Tuesday, July 17, 2007

Pricing in Basketball via the Free-Agent Market

I am fascinated by who's getting overpaid in the basketball free-agent market, and who's getting underpaid. Five or ten years ago, the players being overpaid tended to be the big men: Juwan Howard, Erick Dampier, Adonal Foyle, etc. But now, young bigs like Darko Milicic and Drew Gooden are getting paid somewhat normal contracts. Eight million a year for a young starter at PF who was a former high lottery pick? Yes, nowadays those aren't bad deals. It does proves that the MAX ceiling is definitely too low; I think that if the market determined prices, we'd be looking at 24-32 million a year contract for the best players (4x the price of an average starter).

But look who's getting overpaid--Rashard Lewis? Vince Carter? The players now being overpaid are tall jump-shooting scorers with the occasional ability to go inside. The market is now over-valuing tall players who can make small-ball line-ups work. So why is this happening?

One reason for prices of big men to go down relative to jump-shooting forwards could be scarcity. Now that we can get big men from Europe, Australia, and Asia (Yao Ming, Andrew Bogut, etc.) as well as Africa (Mutombo, Bol, etc.), I think that there are more big men available than before. Thus, the prices are finally falling. However, tall jump-shooting forwards are becoming more scarce. The problem with this idea, though, is that Europe is filled with tall jump-shooting forwards.

Another reason is that small-ball has truly taken over; so instead of having a 6'9" PF and a 7'1 C in your line-up, you run out two 6'10" PF/C types instead who can run the floor. To me, I think this may be the reason. I haven't believed some of the small-ball hype in the past (none of the final four teams in the NBA playoffs played small-ball), but when it affects the way GM's spend money, then it must be true.

So what do you think? Why aren't GM's throwing money at any callow starter who stands 6'11" in his stocking feet?


  1. The rarity of getting a big man inside that plays like Duncan does, Shaq did in his prime, Yao can when he's not hurt, and Oden may play down the road is too big a risk to give multi-millions to any more. Teams are seeing that Phoenix approach and trying to modify their systems accordingly. You don't have to give that contract to a seven-footer who only takes up room and fouls.

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