PLAYING GENERAL MANAGER: A SPORT FINANCE EXPERIENCE Mike Mudrick Sport Management June 7, 2016
Trivia For the 2015-16 season, who was the highest paid player in the NBA? LeBron James Carmelo Anthony Kevin Durant Kobe Bryant
Trivia Since 1984, how many different teams have won NBA championships? 7 8 9 12 15
Trivia At what age do NBA players typically hit their statistical peak? 24 27 29 31
Background Sport Finance Class size: 22 Juniors/Seniors Second time offered Uniqueness of sport Academically Consumer perceived knowledge Active student learning
Fantasy Sport Statistics 66% male, 34% female (FSTA, 2015) 2007: 19.4M USA users 2014: 41.5M Popularity growing amongst college students (New, 2014)
Project Outcome Objectives Budgeting Zero-based League Finance Rules Salary caps Luxury taxes Free agency Competitive Balance Analytics & Financial Implications Risk Writing/Reflection
Analytics in Sport Why have analytics become useful in sport?
Difficulties of Sport Assessment Human error; an inexact science However Predictions and show of causation with statistical significant much better position
Typical measures of efficiency Player Variables Three Point Field Goals Made (3FGM) 0.064 Defensive Rebounds (REBD) 0.034 Offensive Rebounds (REBO) 0.034 Steals (STL) 0.033 Two Point Field Goals Made (2FGM) 0.032 Blocked Shots (BLK) 0.02 Free Throws Made (FTM) 0.017 Missed Free Throws (FTMS) -0.015 Missed Field Goals (FGMS) -0.034 Turnovers (TO) -0.034
How can I translate value? What s a good PER? Unheard of successful year 35 Clear cut MVP 30 Viable MVP Candidate 27 Legitimate All-Star 22 Possible All-Star 20 Decent second option 18 Third best on team 16 Somewhat good player 15 Rotation player 13 Not an NBA player 5
80/20 Rule in Effect Berri & Schmidt (2010) From 77-78 to 07-08 80 percent of wins produced came typically three players
Directions Randomly select NBA team with corresponding budget Draft 13-player roster 4G, 4F, 3C, 2 G/F Salaries provided to class Player overlap allowed Analytic evaluations throughout semester Winner: Most efficient team
Winning Team Player Position Salary Starting PER PER 3/9/14 PER 3/20/14 PER 4/8/14 Final PER VARIANCE James Harden G $13,701,250 21.94 22.57 22.23 23.23 23.51 1.57 Stephen Curry G $9,887,642 23.83 23.29 23.36 23.7 24.13 0.3 Kyrie Irving G $5,607,240 20.04 20.22 20.11 20.44 20.14 0.1 Damian Lillard G $3,202,920 19.52 19.13 19 18.87 18.69-0.83 Jeremy Lamb G $2,111,160 14.6 13.98 13.85 13.43 13.44-1.16 Anthony Davis F $5,375,760 26.47 26.21 27.14 26.63 26.54 0.07 Tobias Harris F $1,545,840 14.84 15.72 16.26 16.64 16.54 1.7 Kenneth Faried F $1,367,640 18.24 19.01 19.68 20.21 19.9 1.66 Markieff Morris F $2,091,840 18.38 18.19 18.25 18.51 18.48 0.1 Paul George F $3,282,003 21.09 20.7 21.14 20.29 20.16-0.93 Larry Sanders C $3,053,368 14.15 14.1 14.08 14.05 14.02-0.13 Demarcus Cousins C $4,916,974 25.9 25.77 25.63 26.22 26.18 0.28 Nikola Vucevic C $1,793,520 18.03 19.17 18.73 18.88 18.85 0.82 Total $57,937,157 257.03 258.06 259.46 261.1 260.58 3.55 Total Alotted $59,113,318
Worst Team Player Position Salary Starting PER PER 3/9/14 PER 3/20/14 PER 4/8/14 Final PER VARIANCE Lebron James SF $19,067,500.00 29.51 29.53 29.3 29.21 29.4-0.11 Kevin Durant SF $17,832,627.00 30.7 30.48 30.41 30.44 29.9-0.8 John Wall PG $7,459,925.00 20.09 20.24 20.12 19.9 19.61-0.48 Goran Dragic SG $7,500,000.00 22.55 22.4 22 21.73 21.43-1.12 Paul George SF $3,282,003.00 21.09 20.7 21.14 20.29 20.16-0.93 Damien Lillard PG $3,202,920.00 19.52 19.13 19 18.87 18.69-0.83 Eric Bledsoe PG $2,626,474.00 19.96 19.81 19.67 19.27 19.62-0.34 John Henson C $1,905,360.00 18.72 17.9 17.53 17.78 17.97-0.75 Nikola Vucevic C $1,793,520.00 18.03 19.17 18.73 18.88 18.85 0.82 DeMarcus Cousins C $4,916,974.00 25.9 25.77 25.63 26.22 26.18 0.28 Anthony Davis PF $5,375,760 26.47 26.21 27.14 26.63 26.54 0.07 Isaiah Thomas PG $884,293.00 21.31 21.15 20.77 20.81 20.54-0.77 Kevin Love PF $14,693,906 28.32 28.15 27.92 27.37 26.97-1.35 Total $90,541,262.00 302.17 300.64 299.36 297.4 295.86-6.31 Total Alotted $101,291,208
In-class Reflection Highest budget last place Only 4 teams improved by end of semester In-depth salary discussion Guaranteed contracts Fan Cost Index Media contracts, sponsorship deals Lack of competitive balance
Student Reflection Paper Assessment of roster, based on value versus player salary Did team receive an adequate return on its investment? Where was best value found? Provide a short and long-term financial plan Considerations Age Future salaries Risk Future strategies must be in accordance with NBA salary cap and luxury tax policies How PER connected to analytics learned in class, has financial implications
Student Comments When looking at professional sports, it can be easy to forget that it is not only the actual players that produce wins and success. In order for them to have the ability to play and showcase their talents, managers and team owners must make informed decisions.
Student Comments Prior to this assignment, I did not have a large knowledge base of the NBA or the inner-workings of the player efficiency rating and salary relationship. Although it was a new experience looking at player statistics and comparing them against others, I found this assignment to be a helpful learning device for me in understanding the larger picture and role of general managers overall.
Project Issues Time Statistics Class size Lack of active management Student reward? Looked at winning, not team revenues
Moving Forward More of a business operation Multi-player teams Use of similar project in other sport management classes
Discussion Questions Ways to incentivize students to be more engaged? NCAA concerns with student-athletes? Assignment ideas throughout process? Other virtual reality programs out there (non-fantasy) for similar outcomes? Other ways to improve experience?
Other Questions?