Competitive Balance in the NBA

Presented By:

Andrew SmithJoe Turcotte

OVERVIEW

• Abstract• Definition of Competitive Balance• Summary of Previous Research • Questions• Methodology• Variables• Regression Results• Conclusions• Economic Theory

ABSTRACT

• The NBA has always struggled with perception of competitive balance.

• Prior to the 2003 NBA season, the league changed the 1st round of playoffs to a new format:– Old Format: Best-of-5– New Format: Best-of-7

COMPETITIVE BALANCE

• What is it?• 3 different ways a league views this:– 1) Close competition between teams each year.– 2) Different teams make the playoffs each year.– 3) There are different champions each season.

• Fans are most interested in games where the home team wins 60-70% of the time.

BACKGROUND

• Allen R. Sanderson – “The Many Dimensions of Competitive Balance.”– One necessary aspect of competition is how to

produce high-quality performances.– Enhance and constrain competition.– Rule changes throughout the NBA’s history.• 3-point shot.• Interpretation of what is a foul.• When free throws are taken.• Number of officials.

BACKGROUND

• David Aldridge – “Competitive Balance? NBA Has Always Been About Dynasties.”– In the midst of the NBA lockout, the league’s

competitive balance was brought into competition.– The NBA has had a “dynasty” in every decade since

its inception, except the 1970’s.– At the same time, other leagues have been

similar.– How can smaller teams succeed?

BACKGROUND 1947 - 2011

http://www.creativeclass.com/_v3/creative_class/2011/06/01/is-the-geography-of-nba-dominance-shifting/

Dallas Mavericks2011

BACKGROUND

• Neil Longley and Nelson Lacey – “The Second Season: The Effect of Playoff Tournaments on Competitive Balance Outcomes in the NHL and NBA.”– Analyzes impact of post-season tournaments on regular-season

outcomes.• Type of playoff tournament used.

– Issue of Conference “pooling.”– Playoffs give lower seeded teams a “second chance.”– How should team success be measured?– Different playoff structures will provide different

levels of advantage to the best teams.

HHI INDEX RESULTSNFL NHL MLB NBA

1950’s .42 .42 .341960’s .42 .16 .821970’s .26 .44 .22 .141980’s .26 .34 .12 .361990’s .18 .14 .17 .422000’s .18 .13 .14 .28

1950'S 1960'S 1970'S 1980'S 1990'S 2000'S0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

Competitive Balance By Decade

NFLNHLMLBNBA

HHI I

ndex

Mea

sure

QUESTIONS

• 1) What does the NBA define as competitive balance?

• 2) What are the key statistics that determine an NBA champion?

• 3) How does the change in the 1st round of NBA Playoffs from a 5-game series a 7-game series affect questions 1 and 2?

1ST ROUND ANALYSIS - EASTEast-Yr. 1 vs. 8 2 vs. 7 3 vs. 6 4 vs. 5 Higher Seed

1995 1 2 3 5 75%

1996 1 2 6 5 50%

1997 1 2 3 4 100%

1998 1 7 3 4 75%

1999 8 2 6 4 50%

2000 1 2 3 4 100%

2001 1 2 6 4 75%

2002 1 2 3 4 100%

W-L High 87.50% 87.50% 62.50% 75.00%

W-L Low 12.50% 12.50% 37.50% 25.00%

East - Yr. 1 vs. 8 2 vs. 7 3 vs. 6 4 vs. 5 Higher Seed

2003 1 2 6 4 75%

2004 1 2 3 4 100%

2005 1 2 6 5 50%

2006 1 2 3 4 100%

2007 1 2 6 5 50%

2008 1 2 3 4 100%

2009 1 2 3 4 100%

2010 1 2 3 4 100%

W-L High 100% 100% 62.50% 75.00%

W-L Low 0% 0% 37.50% 25.00%

1st ROUND ANALYSIS - WESTWest- Yr. 1 vs. 8 2 vs. 7 3 vs. 6 4 vs. 5 Higher Seed

1995 1 2 6 5 50.00%1996 1 2 3 5 75%1997 1 2 3 4 100%1998 1 2 3 4 100%1999 1 2 3 5 75%2000 1 2 3 5 75%2001 1 2 3 5 75%2002 1 2 3 4 75%

W-L High 100% 100% 87.50% 37.50%W-L Low 0% 0 12.50% 62.50%

West - Yr. 1 vs. 8 2 vs. 7 3 vs. 6 4 vs. 5 Higher Seed

2003 1 2 3 4 100%

2004 1 2 3 4 100%

2005 1 2 3 4 100%

2006 1 2 6 4 75%

2007 8 2 3 4 75%

2008 1 2 3 4 100%

2009 1 2 6 5 50%

2010 1 7 3 5 50%

W-L High 87.50% 87.50% 75% 75%

W-L Low 12.50% 12.50% 25% 25.00%

NBA CHAMPIONS SINCE 1995

Year-Old

Team Seed PointDiff

Year- New

Team Seed Point Diff

1995 Rockets 6 2.8 2003 Spurs 15.5

1996 Bulls 1 10.6 2004 Pistons 36.4

1997 Bulls 1 5.5 2005 Spurs 24.3

1998 Bulls 1 7 2006 Heat 23.8

1999 Spurs 1 7.2 2007 Spurs 34

2000 Lakers 1 2.4 2008 Celtics 15.2

2001 Lakers 2 12.8 2009 Lakers 17.2

2002 Lakers 3 3.7 2010 Lakers 13.8

METHODOLOGY

• Data:– 1996, 1999, 2002, 2005, 2008 seasons.– All 16 teams who were in the playoffs for each

season.– 750 total playoff games.

• Regression Analysis:– Regression model is used to predict

what the most important statistics in determining an NBA Champion are.

VARIABLES• Dependent Variable

– Champion (Dummy Variable)• Independent Variables

– Games Played– Points / Game– Points / Allowed per Game– Point Differential– Offensive Rebounds– Defensive Rebounds– Field Goal %– Opponent Field Goal %– Free Throw %– 3-Point %

REGRESSION RESULTS

df SS MS F Significance F

Regression 10 1.512740388 0.151274039 3.287779218 0.001572382

Residual 69 3.174759612 0.046011009

Total 79 4.6875

Regression Statistics

Multiple R 0.568082696

R Square 0.322717949

Adjusted R Square 0.22456113

Standard Error 0.214501769

Observations 80

REGRESSION RESULTSColumn1 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%

Intercept -0.02551375 0.692884564 -0.036822512 0.970732849 -1.407780634 1.356753134 -1.407780634 1.356753134

Games -0.058791179 0.044528244 -1.320312076 0.191093899 -0.147622596 0.030040238 -0.147622596 0.030040238

PTS/G -0.003506697 0.01134997 -0.308960906 0.758282245 -0.026149268 0.019135874 -0.026149268 0.019135874

PTS Allow -0.002787557 0.010069452 -0.276833081 0.782735894 -0.022875564 0.017300449 -0.022875564 0.017300449

PTS Dif -0.000282283 0.009130534 -0.030916323 0.975425526 -0.018497199 0.017932634 -0.018497199 0.017932634

Off Reb 0.003832186 0.001457073 2.63005863 0.010518934 0.000925406 0.006738967 0.000925406 0.006738967

Def Reb 0.001182013 0.001202635 0.982853309 0.329113457 -0.001217177 0.003581203 -0.001217177 0.003581203

FG % 0.536726972 1.487579683 0.360805527 0.719347123 -2.430913297 3.504367241 -2.430913297 3.504367241

Def FG% 0.442460487 0.665923024 0.66443188 0.508628372 -0.886019597 1.770940571 -0.886019597 1.770940571

FT % -0.009052839 0.622576148 -0.014540934 0.988440385 -1.251058272 1.232952594 -1.251058272 1.232952594

3P% 0.185621904 0.622660671 0.298110853 0.766514399 -1.056552148 1.427795955 -1.056552148 1.427795955

CONCLUSIONS

• 1) 1st round structure did not yield more competitive balance in that particular round.

• 2)Overall playoff competitive balance did improve.

• 3) Improvements in data analysis to determine an NBA Champion needs more research and refinement.

ECONOMIC THEORY

• Competitive Balance.• HHI Index.• Moral hazard.– “Second chance.”

• Large-Market vs. Small-Market teams.• Role of Leagues.

FURTHER IMPROVEMENTS

• Analysis of 2-3-2 format.• Apply to NHL Playoffs.• Probit Regression.• 5 out of 16 seasons.– 80 observations vs. 256 observations.

• Player statistics.

BIBLIOGRAPHY• Aldridge, D. (2011, October 17). Competitive Balance? NBA Has Always Been About

Dynasties. Retrieved March 28, 2012, from NBA.com Web Site: <http://www.nba.com/2011/news/features/david_aldridge/10/17/morning-tip-labor-update/index.html>

• Longley, N., & Lacey, N. (2011). The "Second" Season: The Effects of Playoff Tournaments on Competitive Balance Outcomes in the NHL and NBA. Journal of Sports Economics , 1-3, 10-12, 16, 20.

• Sanderson, A. R. (2002). The Many Dimensions of Competitive Balance. Journal of Sports Economics, 205, 207-210, 216, 224.

• Sports Reference LLC. (2000-2012). NBA Playoffs Summary. Retrieved April 3, 2012, from Basketball-Reference.com:

<http://www.basketball-reference.com/playoffs/NBA_1996.html> <http://www.basketball-reference.com/playoffs/NBA_1999.html> <http://www.basketball-reference.com/playoffs/NBA_2002.html> <http://www.basketball-reference.com/playoffs/NBA_2005.html> <http://www.basketball-reference.com/playoffs/NBA_2008.html>

THANK YOU!

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