NBA parity? History shows new labor deals achieve the opposite

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It was March 7, two weeks after the Knicks had acquired Carmelo Anthony and 20 minutes since they'd faced the Utah Jazz. Having recently lost their two best players, Carlos Boozer and Deron Williams, to free agency and trades, the beleaguered Jazz were no match for New York, who rode a 65-point performance from their new dynamic duo of Amar'e Stoudemire and Anthony to a 22-point win. After the easy rout of the Jazz, the Summer of LeBron and a bevy of big trades, Stoudemire was asked what everyone had long been wondering about the NBA: Is it turning into an unbalanced league of big-market haves and small-market have-nots?

Stoudemire wasn't quite sure what to make of the question, but the pundits certainly had answers. "Soaked in the arrogance of fame, wealth, immaturity and business ignorance, the players have dramatically reshaped the league with their free-agent and impending-free-agent maneuvers," columnist Jason Whitlock wrote after the flurry of trade deadline deals. The players were, "destroying basketball in Cleveland, Utah and Denver." (After a long-time gig with the small-market Kansas City Star, Whitlock had recently taken his talents to Venice Beach for a big pay-day with Fox Sports. It's unclear if he destroyed Kansas City sports punditry in the process.)

"If [players] start joining up in threes we'll have 10 or 12 good teams, and the rest of the NBA will be the Cleveland Cavaliers," said ABC/ESPN basketball analyst Jon Barry. "That's not that enjoyable in my eyes." (Barry was no stranger to player-forced trades himself. After the Celtics drafted him in 1992 he refused to play until Boston shipped him to Milwaukee midseason.)

Barry and Whitlock's conviction that the NBA is turning into a polarized assemblage of powerhouse teams and increasingly irrelevant also-rans had become conventional wisdom among media. The Wall Street Journal compared the NBA to British soccer's top-heavy Premier League. Others suggested contraction, stiffer salary-cap rules and new regulations on player movement. More than five months later, those issues are looming even larger as the NBA and players' association haggle over a new collective bargaining agreement, with owners and the league looking to restore some fiscal sanity and competitive balance to the league.

But before they meddle with the economic parameters of the game, league officials would be wise to consider a simple fact: The conventional wisdom is wrong. Statistical analysis shows that the disparity between good and bad teams in the current NBA is actually right in line with the late 1980s and 1990s -- a so-called "Golden Era" of big profits, bigger TV ratings and all-time greats like Magic Johnson, Larry Bird, Michael Jordan, Isiah Thomas and Hakeem Olajuwon. In fact, the aberrational period is the one we're just coming out of, when league parity was at an all-time high (and, perhaps not so coincidentally, fan interest lagged). The stats also show the outsized influence each new CBA has had on the NBA's competitive balance, sure to happen again when a new CBA is negotiated.


The talent differential between good and bad teams in the NBA is difficult to measure, but the best tool is probably regular-season records and the standard deviation, which measures the variability of the numbers in a set of data. By way of example, the average American male is about 5-foot-10, with a standard deviation of three inches, which means that about two-thirds of American men are between 6-1 and 5-7.

Since NBA teams only play each other during the 82-game season, the league always averages 41 wins. The larger the standard deviation of wins each season, the more disparate (or top-heavy) the league; the lower the standard deviation, the more parity.

Over the last 30 seasons, NBA teams have had an average standard deviation of 12.9 wins. Last season, it was 13.7 wins -- a bit above average, but only the eighth-highest since 1982. What's more, there's no indication that the league is getting more polarized: The 2010-11 season had a lower standard deviation than the 2007-08 and 2008-09 campaigns, and the league was more balanced after the February trade deadline. Despite Whitlock's claims, Carmelo hardly destroyed basketball in Denver; after the trade, the Nuggets' record improved while the Knicks fared slightly worse with the star forward.

If you graph teams' standard deviations over the last 30 years (above), you can see that the aberrant period is not the current NBA, but the era it recently came out of: 2001-07 was the most parity-filled period in modern NBA history. The current gap between good and bad teams may feel extreme, but only in the way that an 80-degree day feels like a scorcher if you just stepped off a plane from Alaska.

Include the NBA's new labor deals on that graph (dotted markers), and you can also see the impact each CBA has had on the competitiveness of the game. Over the last 30 years, the most balanced season was 1983-84, just after a CBA was signed, as teams prepared for a new salary cap to go into effect in 1984-85. But unlike the hard cap used by the NFL, the NBA's cap included loopholes, like one that let teams go over the salary limit to re-sign their own players. Throughout the 1980s, star-studded franchises used that clause (known as the "Larry Bird exception") to help assemble the great 76ers, Celtics, Lakers and Pistons teams of the 1980s, and cause a steady upward trend in the standard deviation. After all, you can't have great teams if they aren't beating up on bad ones.

As star players retired and the CBA kept the salary cap low, competitive balance crept back up in the early 1990s. Then, after a new CBA forced the largest-ever increase in the salary cap -- from $15.9 million in 1994, to $23 million in 1995 -- the NBA had its highest standard deviations in the modern era (with more than a little help from Jordan's Bulls, Karl Malone's and John Stockton's Jazz, and the arrival of Tim Duncan in San Antonio and Shaq and Kobe Bryant in L.A.).

During the 1997-98 season, the salary cap was $26.9 million, but the soon-to-be-retired Jordan was making more than $30 million thanks to the Bird exception, and even a young turk like Kevin Garnett had just signed a six-year, $126-million deal -- the most lucrative contract in league history at that point, and one that many blamed for the heightened tensions between players and owners -- to go in effect the following season.

Scared by the trends, the owners locked out the players after the '97-98 season until they agreed to a number of salary concessions, including a maximum salary of $14 million a year for veteran players. The Bird exception was still technically in effect, but the max-contract limit removed most of the advantages a team had in re-signing its own players.

The 1999 CBA also changed the league's salary-cap structure. Teams could go over the cap to sign free agents as well as their own players, but they would be charged a luxury tax for every dollar extra they spent on salaries. The CBA also included hidden stipulations, like taking salary-cap violators' escrow money. All told, teams could lose as much as four dollars for every dollar they went over the cap. Making matters more complicated, the salary cap didn't kick in if league-wide revenues were high enough that year, and the salary-cap itself wasn't determined until after the season. This meant teams had no idea whether a new contract would push them into the tax bracket, making them hesitant to sign any deals that might trigger the tax.

The combined effect of the maximum contract, prohibitive luxury tax and all that uncertainty made it difficult to keep good teams together. Not helping matters were the owners themselves, who took the money they saved on premier players and squandered it on second-tier and troubled talents like Vin Baker, Raef LaFrentz and Brian Grant.

The economics of the new CBA changed the game almost immediately. The two years leading up to the 1998-99 lockout had the highest standard deviation in team wins of the last 30 years; the years following the lockout had some of the lowest. Burnt out and not willing to play for half his old salary, Jordan retired. Playoff ratings dropped. The 2003-04 Pistons became the only NBA champions in the last 30 years to win without a future Hall of Famer on the roster (unless Darko Milicic finally turns things around).

The iconography of the game changed as well. Where before the biggest superstars were team players with high-caliber supporting casts (Boston's Big Three, Magic's "Showtime" Lakers, Isiah and the "Bad Boy" Pistons, Jordan's Bulls, Malone's and Stockton's Jazz), the new superstars were players like Allen Iverson and Vince Carter, lone gunslingers who put up gaudy numbers but rarely went deep into the playoffs.

But in 2005, a new CBA reversed the league's competitiveness. In the new agreement, the limit on max contracts stayed but the league eased up on the luxury tax and distributed more escrow money to salary-cap violators. Suddenly teams trying to retain young talent or build a championship contender could afford to do so.

By the 2007-08 season, when the Celtics acquired Ray Allen and Kevin Garnett and the Lakers traded for Pau Gasol, the league's standard deviation had risen from its third-lowest point in 2006-07, to the more normal (if slightly above average) range that it has maintained for the previous four years.

None of this is to say that the current NBA is some kind of middle-class Mecca, but it never has been. With only five players on the court at a time, and any one player exerting far more influence on the game than any outfielder, goalie, or even quarterback, the NBA is inherently unbalanced each year. That's why just two teams, the Lakers and Celtics, have won more than half of the NBA championships. It's why stars can rack up five, six, or in the case of Bill Russell, 11 championships during their careers. You can argue over how unbalanced the league should be, but a sizable talent gap is a foregone conclusion.

But while the gap between good and bad teams in the NBA may not be getting much wider, there's another element to the question of haves vs. have-nots: Can small-market teams still compete with the big-market behemoths? Here the conventional wisdom might be on to something. Some teams are bordering on insolvency, while others can flaunt the salary cap and just use their extra revenue to pay the luxury tax. As the Lakers, Celtics, Mavericks and Major League Baseball's Yankees and Red Sox have shown, it's a lot easier to win a championship when you're outspending everyone around you.

But compare the league's team salaries to the final standings and it's clear that it takes more than a big market and fat wallet to build a contender. The best team last regular season was the small-market Spurs, who were ousted from the first-round of the playoffs by the small-market Grizzlies. Memphis was then beaten by Oklahoma City in the Western Conference semifinals. Despite devastating injuries in recent years, the small-market Trail Blazers gave the champion Mavericks more trouble in the playoffs than the much ballyhooed Lakers (who had some first-round troubles themselves with the small-market Hornets). Meanwhile, bad management knows no zip code, and there are more than enough big-city losers, including the Clippers, Warriors, Wizards, Pistons and Nets to conclude that money isn't everything.

Even in the instances where small-market teams have lost marquee players, it's not always because those stars wanted to play in big markets or make more money (LeBron and Chris Bosh both took less money than they could have received from their incumbent teams to sign with Miami), and more because their former teams were poorly managed. Without LeBron, Cleveland was the worst team in the NBA last year. Is it any wonder he wanted more talented teammates? When it comes to building a good team, beach-front real estate, low taxes and a large local market are nice, but dependable ownership, good coaching, and savvy talent evaluation seem to win out.


Sitting in the media room after the Knicks' easy win over the Jazz, that was certainly Stoudemire's takein regards to the Jazz. "Utah made a couple decisions," he said. "They didn't sign Boozer. They traded Deron. They lost a coach (Jerry Sloan, who retired weeks earlier)."

The Jazz also decided to spend $40 million on Al Jefferson, Andrei Kirilenko and Mehmet Okur, and pick the immortal Kosta Koufus over Serge Ibaka (now a budding star with the Thunder) in the 2008 draft. Stoudemire's former team, the Suns, "saved" money over the years by not resigning him and Joe Johnson, but then they lavished it on the likes of Quentin Richardson, Boris Diaw and Hedo Turkoglu.

It's been something of a "best of times, worst of times" season for the NBA. The league has a healthy crop of likeable young stars, and the best international audience of any sport not played by David Beckham. LeBron's season-long free-agent decision generated the kind of mainstream media attention the league hasn't had since the Jordan era, and for the second straight year more than 10 percent of all American televisions were tuned into the NBA Finals. But the league also lost more than $300 million last year (or so David Stern and the owners claim) and had to take control of the Hornets.

But the conventional wisdom and media hype about competitiveness and player movement are glossing over some important facts. Stars have always moved from team to team, even before free agency. The NBA has always been a top-heavy league, and it's no more polarized now than it was during the 1980s and late 90s. It remains to be seen whether the owners will consider league history and the impact of past CBAs when they negotiate a new deal, one that will hopefully take advantage of the good things the league has going for it now, without making changes based on bad conventional wisdom.