Should The Upcoming NBA Draft Have Been Decided By An Auction?

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Tanking. The word sends shivers up any basketball fan’s spine, never mind an economists’. Is it fun to watch? Never. Does it work? Sometimes. And yet, NBA teams consistently commit to tanking in an effort to gain favourable picks and take advantage of today’s draft lottery structure. This year, tanking teams will find out if it was worth the sacrifice next Thursday on June 26 during the 2014 NBA Draft. But could there be another way that doesn’t require so much loss?

 
 

Two economists at Purdue suggested a market-driven, auction-like improvement to this year’s NBA Draft Lottery that could have leveled the playing field for teams in Thursday’s draft and eliminated their incentive to lose spectacularly. In such a system, a team’s positive regular season performance would translate to an increased number of credits with which they can buy draft slots—upending today’s system, which awards the highest picks to the poorest performers, more or less. These credits could also potentially be traded or split up, creating a sort of mini-economy within the league. To see what an auction system might look like, we broke down the most popular arguments to get an idea of the pros and cons.

Pros

No more high costs for a high draft pick
Stopping tanking is the whole reason an auction-style draft would be implemented. Without tanking, teams won’t be forced to take a hit to their fanbase or their coffers ahead of a rebuild. This is primarily a problem these days because it’s the smaller, poorer teams that might be tempted to tank—recall the 2012 Charlotte Hornets, whose money situation became even more of a mess during their ride to the bottom.

Teams will readjust their credits, not their performance
In today’s NBA, a team realizing it will lose will purposefully slump after the All-Star break. In a credit system, they would be incentivized to rebalance their credit purse instead while continuing to play as hard as possible. Given that logic, a team finding themselves on an unexpected playoffs run may be more loose with their credits and prefer to buy more picks over a single high pick. This would encourage parity in the league with poorer performers getting the higher picks.

Fans of losing teams will stay engaged
With credits and draft slots continuously up for grabs, the resulting transactionary drama will give fans of teams that are doing poorly or don’t make the playoffs something to follow.

More ways to restructure
Currently, the most accepted (and to some, only) path to restructuring a team involves netting one, or possibly two, high-ranking draft picks around which to rebuilt a faltering franchise. Now, however, teams will have more options. Rather than going for just one player at the top, they can potentially purchases multiple late picks to get additions that are the sum of their parts.

Luck is out the window
There’s a reason that tanking only works sometimes—there’s still the element of chance involved in today’s draft lottery process. Never again would the Cavaliers end up with the number one slot without “deserving” it.

Cons

It leaves too much up to the suits
Teams showing poor performance in the latter half of the regular season (specifically, the symptoms of tanking) may get penalized at the league’s discretion, while teams actually facing a slump may get a higher allocation of credits to encourage parity within the league. This could leave too much up to internal politics of the league, which can hardly be called objective, and may punish teams for perceived infractions.

Tanking may still be a thing
That said, teams may be able to plan year-long tanking efforts or otherwise hide their intentions long enough to fool officials and collect extra credits. No system is flawless.

Bidding process may be confusing for fans
Although fans will have more to look forward to gameplay-wise, following a series of credit bids could be boring unless it is handled well by NBA teams and publicists. Have you ever tried to watch stock trading?

The draft may stay stacked at the top
If there’s anything that the NBA tanking has proven, it’s that teams are willing to put all their eggs in one basket. Simply because a franchise has the opportunity to spread their credits around to buy multiple draft picks doesn’t mean it will. In fact, a far likelier scenario suggests that teams will spend all or a majority of their credits (quality over quantity) in order to nail a single high pick. Although this would ideally leave trailing teams with a bevy of slots to buy up, teams are only willing to sign on so many new players every year, so it makes little difference.

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