APBRmetrics

[jburchen]

Has anyone thought about ways to measure the value of an expiring contract? My thoughts were something along the lines of:

(luxury tax $s saved)+(some measure of the value of the free agent space created)-(salary remaining)...

That isn't very refined yet, but I was thinking that the value of the space created would be in tiers (so if you carve out enough for LeBron, that means way more than twice carving out half the space for a mid-level player) reflecting the average surplus value of a player at that contract level. Having a hard time getting any farther than that though.

Thanks.
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BMW S85 history

[devin3807]

[Manchvegasbob]

Does anybody know what deal Ilgauskas took in the buy-out? Did he take 90 cents on the dollar of the money remaining on his contract?

The incentives are hard to figure here, and it seems like some collusion is going on with these trade-away and re-sign said "contract buy-out" player.

In general, if there are details on the financials of these buy-outs from the team doing the buy-out and the player bought out's perspective, it would be appreciated.

Larry Coon's stuff on this isn't clear, but I guess the player can agree to take less if the team will release him to play on another squad - is that basically it? If that is the case, the team saves a few $$$ but undoubtedly is weaker because they lost said player - unless they are in a development stage anyway and it doesn't matter.

[ARucker]

[Mike G]

If so, he's only getting 9.3 mill.
That would be 92% of what he made last year.
And he's only half as good as last year.
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36% of all statistics are wrong

[Crow]

(Luxury tax $ saved) and (some measure of the value of the free agent space created) are both possible values of an expiring contract but often teams will have to choose how much to have of each or to have one and not the other. And you have to decide what else to assume they are going to do with the roster and budget.

Value of the free agent space created could be measured the way you describe, if you assume unit returns but I'd prefer to look carefully at the situation since I think the win impact depends on how much else you have and how it fits with regard to position playing time, shots and other Factor redundancy / returns.

The dollar value of the performance or wins that could be purchased for an amount will also vary if it is all spent on one guy or several and who teams can really get will vary.

I think you can list out the things to consider but I think each calculation will be a bit different.

Ultimately teams have different quality curves / competitive windows / plans for future years and value hierarchies about court vs financial performance (that might shift).

If you did work out decently estimated values of an expiring contract of a certain size or all sizes for all teams then you could get a sense of who could / should be buyers and sellers, an overall sense of the level of supply and demand and the levels of motivation. Ultimately you have to guess at 30 team plans / value systems to know what an expiring contract- or anything else- is worth to them.

[LucaMarzorati]

I was also pondering the value of an expiring contract, as they are becoming a more and more integral, yet abstract, part of the game. If you think about it, it is rare in the previously cut-and-dry sports world to evaluate the "value of nothing." I'm going to take a stab at the value as well, using previous posts as a backbone. Note that this is a very rough outline.

The first part would be to measure the value of the salary cap vacancy created. A basic way would be to convert the cap space saved into wins, and tack that on to the value of a player. For instance, if one was to postulate that $3m translated to a win, then each $3m the hypothetical player saves in salary cap space could be converted to one win. However, this basic logic omits two tenets of salary cap wisdom.

First off, uncertainty has to be weighted into the equation. A player's value in 2010-11 is a much easier guess then their value 2015-16. Therefore, the value of the vacant cap space has to be reduced by a certain factor throughout the contract. The true of value of this factor is unknown, but my best guess is that it is around 7%, meaning that, for instance, the fifth year of the contract would have a certainty of 0.93^(5-1) = 75%. This section is the most abstract of weighing the value of an expiring contract.

I like what jburchen tried to incorporate, regarding the value of a superstar like LeBron James, as compared to a league-average player. I think the rationale for this is that the NBA pay scale is exponential, not linear - if Player A produces twice as many wins as Player B, Player A will probably have a salary more than three times as large as Player B. Therefore, the space that the expiring contract leaves has to be converted into spending power. Let's stick with the idea that each win costs $3m. Using the equation [Spending Wins=Millions to Spend/3 + Millions to Spend ^ 1.1] we can try and interpret the value of more cap space. Using these fictitious numbers, having $10m to spend nets about 6 wins, while having $20m to spend nets 13 wins, while having $30m to spend nets 27 wins.

The numbers used in are not exact and are used to test a model, and it is hard to estimate how many wins a player contributes to his team. However, I'm just throwing out a methodology that could certainly be improved upon. Also, like jburchen, I would include the money saved from the lack of luxury taxation. In addition, I think Crow's point about adjusting for "team plans" is valid, but I wonder if perhaps expiring contract value should be team-independent.[/list]

[jburchen]

I really like the idea that the value increases by some non-linear power. It makes a lot of sense and better explains the reality of these free agent decisions.

As of right now, I have made a little progress. Where my thoughts were originally that: