A player’s true value is actually a function of his value relative to the general caliber of play in the league – which, in turn, is driven by competition levels and expansion of professional sports leagues. That is, if a young basketball player is worth five wins and has the potential to become a star (worth, say 10 wins in a few years), that same player’s “true value” within the league is worth less:
• in super-competitive league A, where many players are bunched together with values in the “8-win” range, with some outliers both good and bad, versus
• a less-competitive league B, where the young player can make a larger impact.
Below, we show the impact of young stars in the NBA over the years. The data shows a gradual decline on the impact of young stars in the NBA as competition increased. There is an uptick and blip in the general downward trend due to the expansion in the NBA from 23 teams to 27 teams from 1988 to 1990. Besides this, the downward trend is fairly pronounced.
This is due to a variety of factors, including the increasing number of international players, increased popularity of professional sports, and the evolving incentive structure of professional sports. There is significantly more money to be made in professional sports today than there was even fifteen years ago, and more elite young athletes see this as a legitimate career opportunity. This has altered the parity structure of youth sports, which has carried over to the professional level.
Value of Top NBA Draft Pick over time
Figure 2: NBA – Historical Contribution of Young Stars
(Note: NBA expanded from 23 to 27 teams from 1988-1990)
If we take a top-down approach to analyze team results, the results verify this bottom-up type of approach. That is, team results reflect the performance of these cohorts of top young talent over the years. Teams that are able to draft top draft picks improve for a variety of reasons, and if we carve out some of the noise, we are able to triangulate and verify the decreasing impact of top draft picks.
While top young stars can help teams improve, this level of improvement has decreased over the years from an average of ten advanced wins to about six. While a difference of four wins may not seem very significant, note that this figure is only an average. That is, the outliers may help teams at rates much more than this average of +10 or +6. However, the impact in today’s more competitive environment is markedly decreased.
This, in turn, means that the probability of playoff appearances and even championships is correspondingly lower in today’s sports marketplace. In many ways, this result mirrors the Bill Simmons reflections in The Book of Basketball. Simmons comments about changes in the competitive landscape in the NBA. In the mid-sixties, the NBA consisted of ten or fewer teams, so that most teams were stacked with great players [2}. However, after expansion and then the merger with the ABA in 1977, the level of play was diluted. Since 1980, the data shows a steady increase in the overall level of competition and correspondingly less impact by young NBA stars. This has implications for the true value of draft picks relative to the overall level of competition in the league.
Jimmy Johnson’s chart on the relative value of NFL draft picks was groundbreaking research. However, with today’s available analytical tools, we can move this model forward and use this approach as a function of draft pick values, player values, and overall level of competition.
In the chart at the top of the article, we show various metrics highlighting the decreasing impact of young stars in the NBA. Interestingly, the numbers show us that stars reach similar peak values across different time periods and eras. However, the actual impact on team- wins varies as a function of the level of competition.
Carlton Chin is a fund manager, MIT-trained quantitative analyst, and co-author of “Who Will Win the Big Game?" He has been quoted by the Wall St. Journal, New York Times, and ESPN. Jesse Heussner and Max Weisberg co-authored this paper and worked with Carlton for the Sacramento Kings on Draft 3.0.