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You Are What You Spend: Erik O's Chart of Destiny

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Some of you probably saw this chart analyzing revenue versus payroll posted by our own Erik O, buried in a John R' fanshot. While the data was relevant to that post, it also seems valuable on its own. Why Erik O didn't post it on his own instead of burying it in a comment I will never know.  I'm correcting that error by putting it up on the front page. Ridiculous that my name's up there as author but that's Erik's fault.  

The chart and Erik's analysis after the jump.

I feel like doing some research

I can post my calculations if anyone wants to see it, but going back to 05-06 through 11-12 salaries committed so far, here’s a list of teams and their respective average revenues / salaries.


Now, here’s part 1 of my argument: if a team has high revenue, they have the ability to spend a lot of money on players. Some teams, like the Bucks, don’t have a lot of revenue, but they made the sacrifice to spend money on players, and it got them into the playoffs. Other teams, like the Wizards or Raptors, have lots of money but chose not to spend it on players, so they have remained outside of the playoffs for the most part. I don’t think anyone’s disagreed with this so far, it just really leads to my second point.

And here’s part 2: teams that spend a lot of money on their players are most likely going to the playoffs. Every single one of those teams in the top 15 has been to the playoffs in the past 2 years, and made significant appearances over the period of this analysis. Some teams that have made a lot of appearances without spending a lot on players are the Nuggets and Pistons (and most recently the Grizzlies), and a team that has spent a lot with very little playoff success are the Knicks and Sixers. Fans of advanced metrics will point out that these first teams are those that have spent very wisely (the past super-Pistons is outweighing the current idiot-Pistons). You’ll also note that the Knicks and Sixers have most definitely not spent wisely.

Now, lending itself to John R’s "having your LeBron" theory above, the Hornets have made a ton of playoff appearances without revenue, and without a high payroll. Ladies and gentlemen, Chris Paul is most definitely a LeBron. The Magic have not spent very wisely, and yet they’ve had success because they have their own LeBron in Dwight Howard. One could probably argue that the Magic could have saved a lot of money and had just as much success.

So my afternoon of research has led me to the following conclusion: you can get to the playoffs (i.e. competitive*) by a number of avenues.

1) Spending a lot of money on good players
2) Spending very little money on sneaky-productive players (spending smart)
3) Spending a lot of money on bad players, but having a LeBron to make up for it
4) Spending very little money on bad players, but having a LeBron to make up for it

Money isn’t the only way to win, though it absolutely helps. You don’t have to worry about spending smart if you can afford to just keep shooting in the dark until you win. Yes, poor teams can win under the current situation, but most poor teams aren’t going to spend a lot of money on players, so they only have 2 of the above options available to them. Rich teams have 4 of the options available to them. That doesn’t sound very fair, does it?

*While championships are the ultimate goal, the playoffs are such a small sample size, almost any team can win once they get in, so let’s not use championships as a measuring stick, please.

"Failure is not fatal, but failure to change might be." - John Wooden

by Erik O on Nov 11, 2011 6:54 PM PST