How NBA team salaries correlate to winning

In Mikhail Prokhorov’s tenure thus far as majority owner of the Brooklyn Nets he has nearly single-handedly help change the power structure in the Eastern conference. He has helped dismantle a juggernaut in the East looking to rebuild (the Boston Celtics), but he also took a piece from Atlanta (Joe Johnson) as well as one of the best point guards in the West (Deron Williams). Now the Nets are favorites to compete deep into the playoffs. He has absolutely no regard for the NBA salary not-so-cap, but since paying the luxury tax isn't a problem, why not go for it? If you’re a billionaire looking to do something big after losing an election for the Russian presidency, running an NBA team is surely the most logical follow-up…right? After all, his plan with the Nets was inspired by former Soviet Premier, Vladimir Lenin.

But does money really buy success in the NBA?

The 2013 champs had the benefit of underpaying three superstars (LeBron, Wade, and Bosh) while the Lakers paid a much more accurate market value for their superstar, Kobe Bryant ($30 million), who took full advantage of his Bird rights.

Based on the above graphic, 13 teams performed better than their team salary would predict, 13 teams under-performed, and four teams hit basically exactly what you would predict. (OKC and Miami performed most above what you would expect and the Bobcats, Magic, and 76ers most below.) This suggests that is roughly a 50/50 shot at whether or not you perform above or below what you would expect based on how strategically your owner shells out cash. Translation: it's not all about how much you can spend.

NBA playoff series wins vs. team salary. 2012-13 NBA season

In terms of teams that won at least one playoff series in 2012-13, here’s a look at how each team’s salary compares to the median salary ($65 million). Number of playoff series wins increases from left to right (ie Bulls and Warriors won one and Miami won four series).

At first glance, two things stick out: 1) Indiana spends significantly less than average and 2) there is not much of a correlation between salaries and series won…until you look at the Miami Heat.

The median salary for a player in the NBA during 2012-13 was about $5.5 million and if you divide each of the salaries of the playoff series-winning teams by 12 (players on a team), all of the teams except the Pacers (-$1.2 million) and Heat (+$1.5 million) spend within $1 million of the median salary per player. However, a more telling explanation would be that an extra $10 or $20 million could be the difference between being able to add a superstar to your roster...or not. Not only that, but the luxury taxes that teams like the Brooklyn Nets can willingly incur make that $10 or $20 million more than that figure in terms of a cap hit. (This is where I leave my issues with the NBA salary not-so-cap for another day…)

Extrapolating from that data, I created a prediction for the 2013-14 record of all 30 teams based strictly on their team salaries:

Predicted wins for all 30 teams based on team salary for the 2013-14 NBA saeson

The Kobe Bryant contract clearly impacts these results but there are some meaningful takeaways from this prediction. For one, the Western conference is much more equitable in terms of salaries whereas there is a much larger disparity between the top and bottom of the East. The spread in win predictions between the one and four seeds in the East (9) is the same as the one seed and the absolute bottom of the West.

Another point of interest is that the predictions in terms of who makes the playoffs is quite accurate when compared to 2014 NBA playoff predictions like my own. If you put Detroit or Cleveland in Boston’s playoff spot, you have eight teams that one could logically predict to make the playoffs. Same can be said for the West, if you put the Spurs in the Lakers spot.

So while the finer points of how well a general manager crafts a team fine-tune this inexact science, the dollar amount he can work with will usually make the difference between a playoff team and a team that heads home early in the summer.

¹2013-14 NBA team salaries are taken from Basketball-Reference.com and 2012-13 team salaries are from Ballislife.com.

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If you are interested in more NBA statistical analysis, check out TSR, a statistic that I created a bit ago, which quantifies the difference between a scoring point guard and a pass-first point guard.

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