Struggling to Reinvent the NBA Draft Lottery

The NBA’s main proposal to reform the lottery, reported first here, has drawn reactions ranging from tepid support — a shoulder shrug and a smile — to aggressive criticism of the idea as both ineffectual and likely leading to bad unintended consequences.

Very few people have been super-enthusiastic about the proposal, which would move toward equalizing the odds of each lottery team snagging a high pick. The current system gives the league’s worst team a 25 percent chance of snagging the top pick and a 65 percent chance of landing within the top three. The odds cascade from there; the lottery team with the best record has only a 0.5 percent chance of winning the top pick and a paltry 1.8 percent chance of jumping into the top three.

The league only draws the top three picks in the lottery, meaning that if a team doesn’t move into the top three, it is stuck in or very near its original draft position.

The league’s proposal would give at least the four worst teams the same 11 percent chance of landing the no. 1 pick. The lottery team with the best record would have its odds of winning bumped up to 2 percent, and the league would expand the draw to the first six selections. Depending on the precise weights, the teams in the no. 13 and no. 14 spots — the best lottery teams — could each have something like a 15 percent chance to move into the top six.

Please note: This is only one of the league’s proposals. There are others, and several teams have submitted their own reform ideas. That includes The Wheel, a proposal from Celtics assistant general manager Mike Zarren that was first detailed here.

In perhaps the least surprising news of the summer, the Philadelphia 76ers have registered their opposition to early drafts of the league’s proposal, according to Brian Windhorst of Philly likely has reasons both selfish and virtuous. It will be tanking again this season, and the dip in top-pick odds for the league’s worst team would hurt its cause.

The league is targeting the Sixers here, and it is more broadly targeting the rancor the Sixers have generated by using the league’s incentive structure better than perhaps any team in NBA history.

The NBA has raised the possibility of implementing lottery reform as early as next season, and the Sixers have a point about changing the rules midstream. Their new owners green-lit a long-term rebuilding plan under the set of rules in place, with no indication those rules might change so soon.

And they are not alone. Teams dealt first-round picks with various protections under lottery rules the league now wants to scrap. Take the situation between the Lakers and Suns: The Lakers owe Phoenix a top-five protected first-round pick in the 2015 draft, the last goodie Phoenix will get from the Steve Nash trade. The Lakers keep that pick if it falls within the top five; otherwise, it goes to the Suns.

If the Lakers finish with, say, the eighth-worst record in the league next season, the chances of that pick leaping into the top five might be very different if the lottery determines the first six picks instead of the first three.

There is something like universal agreement that switching rules on a dime is not ideal. That is why Zarren’s Wheel proposal would kick in only after all traded draft picks have changed hands.

But the two most common criticisms of the league’s general odds-flattening idea are these:

1. It won’t really do anything to deter the worst teams from aiming for the top of the draft.

2. It would incentivize different kinds of tanking, especially mid- and late-season tanking among teams with a fighting chance to make the playoffs.

The first criticism gets at the very nature of the sometimes fanatical debate around tanking. Would the Sixers before last year’s draft have behaved any differently with “only” an 11 percent chance of the top pick, and a huge chance of at least a top-six selection? Would they have kept Jrue Holiday, Evan Turner, and Spencer Hawes, actually signed meaningful free agents (instead of spending basically nothing in free agency), and worked the trade market for useful players?

It’s not hard to imagine that Sixers team looking like a decent bet for 45 wins and a second-round playoff spot next season within today’s Eastern Conference landscape.

But different franchies have different goals. The Sixers don’t aspire to be the Hawks of the late 2000s. They want to be the Thunder of today. Given those priorities, they might have raced to the bottom in the exact same style — and have been absolutely rational in doing so, even with decreased odds of a lottery home run.

It is hard to separate tanking from rebuilding because there will always be bad teams in a zero-sum sport. Adam Silver, the commissioner pushing lottery reform, has admitted as much. Here’s what he told me in March:

“You and I could take the player cards of all 450 players in this league and put them on a table. We could try to design a league with the greatest possible parity, and it would be very difficult. There would still be teams that would be hard-pressed to have a high chance at winning.”

There will always be expensive teams, or teams about to get expensive, with rosters that top out at 40 wins and first-round demolition. Breaking up those teams to get younger and snag high picks has been a rational course for decades — in every sport.

Tanking like this can even work when it fails. The Bobcats broke up an aging, pricey roster ahead of the 2011-12 season and bricked their way into a historically awful 7-59 record. They lost the Anthony Davis lottery, ending up with Michael Kidd-Gilchrist instead.

The cap flexibility they got from dumping Gerald Wallace, Stephen Jackson, Tyson Chandler, and (eventually) Boris Diaw netted extra draft picks and the space to gamble in free agency on Al Jefferson and Lance Stephenson. They snagged another extra first-rounder by swallowing the extra year on Ben Gordon’s contract, a deal that worked out about as well as possible when the Pistons fell to no. 9 in the lottery and forked over the pick that became Noah Vonleh.

The draft is the best way to acquire talent that is both young and cheap, the result of a rookie wage scale the league imposed in the mid-1990s. The top of the draft is also the best place to find a superstar, and superstars are more important in basketball than in any other sport. You can study competitive balance from as many directions as you’d like, but every analysis will spit out the same answer: The best way to win big in the NBA is to have at least one top-10 player, and the best way to obtain and keep that player is to draft him.

That is the hope of the draft. Until the NBA changes other parts of its system in ways that facilitate the movement of stars around the league, teams without hope will chase high picks. Such changes might make being mediocre more appealing, and not a death sentence. (Note: I detailed many such possible methods here, so I won’t get into them again).

That is especially true if revenue-sharing guarantees profitability for even the worst teams — a potential moral hazard the league has tried to guard against. The Sixers actually made money last season, with projected net profit of about $10.4 million, per league documents obtained and verified by Grantland. They did so without getting a dime from revenue-sharing, so the “moral hazard” threat doesn’t quite apply to them.

Teams in markets over a certain population threshold are banned from ever receiving cash from the revenue-sharing system. Philly apparently falls into this category, which includes New York, Brooklyn, the L.A. teams, and Toronto. But Philly didn’t earn enough revenue to pay into the system, and so the league just nets them out as neither receiving nor paying a cent — a $0 revenue-sharing team. The Sixers and Raptors were the only such teams in the league last season.

The NBA has tried to avoid the Miami Marlins/Pittsburgh Pirates scenario, where teams rake in giant profits via revenue-sharing without trying to win. They appear to have struck a nice balance so far. Nine teams are projected to have lost money last season, and the Sixers were one mid-level contract away from merely breaking even.

There is a strong financial incentive to win, but the league is still healthy enough for Philly to punt multiple seasons without fear of going deep into the red. As long as bad teams don’t get hammered financially, ownership groups who want titles will permit strategic rebuilding. Philly is a big market uniquely positioned to absorb the costs of tanking, but flattening the odds won’t prevent other bad teams from trying it.

That said, there is cautious and justified optimism that equalizing the odds at something like 11 percent for the four or five worst teams will change things on the margins in the league’s basement. Rebuilding teams might be willing to splurge on good players, even though those players might add four or five wins. Those wins don’t do as much damage if the half-dozen worst teams have more or less the same chance of winning the lottery.

The Sixers scoured for undervalued gems last season, but they mostly scoured for players they knew topped out as 10th men. Under the league’s proposal, maybe they gamble on a young guy or international prospect with a higher ceiling. Hell, maybe a bad team goes after Eric Bledsoe, a very good young player who isn’t going to vault an awful team into the postseason.

It’s worth trying, anyway.

The second concern is more serious, and worth deep study. Teams rake in between $1 million and $2 million for each home playoff game, and being good has other financial benefits — better sponsorship deals, better attendance, more leverage when it’s time to renegotiate the local TV contract.

But there is massive value in finding a superstar, and there are absolutely ownership groups who would punt a playoff race midseason if the prospect of moving from no. 14 into the top five was suddenly a 20 percent chance instead of a near-zero proposition.

Not every franchise would behave this way, and no team is tanking out of a solid 6-seed into the lottery. But a team sitting in 10th or 11th in a brutal playoff race might reasonably decide to hit the brakes at the trade deadline.

The Raptors of last season are a good example. They considered punting midseason after trading Rudy Gay and putting Kyle Lowry on the market, a move that would have destroyed them. But the team exceeded expectations in the month after the Gay deal, and Toronto stayed the course. They were so far ahead of the Philly/Milwaukee/Orlando trio by January that tanking became a no-win strategy.

The math would have been very different under the league’s proposal. The Sixers-Bucks-Magic triangle of death might have been a bit better, and landing at no. 8 or no. 10 in the lottery would have been a more profitable outcome than doing so under the current system.

There is real worry the league’s proposal would enable this kind of mid- and late-season tankery. The last two-plus weeks of the season already feature teams sitting starters and trying out questionable strategies while jockeying for position in the middle of the lottery. It would be depressing if teams in the bottom half of a four-team race for the no. 8 spot in the West subtly waved the white flag after 75 games.

And by the way: Upping the chances of the “best” lottery teams winning the no. 1 pick — or just a top-five pick — will result in more “freak” outcomes, which in turn tend to result in knee-jerk anger. A 48-win team missed the playoffs in the West last season. Are you comfortable with such a team landing Andrew Wiggins?

It’s easy to say, “HELL YES! Reward the good teams for trying!” But the league ditched the equal-chances-for-all lottery system after back-to-back wins for the Magic in the early 1990s, and fans this season weren’t thrilled when a middling Cleveland team jumped from the bottom half of the lottery into the top spot.

This has always been my concern about an unweighted lottery, or even an all-inclusive unweighted lottery that gives all 30 teams an equal chance at the top pick. It sounds great in theory. The minute the 2012 Heat get Anthony Davis, there would be an outcry for change.

One other team has tried to address this problem by officially proposing to the league something very similar to Bill Simmons’s “Entertaining as Hell Tournament.” The proposal would expand the playoffs to include 10 teams per conference, but place teams 7-10 into winner-take-all games for the final two playoff spots, per sources familiar with the proposal.

The proposal calls for just two additional games in each conference: no. 7 against no. 10, and no. 8 vs. no. 9, sources say. I’d consider having the winners play a third game, with the winner of that getting its pick of the no. 7 or no. 8 seeds. That may grant too much power to lower-rung playoff teams; if anyone should get to pick its playoff opponent, it should be the top seed in each conference.

The tournament is a fun idea, and it would tweak the incentives at least a bit away from late-season tanking. Ditto for another popular idea, though one that might not be part of any official proposal sent to the league: putting at least the two last playoff teams in each conference into the lottery.

Shortening playoff series would be the best way to make just getting in more appealing, but the league isn’t going there. It’s healthy to consider other methods to reach the same goal.

Any lottery system limited to only a portion of the league will have some built-in demarcation point around which tanking at least a game or two becomes optimal. Proposals like The Wheel and the leaguewide lottery with even odds recognize that reality by obliterating all of those lines in the sand.

The league’s proposal doesn’t do that. But it might be a step in the right direction — a useful in-between structure to the lottery. Implementing any major change like this should likely wait until at least after the 2017 collective bargaining talks. Philly is right to object on that basis.

Filed Under: NBA, NBA Draft, NBA Draft Lottery

Zach Lowe is a staff writer for Grantland.

Archive @ ZachLowe_NBA