Heat Produced: Cost Efficiency

LeBron signs his HEAT contract. He's ambidextrous.
(Picture from hiphophoney.com)

LeBron James was the most underpaid player on the Miami HEAT in 2011 and Joel Anthony was the most overpaid.

Danny Martinez, from the Hot Hot Hoops blog, published an article last week that labeled Mike Miller and Joel Anthony as the two bad contracts on the HEAT. I don’t know what method Danny used to identify Miller and Anthony as the worst contracts on the team, so I decided to see for myself.

This article will use Win Score and Estimated Wins Produced, statistical models created by sports economist David Berri from the Wages of Wins Journal, to measure how much a player's box score statistics contributed to their team's wins. An average player produces 0.100 estimated wins per 48 minutes (Est.WP48), a star player produces +0.200 Est.WP48 and a superstar produces +0.300 Est.WP48. More information on these stats can be found at the following links:

Simple Models of Player Performance
Wins Produced vs. Win Score
What Wins Produced Says and What It Does Not Say
Introducing PAWSmin — and a Defense of Box Score Statistics

I divided each HEAT players’ salary by their estimated wins produced to get the average cost per win for each team member. Based on wins produced data from NerdNumbers and NBA players’ reported share of basketball-related income, the average cost per win in the NBA was $1.8 million for the 2011 season.

All of that information was used to calculate the cost efficiency for each player and the results are in this spreadsheet.

It turns out Danny was right - in a way. The HEAT paid $2 million above market value for Anthony to produce an estimated 0.7 wins in 2011 and $1.6 million above market value for Miller’s 1.9 estimated wins produced. Udonis Haslem was overpaid by $1.9 million but he only played 13 games in the regular season after tearing the Lisfranc ligament in his foot.

Injuries also limited Miller’s cost efficiency. He played 400 minutes less than projected and was only half as productive as expected with only 0.110 est.WP48 in 2011 compared to a projected 0.243 est.WP48. If Miller produced as expected, then the HEAT would have paid him $6.2 million below market value. As long as Miller stays healthy, his contract is not a bad one.

The only other “bad contracts” for the HEAT in 2011 were:

• Jerry Stackhouse - paid $833,218.27 above market value for an estimated zero wins produced 
• Juwan Howard - paid $709,722.33 above market value for an estimated 0.7 wins produced 

Dexter Pittman was overpaid by $0.6 million for 11 minutes of action but that has to be considered an investment at this point. He shouldn’t be considered a “bad contract” until he’s gotten enough minutes to prove whether he can be productive in the NBA.

LeBron, Dwyane Wade and Mario Chalmers were the best bargains for the HEAT thanks to the maximum salary and rookie “scale” contract rules in the old collective bargaining agreement the NBA owners said was costing them money. Those three players were paid $32.7 million below market value for an estimated 35.3 wins produced.

Chalmers is a restricted free agent so he may not be underpaid next season. His 2011 production was worth $5.6 million.

Last year’s big free agents, LeBron, Wade and Chris Bosh were paid $31.6 million below market value for the 42.4 estimated wins they produced. Overall, the HEAT paid $39.3 million dollars below market value for their entire 2011 roster.

If Pat Riley and Andy Elisburg keep doing their jobs that well, then it will make the HEAT’s new CEO position that much easier for Nick Arison.