Given economic bad times, many teams have overspent. But they have lots of long-term contracts, plus there is a salary cap and luxury tax for going above that cap. Real wages ought to fall but most of them cannot fall right away. If a player becomes a free agent, few teams will bid and those players will absorb a disproportionate share of the required wage cuts (the pricing of complementary inputs had some indeterminacy anyway, plus there is an AC constraint).
The lower returns available mean that a given free agent is more likely to be a self-deluding trouble maker who has worn out his welcome (Artest, Gordon, etc.). This favors teams with dominant players (Cleveland), strong systems (Boston), and strong coaches. All those teams can swallow the troublemakers without cracking up. It also favors teams which suffer from well-defined "missing pieces." It favors already-good teams and indeed we see that Cleveland, Orlando, San Antonio, and LA have been major players in the free agent or trade markets.
I predict a greater dispersion of win totals for next year's season.
I am wondering to what extent a similar analysis applies to economics departments, or to teams of bloggers, or to other groups of complementary labor inputs.
Addendum: TrueHoop comments.
What role do you think the 2004 finals played in this trend? That was the first year where significant late-in-their-career hall-of-famers (Payton, Malone) took huge pay cuts to go to LA, and it seemed to set a trend. On the other side, the Pistons had a strong, no-star system in place that managed to
a) get Rasheed Wallace to buy in, and
b) get a Finals MVP award for Chauncey Billups
Yes, the free agent segment is where teams have salary flexibility. But no, that doesn’t mean free agency selects trouble makers. For that you have to look at the advantage that the rules give to extant teams. Unrestricted free agents can be signed to their extant team on terms unaffected by the team’s cap. Home teams can sign restricted free agents at 125% their previous salary without the cap binding. Isn’t this why Vince Carter is still at Nets? Point being, home teams have an effective right of first refusal, and they’re more likely to waive that with trouble making players.
A soft demand market will also favor younger players, whose maximum signing amounts are subject to tighter caps.
The economic downturn favors teams with enough money to withstand the rough time (Lakers, Boston, Portland) or good enough to be ready to pay for a shot at a title (Cleveland, Orlando, San Antonio). It’s not so much a “troublemakers” issue as a “why pay luxury tax to be mediocre when we’re losing money?” issue.
Ed Lopez: You make good points about the rules for free agents, but… uh … the New Jersey Nets traded Vince Carter to Orlando last week in order to cut salary for 2010-11.
Berri does not use a subjective model. He regresses wins on teams stats to come up with his numbers (Or something like that, its been a while since I looked at his model). The problem is that he equates valuable team stats to valuable player stats. It results in him treating offensive rebounding the same as defensive rebounding and not considering usage rates. But he presents his results very clearly and he does a good job of selling his formula as being the best, as evidenced by AOM’s post.
Gordon is not a trouble maker, but he only has one skill (scoring) and is not worth the money the Pistons gave him, esp. in a down market.
Probably shouldn’t be making assertions about players (Ben Gordon) that you haven’t the first clue about. I know you imbibe a great quantity of information but you sure missed the boat on the quality of this one, a player who has put up with getting paid less than and coming off the bench for many an inferior teammate, not to mention his treatment from management, all without causing a stir.
I think Bill Simmons was the first to point out that, in that awesome game 2 shootout of the Bulls-Celtics series, Ben Gordon managed to put up 42 points . . . with one rebound and zero assists. It was one of the greatest one-dimensional performances ever.
On troublesome players, see Todd Kendall’s article (maybe fall 2008?) in the J of Sports Econ. In a nutshell he finds players misbehave b/c they can–the highest paid player on a team is more likely to draw technical fouls than the second highest paid etc.
Steko, attendance numbers alone don’t tell the whole story about tickets. Teams have all sorts of special offers that they can use to sell more tickets (after all, selling courtside seats for $30 would still be better than leaving them empty) which can inflate the attendance numbers. They tend to only use these methods during difficult times.
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