign Brandon Ingram. You can take small steps forward, rather than trying to elbow yourself into a position from which you can launch a great leap forward.

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If that team can’t sign him … well, the money remains in the account for next year. Two-thirds of draft picks go unfulfilled. You can take some of the money and go after Brice Johnson, who you also drafted in the second round, and leave some of it in the kitty for next year. (If you have three draft picks for each player, then the last draft pick for Brice Johnson isn’t going to go before the late second round.) The draft would also certainly have to be longer. Five rounds would be more or less equivalent to two, since you wouldn’t have exactly the same 30 players drafted three times each.

Well, perhaps it was greedy of me to try to sell a problem and a solution in the same package. Perhaps it would have been enough just to get people to understand that there is a problem building up, and then perhaps I should have opened up the floor to see what ideas you all had about the solution. What do you think?

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