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Monday, December 19, 2011

competitve balnce in the NBA

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The competitive balance in the NBA is an essential part of the uncertainty of outcome that constitutes a functioning league and cartel. The NBA has three mechanisms to maintain competitive balance and they are a soft salary cap, League wide sharing of revenues among teams and a two round player draft (Hwang 6). Even thou the NBA utilizes all of these mechanisms it has the worst competitive balance out of the four professional leagues.


The competitive balance is supported by a pool of players that are drafted from the labor market. In a typical situation a player that has a very high amount of skill will get the highest spot in the draft therefore getting a higher salary. In order to make the league competitive there are systems in place that require a draft, player contracts, free agency and trades among teams. To fuel competitive balance from the draft the thirteen teams that did not make it to the playoffs will have the highest picks from the draft lottery (NBAdraft). This brings new fresh talent to the teams with the worse win-loss percentages. For example, the Cleveland Cavaliers will have the highest percentage of winning the top three draft picks in the 004 NBA draft, because they did the worst last season.


Another factor in the NBA that was added to the league was a Soft salary cap. The Soft salary cap limits the higher payroll teams from spending an unlimited amount of money on free agency players. If teams could buy up all of the free agents they would in theory have a competitive edge among the rest of the teams in the league, because they can hire proven veteran talent. Since there is a salary cap is soft there are exceptions that can lead to breaking the salary cap. The salary cap can be broken by such rules as the Larry Bird exemption. This exception has rules where the player in question must have played for the team that is signing him for three years without trades or had been waived(Hwang 6). This allows teams to keep giving pay raises to veteran players even if it exceeds the salary cap allowed by the league.


In the past ten years there have been only four different teams that have won the NBA finals. The L.A. Lakers and the Chicago bulls had split six wins between them. All of the wins between the teams had been repeats for them with the exception of the San Antonio Spurs which had won it in 1 and 00(NBAdraft). Team salary has little to compare with the amount that a team has a winning season. With the exception of the L.A. Lakers the rest of the teams in the past ten years have been medium to low in respect to team payroll and the Lakers is at five on the list(Celtic Nation). These results almost make the outcome of the NBA finals predictable.


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