Tanking in the NBA

People disagree about the significance of the tanking problem in the NBA, but no one doubts that it exists.  Most of the media coverage on tanking has focused only on the race for draft lottery ping-pong balls that was especially evident this year, given the expected strength of the incoming draft class and the projected gap between the top teams and the bottom teams before the season even began.  This kind of tanking can manifest in many different forms and degrees, with some front offices actively trading away productive players (Boston trading Pierce, Garnett, Lee, and Crawford or Philadelphia trading Turner and Hawes), others benching players towards the end of the year citing bogus injuries (Milwaukee holding Sanders out until it was beneficial to medically clear him to start his marijuana suspension), and others simply making no effort to improve the team at any point in the season (Philadelphia not bothering to reach the salary floor or Utah trading for Jefferson and Biedrins to reach the salary floor).  Still, this might not even be the most egregious manner by which teams actively trying to lose games, as many of these draft lottery tankers initially tried to compete and arguably only Philadelphia, Utah, and Boston stuck to season-long losing blueprints.  There are two rules that even more directly incentive teams to intentionally lose, and each of these is more easily fixable.


Tanking to game draft pick protections
Problem:
A recent example of this happened when the Warriors benched entire lineups at the end of the 2012 season to keep the draft pick that eventually became Harrison Barnes (woops).  This incentive for tanking can be larger because there is a definitive difference between having a draft pick and not having one, especially when compared to merely the increased probability of landing a top pick that results from chasing ping-pong balls.  A main purpose for protections on draft picks was likely to increase liquidity in the trade market.  Compared to the other major North American sports, in the NBA the best players are disproportionately more valuable, rosters are much smaller (which is exacerbated given that the NBA's minor league system that pales in comparison to the MLB or NHL’s), top picks become busts a lot less frequently, and there are much fewer draft picks; all of these factors make it much more difficult to trade current assets for future assets (or vice versa) without the draft pick protection system (and even then, such trades happen much less frequently than in other sports).  Here is a solution that has the same benefits as draft pick protection (and to an even larger degree), does not have the same problems, and may help alleviate additional tanking incentives.

Solution:
Replace the NBA draft with an MLB-like draft bonus cap system (except without the draft that accompanies it).  Similar to the MLB system, teams would be allocated a specific maximum amount they can use to sign incoming rookies that is determined by the reverse order in which each team finished in the standings the prior year.  More analysis would be required to determine the optimal amounts to use and how this cap would fit with the overall salary cap (my initial proposal would be to include the rookie cap within the overall cap, so a team with $10M in rookie cap space and $30M in overall cap space can spend up to $10M on rookies and up to $30M total on players including the rookies), but the benefits of such a system are already evident.  Now, teams can actually trade half (or any other percentage) of their rookie cap space (similar in theory to trading half of a draft pick), which vastly increases the liquidity in the trade market, all without draft pick protections and the tanking incentives that follow.  Furthermore, similar to normal free agency, other characteristics of a team now matter in determining the destination of an incoming rookie, as some rookies might not want to play on a roster stripped bare in order to chase max rookie cap space, and there’s even less incentive for front offices to trade away productive players just to lose games (trading away productive players for rookie cap space, however, can still be beneficial as some rookies might want to play with specific other rookies).

The most likely criticism of such a system is that it would benefit bigger market teams as they would have another advantage over smaller market teams that didn’t previously exist with the draft.  The counterargument to this is that there is always a price one can place on something like this.  One such solution would be to add some kind of market-size tax on one’s rookie cap space (which, on a side note, is also an idea that could be applied to the current salary cap system to alleviate market inbalances).  Normally, a team with the worst record might get $20M in rookie cap space; however, the Lakers might only be allowed $15M while the Timberwolves might be allowed $25M.  The exact optimal amount is again something that would require more analysis, but the point is that there would be a breakeven price that would ensure that teams aren't unfairly punished relative to the current system.

Another obstacle would likely be that someone (either the NBPA or the owners) would likely oppose this proposal because it's contingent on paying rookies a higher salary on average (since it's unlikely that the difference between say $5M and $4M would be significant enough to sway rookies) and there's a zero sum nature in dividing revenue between owners, rookies, and veterans.  If the overall salary cap doesn't increase as well, then there would be much less money available for non-superstar veterans (whose interests heavily influence the NBPA).  If the overall salary cap does increase to appease the NBPA, then the owners would receive less of the revenue pie.


Tanking for favorable playoff matchups
Problem:
Tanking can also be a problem for playoff teams, because teams often intentionally lose games in order to optimize their playoff matchups.  This is a particularly true for the NBA, since the brackets are fixed (no-reseeding like in the NFL) and there are enough playoff seeds and enough regular season games for teams to be able to intentionally drop seeds after clinching playoff berths (unlike in the NFL/MLB); the NHL might also have this problem going forward now that they no longer reseed and have the same characteristics mentioned above as the NBA.  The reason this can be an even bigger tanking issue is that there is an incentive for the entire organization (from the front office to the coaching staff to the players) to follow, while draft lottery tanking usually stops at the front office level.  Some examples of this include the Nets intentionally resting players to try to fall to the sixth seed to face the Raptors instead of the Bulls in the first round and the Heat intentionally resting players to clinch the second seed (instead of the top seed) and what will likely be a matchup against the Raptors/Wizards barring other tanking shenanigans.  Usually, this happens more often for the bottom half of the playoff field (since those teams wouldn’t be sacrificing home court advantage unless multiple upsets occur), but the tradeoff might sometimes be worth it for teams like the Heat to sacrifice home court advantage (against the Pacers) if the second round matchup appears sufficiently favorable.  Here is a rough calculation for the Heat example.

If we assume that the Heat and the Pacers are evenly matched on a neutral court (which is likely not true given the Pacers’ prolonged struggles recently), studies estimate that the home team would have a 64% chance at winning each individual game (based on regular season win percentages for home teams against evenly matched teams).  That percentage is lower than the overall win percentage of home teams in the playoffs but two factors may be skewing these numbers:  1) referees may be biased in prolonging the series and thus aiding the team that is behind, which more often than not is the home team, and 2) the higher seed (almost always the better team) will always get at least as many home games as the lower seed due to the 2-2-1-1-1 format, so there could be some significant covariance between relative team strength and home court advantage.  For the sake of this calculation, I’ll be assuming 64% for the home team in Game 7 and 72% otherwise (if we attribute the entirety of the discrepancy to the referee series-prolonging bias).  If we assume each game is independent (which, again, is not true given both the aforementioned referee biases and potential player complacency from leading a series), the only way for home court advantage to matter is if the series reaches Game 7.  There are four ways for that to happen:  1) win 3 games at home and 0 games on the road, 2) win 2 games at home and 1 game on the road, 3) win 1 game at home and 2 games on the road, and 4) win 0 games at home and 3 games on the road.  There are 9 permutations each for options 2 and 3 to occur and 1 permutation each for options 1 and 4 to occur.  If we assume that the probability of winning a home game is 72% and the probability of winning a road game is 28%, there is a 1*0.72⁶+9*0.72⁴*0.28²+9*0.72²*0.28⁴+1*0.28⁶ = 35.8% chance of the series reaching a seventh game.  As a result, if we assume the home team has a 64% change of winning Game 7, the home team has a 0.358*0.64+(1-0.358)/2 = 55.0% chance of winning the series.  Now, if we assume that the Heat are 100% favorites against the Bobcats/Hawks and 95% favorites against the Raptors/Wizards (all numbers created for the sake of this example), then they would need to be (1-0.55)*0.95/0.55 = 77.7% favorites or below against the Bulls/Nets for this tradeoff to be worth it, which doesn’t seem unreasonable.  If we also consider the residual effects that playing a tougher second round opponent (both in terms of the physical style of the teams and because the matchups will likely lead to longer series) may have in future rounds and the corresponding decrease in the Pacers’ chances of advancing to the third round if the Heat play the Raptors/Wizards and the Pacers play the Bulls/Nets, the tradeoff for the Heat is likely even more advantageous.

Solution:
Let the top seeds pick their opponents each round!  For example, in the first round, the first seed chooses first, the second seed chooses second (unless they were somehow picked by the first seed), and so on.  Not only does this eliminate the tanking issue (teams can’t control their opponents by losing), it also presents additional benefits.  For one, imagine the intrigue in a series if a team bucks conventional wisdom and picks a team other than the team with the fewest wins.  In addition, the top seeds are more properly rewarded, as they have the opportunity in each round to face their ideal opponent regardless of the seeding.

One potential argument against this would be that the bottom seeds have no incentive to win after clinching a playoff berth.  I’m not sure this would be a drastic difference from the current system given that there aren’t proper incentives now either, and teams with the power to choose their opponent would likely default to the team with the fewest wins unless an obvious alternative is available. Furthermore, there are additional changes to this solution that could solve this.  For example, the difference in regular season wins could determine the number of home games the higher seed plays, so for example a 10 win differential or below leads to a 4-3 split, a 10-20 win differential leads to a 5-2 split, and a 20+ win differential leads to a 6-1 split.