Shadow of the Wasp

FreeDarko’s ongoing partnership with the The Chicago Sports Review and the pseudonym arms race it has inspired continues today with this article by A.C. Lilburne, which considers how the Death of Positions in the late-90s contributed to that era’s rampant contract/payroll inflation. Though you’ll have to go read the piece for the full, boring details, the basic thesis is fairly simple: that is, that unlike earlier leagues, whose economic efficiency had been predicated on a fairly rigid division of labor, the late-90s saw a generation of players for whom position and specialization were afterthoughts at best, and it was this breakdown in the traditional organization or work – not player greed – that precipitated the league’s fiscal crises. One piece of supporting evidence not mentioned in the piece is that even today, seven full years after the maximum salary rule took effect, most team payrolls continue to exceed the cap – an indication that something bigger than mere contract inflation is probably behind it all.

As a side note, let me just say that while I’m a big supporter of economists joining the basketball discussion, and I appreciate much of what they’ve contributed, their take on concepts like efficiency often seems more managerialist than scientific: their goal is to convince us of the way it should be, not to explain the way it is. My biggest complaint with The Wages of Wins isn’t so much with its failure to accurately measure the marginal product of basketball players, but with its presumption that a marginal product can be measured at all. As my own thinking about this stuff tends to be hopelessly continental and mushy, I’d love to see one of these economists get their Oliver Williamson on and actually explore the implications of the NBA’s imperfect-information/bounded-rationality/team-production problems, rather than simply substituting their own judgments for those of the front office.

(ps: please excuse the typos in the CSR piece, or at least refrain from mocking me for them).


At 8/31/2006 3:33 PM, Blogger GentleWhoadie9000 said...

I think this is a difficult argument to make without the benefit of analyses of variance which can parse out the true sources of variation in salary. Is it position or is it time (time being the expression of some other hidden variable should it happen to be responsible)? What other variables could be contributing?

wild like rock stars who smash guitars

At 8/31/2006 5:26 PM, Anonymous Red Snapp said...

I agree. How about the effect of economic exhuberance during the mid to late 90's? Owners probably thought they could get away with it, thinking in the long run they would cash in on the boom. Everyone thought it was a "new economy"...

At 8/31/2006 6:13 PM, Blogger SilverBird5000 said...

I'm not convinced by that argument. The boom was over by 2000, over a year before payroll spending (as a % of the salary cap) would peak. Teams are still overspending today; very few are below the cap and several are well over it.

I take GW9000's point, which could well be made of any causal-historical argument. Absent a counterfactual case, though, good theory is the next best thing. And while mine is certainly far from perfect, i do think its an improvement on the "stars just got greedier" CW.

At 8/31/2006 6:37 PM, Anonymous Anonymous said...

i'm just wondering when you guys are going to start crying about the team usa/gilbert arenas fiasco

At 8/31/2006 8:09 PM, Blogger d.d. tinzeroes said...

Hey I'm as big of a fan of Positional Relativism as anyone, and I think the breakdown of the redefinition of PF is spot-on ('cept I'm more inclined to see Larry Johnson as the harbinger of change @ that position), but the big-salary clusterfuck of the mid-1990s really has more to do w/ evolution of the Luxury Tax provisions in the '95 & '99 collective bargaining agreements.

Sadly, I suspect it also involves a weakening of the will by the general constituency of the NBAPA.

At 8/31/2006 10:55 PM, Anonymous ben said...

Take a look at Dean Oliver's Basketball on Paper for a math oriented analysis of basketball that actually has some commons sense in it.

The fact is, the Wages of Wins guys approach the table with a lot of knowledge in economics but very little in basketball, and for that their analysis suffers. There are plenty of great mathematical minds out there who also know a great deal about basketball, and are able to combine the two in ways that make great deals of sense (the aforementioned Oliver, Dan Rosenbaum, Kevin Pelton, Ed Kupfer, for starters).

At 9/01/2006 12:04 AM, Blogger Bethlehem Shoals said...

amazing kornheiser comment about gilbert today: "the chip on his shoulder is getting to big that it's almost obscene."

as for the reaction everyone wants me to have, i called this when he first dropped out with injury. maybe i'll have something tomorrow, but right now i'm mostly thinking a chilling "told you so."

this does, however, officially make me despise team USA. the whole thing is like bringing in a porn star to help an oscar winner improve her sex scenes.

At 9/01/2006 5:47 AM, Blogger japaja said...

This comment has been removed by a blog administrator.

At 9/01/2006 11:15 AM, Blogger SilverBird5000 said...


i'm curious to know more about this luxury tax theory. my understanding is that the luxury tax, which was only added once spending began to rise (in '95), was intended as a further control on spending; were there unintended consequences i'm not aware of.


Basketball on Paper has its moments. So does Rosenbaum (his 'It doesn't pay to be young' article was excellent). Still, these guys aren't theorists. At least Berri et. al. hints at an explanation for management's various woes.
There's an old saying that Newton invented calculus to do physics, but economists invented economics to do calculus. In that same spirit, Oliver and the rest seem to have invented APBRmetrics just to get jobs watching basketball. (And it worked! Oliver's works for the Sonics, right?).

At 9/01/2006 11:49 AM, Blogger T. said...

Well, I guess Sheridan and his constant negativism (nattering nabobs even) was right. Although it wasn't the smelly foreigners or weird beds that did USA in . . .how about lack of shooting (where are you Gil?) and perimeter defense (Chris Paul is shockingly bad, Hinrich is okay I guess, but everytime I looked up a foreign guard - from Carlos Arroyo to CJ Bruton - was making layups at the rim.

At 9/01/2006 3:05 PM, Blogger d.d. tinzeroes said...


They were intended as a further control on spending, but the penalties were flawed.

It wasn't as simple as "if you're over the cap, then you're taxed" (a 'hard cap'), it was "if you're over the cap, and total LEAGUE player salaries are equal or greater than a certain percentage of total league revenues, then the tax is triggered" (a 'soft' cap).

So, what quite a few teams with deep pockets did (the Blazers, Knicks, Heat, and Wizards, as I recall) was just go over the cap anyways and take the gamble that no one else was going to throw that much money around and the total salaries would stay under the tax trigger number.

In the '99 CBA, Stern (I've heard this was done somewhat covertly) got some provisions in there that made the potential penalties, if the tax was triggered, increasingly severe. Its like the gamble was upgraded from a roll of the dice to Russian roulette. This seemed to catch some the teams off guard, namely the Blazers, who had sort of pioneered this gamble-that-the-tax-doesn't-trigger approach to GMing.

The exception to this, of course, is the Knicks. They just don't care. They'll put the pistol to their temple every time, the crazy fuckers.

At leat that's how I understand it & interpret it.

At 9/01/2006 4:25 PM, Blogger SilverBird5000 said...


I still don't understand why the addition of the luxury tax in '95 would have encouraged overspending as compared to pre-95 CBAs. Obviously it didn't work as a control on spending. But it still doesn't explain why spending was going up to begin with. And more significantly, why teams were spending more on star players as a percentage of payroll. This is where the whole Death of Positionality thesis would come in....

At 9/04/2006 4:12 PM, Anonymous Anonymous said...

No, no, no. It was expansion. More teams = more demand for star players.

But the number of players with star-level abilities never increased.

Thus the bargaining power of the extant stars went up, resulting in higher salaries.

At 9/05/2006 1:28 AM, Blogger d.d. tinzeroes said...

A) Expansion is a big culprit. Dilution of talent & all that. On flip side, tho, this probably jumpstarted the HS and Euro scouting binge.

B) Pretty much every CBA is geared such that when revenues go up, the salary cap is raised and the entire salary structure's high water mark elevates. As big as the '80s were for NBA growth the '90s were out of control. Team could simply AFFORD to shell out big $$$ because the revenues were there. Anything less and the players are seriously just getting ripped off.

At 4/15/2008 10:48 AM, Anonymous Anonymous said...

Should there be a Salary Cap in English Football?
Personally I think there should be! It’s just getting to be stupid money in football at the top of the premiership!
It’s always the same teams at the top proving that football success is based purely on money which ruins the idea of it being a sport! They’ve done it in rugby, basketball, hockey and American football and it makes the sports more competitive and better to watch!
I do a little Spread Betting from time to time and most matches don’t hold much surprise who is going to win, its boring! I want to see a team at the bottom pulling off an amazing season beating last seasons winners in a close fought battle!
Make things fair! It shouldn’t be about money!
All there is all that money in the premiership and barely any of it stays in the UK so it’s not even helping the economy!
From my Spread Betting, if I ever win big (which is never, I’m unlucky) it’s still nothing compared to the average premiership players weekly wage!
This Rant was brought to you by Spread Betting Spike. 


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