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Can more bonuses improve the NBA?
If every player had money on the line in every game based upon a victory, you'd see some unbelievable competition. Sports and team concept would change dramatically.
Of course "per-victory" contracts are possible now, but most incentive clauses are based on individual performance or a victory or playoff threshold. Why?
1. Star players might injure themselves too frequently if they try hard every game. Their value to the league involves an external benefit which they do not internalize when deciding how much injury to risk. Plus an owner wants them to conserve their energy for the playoffs or for critical opponents.
2. Most fans don't know the difference between a good game and a bad one. They want only to see the stars, and maybe a few slam dunks. So why impose more pecuniary risk on the players?
3. Players already try hard on offense. Making them play tough defense would deaden the game. This doesn't explain why a single team doesn't use per-victory bonuses, but it does suggest there will be no league pressure to do so.
4. Per-victory compensation will lead the players to blame each other too much for particular losses. Team morale and thus team productivity will decline.
5. Incentives of fame and approbation already impose this incentive structure, and in a more powerful way than money could do.
6. When bargaining over a contract, a player would reveal negative information about his self-estimated talent level by accepting high-powered incentives. If you cut a deal with big bonuses, the team must think your low-effort state of output is pretty crummy.
I put weight on all of these, but on #6 least. Of course this relates to the general question of why firms don't use more high-powered incentives. Could the lesson be that fewer business variables matter than you might think? (A related question is why don't more firms use idea futures.)
Would Rick Barry's idea improve the NBA? Comments are open...
Posted by Tyler Cowen on February 23, 2006 at 07:38 AM in Sports | Permalink
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Comments
Tyler, you need to give up on the NBA and watch some good college teams play. That's basketball! That's the difference between a team sport and five individuals on each side showboating.
Posted by: Matthew Cromer at Feb 23, 2006 7:51:57 AM
> If every player had money on the line in every game based upon a victory
How is this any different than placing a bet on your own team to win? Isn't that the ultimate sports sin?
Posted by: AZ at Feb 23, 2006 8:30:12 AM
In soccer (at least in Europe), players generally receive bonuses for each win as well as for achieving certain team goals. Performance incentives are rarely individual (except appearance-based bonuses for injury-prone players). Individual performance in basketball is, of course, much more easily observable than in soccer.
I bet that one of the outcomes of team-based incentives in basketball would be lots of good in-fighting: players blaming each other for their failure to perform. I'm all for it!
Posted by: Erik at Feb 23, 2006 8:37:52 AM
"Star players might injure themselves too frequently if they try hard every game."
While I don't know much about basketball, in other sports the optimal strategy for the TEAM is often not for every player to push it to the limit each game. At least in baseball and football the teams that are dominating the league often lose more games as they near the post-season. It makes no sense to burn out your best players when you know you've clinched the playoffs, so second string players fill in.
Under the per-game incentive regime, even if the players themselves could maximize their payouts by sacrificing some performance for long-term health, it seems that the best players would never want to sit out any games at all.
There's no I in TEAM. At least there shouldn't be.
Posted by: Collin at Feb 23, 2006 8:41:47 AM
#6 - the Master P/Ricky Williams contract with the Saints
Posted by: Sean at Feb 23, 2006 9:08:11 AM
I doubt trying harder matters that much.
Posted by: joshg at Feb 23, 2006 9:15:12 AM
AZ: The ultimate sports sin is placing a bet on your own team to lose, no?
Posted by: James Grimmelmann at Feb 23, 2006 9:15:48 AM
#5 hits the nail on the head.
Posted by: kid mercury at Feb 23, 2006 9:22:34 AM
I suppose throwing games, whether or not you've bet on them, is the WORST thing you can do in the sports world, but even if you bet on your team to win it is looked at is sacrilegious. Even if you bet on other SPORTS it is frowned upon - look at Rick Neuheisel, who participated in an NCAA tournament bracket while a FOOTBALL coach at Washington. And the fact that Pete Rose allegedly bet on the Reds to WIN while he was the manager was also frowned upon.
Posted by: AZ at Feb 23, 2006 9:28:02 AM
realted to Matthew Cromer's post above: How about a pretty low ceiling on contracts, say 100K, but the requirement that the salary had to be maintained for the life of the player?
Posted by: theCoach at Feb 23, 2006 10:02:33 AM
I've been an software and physics guy of various sorts at various firms. As for why more firms don't use incentives, individuals don't matter that much. The very best software people (say, top 5%) are extremely productive, those you can target with higher base pay. But the difference between a 55th percentile guy and an 80th percentile guy isn't that big - in fact, it's smaller than the differences in organizational structures. So it makes more sense to make sure you only hire from the top half, and then concentrate your efforts on effective management (good source control, design processes, bug tracking, etc).
That, and firms are stupid. I mean, if techies didn't think so, would Dilbert be so popular?
Posted by: ptm at Feb 23, 2006 10:27:37 AM
I think that you over-emphasize fame as a motivator. I think that the true motivator is still money since additional fame often lead to very lucrative off-court advertising deals.
Posted by: Chris at Feb 23, 2006 10:31:32 AM
Chris -- correlation or causality?
We cannot say that players aren't status/fame-seeking just because money comes with it. However, (in your defense) we also cannot say that players aren't money-seeking just because status comes with that.
Posted by: Collin at Feb 23, 2006 11:12:29 AM
As long approximately half of all NBA teams get into the playoffs, there isn't a real big incentive to win a ton of games in the regular season, either for teams or for players.
And most people underestimate how hard pro sports players work. I really doubt there are a lot of undermotivated NBA players who would turn it up a notch if there were some extra dollars on the line.
Besides, how much motivation is it going to be for the 6th man to give him a bonus for wins? Assume he is only giving 80% right now; if he gives 100% the team might win, what, 2 more games a season? If that? The only people who are in a position to be motivated by bonuses tied to wins are the players who have the most impact on wins in the first place; i.e., the superstars. You know, the guys with multimillion dollar contracts, huge endorsement deals, giant egos, etc. You really think there is room for extra motivation there?
Posted by: bob montgomery at Feb 23, 2006 11:40:56 AM
"There's no I in TEAM."
But there is a ME.
I once saw a slow break in a NBA game on TV in November. One player launched a very long jump shot that hit the rim and bounced all they way back to mid court. A player on the other team grabbed the rebound, and all ten players turned around and walked slowly to the other end of the court.
These days I only watch college basketball.
Posted by: Robert Schwartz at Feb 23, 2006 12:56:20 PM
I think you're missing a significant side-effect:
7. Players will have even more incentive to avoid bad teams and there will be even less parity in the league. Everyone drafted by a bad team will bail as soon as their contract is up. No free agents will go there. Etc.
Posted by: Joe Grossberg at Feb 23, 2006 1:18:34 PM
Of course "per-victory" contracts are possible now, but most incentive clauses are based on individual performance or a victory or playoff threshold. Why?
Ok, a few guesses, with a note that current incentives are usually nominal in scale to the overall contract:
1. Scale of incentive involves a framing effect. A 1% bonus for making an All-Star team seems like a "reward." However, if too much salary became wrapped up in a win total (or any incentive), it looks more like a "non-guaranteed contract."
2. Team win total depends on too many external/unpredictable factors, including: injury, coaching skill, performance of other players. There are only a handful of players so good that they can make any team a winner on their own.
3. Too much money in incentives will cause players to put themselves in greater risk of injury, not from playing "harder" but from trying to play when hurt. There would be less willingness to listen to team doctors.
There are a few other problems with this type of structure, although I doubt these are the holdback:
1. For teams that are out of contention (or already locked into a playoff spot), there may be additional pressure from the ownership to slack off (i.e. "rest" injured players, "test" unready rookies).
Why pay more for a 28-54 season than you would for a 22-60 season (or, for that matter, 62-20 versus 59-23, if your seeding is locked up)?
This is not that different than the rationale for having a draft lottery: minimize any incentive for management to lose.
2. There will be greater tendencies towards "dynasties." Why would a free agent go to a losing team if he didn't need to? If enough money is on the line in a contract, Player X will always choose the Lakers over the Warriors. The greater the proportion of the contract tied to wins, the stronger this tendency will be.
Posted by: Brad Lehman at Feb 23, 2006 1:19:48 PM
I don't know if structuring pay on team performance would lead to wins but it would be a fascinating economics experiment. Personally I think performance incentives have already hurt the game. By making personal success in defined areas a priority players undermine the team strategy. If we offer incentives for winning we must ask if players accurately guage their contribution to the team. I suspect they do not and the result is (as many above have noted) rivalry within the team. I doubt that anyone reading Marginal Revolution questions that incentives matter but they matter is infernally complicated.
Posted by: Cb at Feb 23, 2006 1:38:51 PM
How does this all play into the Alfie Kohn-type discussions of intrinsic/extrinsic motivations. Don't we have at least some results that suggest that over-focus on results even with rewards can decrease result quality in every area you're not specificilaly incentivizing?
Posted by: Kyle at Feb 23, 2006 1:58:52 PM
The unstated assumption is that teamwork is lacking in today's NBA. Anyone who's watched the last several championship-winning teams, the Spurs and Pistons, knows that's not true. Sure, not every team like the Spurs or Pistons, but several are -- and in every sport the worse teams are worse at applying winning concepts.
Four of the Pistons made this year's East All-Star team. The East was behind early in the second half when the coach inserted all four at the same time. Since they are on the same team, and they know each other and play well as a team, they immediately surged to the lead against the West's all-stars. That seems as close as we can get to a natural experiment.
I am very skeptical of a bunch of old guys talking about how it was better in the old days. You can find analogues of this old-man's-roundtable for every sport and for most aspects of life, and usually they can be dismissed out of hand. I think this is no different. The players are much quicker and longer today yet the court is the same size, and that has changed the game: it takes much more athleticism to get a shot. It used to be you could swing the ball around the court quickly and find an open man; nowadays you're likely to swing the ball around and still the defender is able to close out. (Good luck using that set shot against Tayshaun Prince, Rick.)
And I am extremely skeptical of anyone who would rather watch college basketball than the NBA. If you think players standing around characterizes the NBA, you're either not watching or you have some incredible prejudices preventing you from seeing straight. It's the college and high school games that lack team play, because the typical college or high school team can't put together five players of high caliber. It's those teams are generally dominated by one star with the other four players standing around, cautiously throwing the ball around the perimeter in a semblance of action, or panic-dribbling upcourt worried that their lousy ballhandling is going to get the ball turned over.
Posted by: Jason Briggeman at Feb 23, 2006 2:15:03 PM
The NBA is horrible. It's only slightly more entertaining than professional wrestling, which is to day, not at all.
Posted by: Paul at Feb 23, 2006 2:31:43 PM
Why not make the bonus based on playoff seeds? No bonus unless the team makes the playoffs, and then an increasing bonus with seed? This still gives the coach latitude to rest players at the end of the season once the seed is locked in.
Posted by: Neema at Feb 23, 2006 2:33:23 PM
Okay, let me add something constructive. Cut the number of regular season games in half, then use per-victory contracts. Fewer games means fewer injuries and less fatigue. Then players can afford play harder. As it now stands, regular season games, especially any single game, don't mean much so they are usually intensely boring.
Posted by: Paul at Feb 23, 2006 2:35:48 PM
People who say college ball is better than the NBA either don't know basketball, or have some weird sentimental attachment to the idea of people not getting paid for what they do.
The fundamental issue in terms of effort and the NBA is that the season is MUCH too long. Players have to slack off or they would burn themselves out. The league makes them play an 82 game regular season, with frequent back to backs and crazy stuff like 5 games in 7 nights with extensive travel. Plus a game length 20% longer than college. Then on top of that half the league makes the playoffs, so you have four rounds of up to 7 games each. And the playoff games are played at MAX intensity. It's basically physically impossible to give full effort all the time, and since the regular season is not that important compared to the playoffs anyway the good teams really should slack off some to stay fresh for the playoffs.
Not quite sure how this would interact with a per-game incentive contract, but the bottom line is that with the overlong regular season and easy access to the playoffs, regular season wins are just not the key output. Championships are. Short of championships, winning playoff series. Doing well in the playoffs might require losing some games over the regular season, as coaches experiment with lineups, rest injured players, etc.
Posted by: MQ at Feb 23, 2006 2:43:57 PM
You said it before I could, Paul. Shorter too.
Posted by: MQ at Feb 23, 2006 2:45:02 PM
