Sports

The Warriors Ain’t Dead Yet!

Mike Kwatinetz Golden State Warriors, NBA, Sports, Thoughts , , , , ,

Why the team is still a contender

My long term readers know that every so often the blog wanders into the sports arena. In doing so, I apply the same type of analysis that I do for public stocks and for VC investments to sports, and usually, basketball. Given all the turmoil that has occurred in the NBA this off-season, including the Warriors losing Durant, Iguodala, Livingston, Cousins and several other players, I thought it would be interesting to evaluate the newly changed team. Both ESPN and CBS power rankings have them 7th in the West and 11th in the NBA. I find that an overreaction as the Warriors may have beaten the Raptors if Klay Thompson not been injured, they swept Portland, and won the last 2 Rockets games without Durant. At the time this drove a lot of chatter that the team might be better off without Durant (I disagree).

But rather then compare the revised roster to last year’s, it seems more closely matched with the 2014-15 team, as that was a championship team that did not include Kevin Durant. I will make 2 key assumptions:

  1. Klay Thompson will return by the end of February and be as effective as he was before his injury
  2. The Warriors will make the playoffs despite missing Thompson for the majority of the season

It all starts with Curry

A third key assumption that has been proven over and over again is that players that come to the Warriors usually perform better as they benefit from the “Curry Effect”, namely, getting more shots without having someone closely guarding them, (The Curry Effect), resulting in an average improved shooting percentage of over 5%. In all fairness, it really is the “Curry plus Thompson Effect” as the extreme focus on preventing the two of them from taking 3 point shots is what frees up others. It helps that Curry is unselfish and readily passes the ball when he is double or triple teamed. Thompson’s passing has improved substantially but since he gets his shot off so quickly, he has less need to pass it. Last year both shot over 40% from 3 despite defensive efforts focused on preventing each of them from taking those shots.

Starting Teams: 2019-20 vs 2014-15

Table 1

Curry, Thompson and Green, the heart and soul of the Warriors, all remain from the 2014-15 roster, and now are at their peaks. In the 2014-15 season when Green first became a starter, Curry was one year away from reaching his peak and Thompson was just coming into his own especially on defense. I believe each of them is better today then they were at that time. At his best, Bogut may have been better than Cauley-Stein, but by 2014 Bogut had been through a number of injuries. Last year Cauley-Stein averaged nearly double the points of 2014 Bogut (11.9 vs 6.3), took slightly more rebounds per game and was a better free throw shooter. Stein, much like Bogut, is also considered a solid pick setter and defender. Russell is someone who should benefit greatly from playing with Curry. Even without that, last season he averaged over twice as many points per game as 2014 Barnes (21.1 vs 10.1) which should take considerable pressure off Curry (and Klay when he returns). However, Barnes was a better defender in 2014 than Russell is today. I give the edge to all 5 starters on the 2019 starting team compared to the 5 that started in 2014-15.

Thompson may be the most underrated player in the league!

It’s unfortunate that Thompson was injured in game 6 of the 2019 finals as he was once again proving just how good he can be. Not only was he playing lockdown defense, but he also drove the offense in what has been referred to as a typical Klay game 6. In just 32 minutes, before getting injured, he scored 30 points on 83% effective shooting percentage (67% on 3s), went 10 for 10 on free throws, and had 5 rebounds and 2 steals. I believe Golden State, even without Durant, would have forced a game 7 if Thompson did not get injured.

It boggles my mind that one of the websites could refer to Thompson as “an average player” who did not merit a max contract. This is bordering on the ridiculous and has a lot to do with the fact that the most important measure of shooting, effective shooting percentage (where each 3 made counts as 1½ 2 point shots made) does not normally get reported (or even noticed). In Table 2, I list the top 31 scorers from last season (everyone who averaged at least 20 points per game) and rank them by effective shooting. Thompson is number 8 in effective shooting and number 3 in 3-point percentage among this group. So, if effective shooting percentage was regularly published, Thompson would show up consistently helping the perception of his value. When this is coupled with his being a third team all-defensive player (i.e., one of the top 15 defenders in the league) it appears clear that he should be considered one of the top 15 players in the league.

Table 2: Top Scorers 2018-2019 Season

6th Man 2019-20 vs 2014-15

Kevon Looney has emerged as a potential star in the works. While he may not yet be the defensive presence of Iguodala, he is getting close. His scoring per minute played was higher than Andre’s 2014-15 numbers and his rebounds per minute were more than twice as much. While Iguodala had greater presence and could run the team as well as assist others in scoring, Looney at least partly makes up for this in his ability to set screens. Looney also has a much higher effective shooting percentage (62.7% vs 54.0%) than Andre had in 2014-15. While Kevon doesn’t shoot 3s he gets many points by putting back offensive rebounds and dunking lob passes. Overall, I give the edge to Iguodala based on the Looney of last season but given Looney’s potential to improve this might be dead even in the coming one.

Rest of the Bench for the 2 teams

It is the bench that is hardest to evaluate. Unlike last year’s bench, the 2014-15 bench was quite strong which spawned the Warrior logo “Strength in Numbers”. It included quality veteran players like Leandro Barbosa, David Lee, Mareese Sprouts and Shaun Livingston, who was playing at a much higher level than last season. The four of these together averaged over 26 points per game.  This coming year’s bench is much younger and more athletic. It includes Alec Burks, Glenn Robinson, Alfonzo McKinnie and Omari Spellman, plus several rookies and Jacob Evans III. The first four are all capable of scoring and are solid 3-point shooters (they could increase to well above average once with the Warriors). I expect that group, coupled with one or two of the others, to exceed the 2014-15 bench in defense…but may not have as much scoring fire power. The team is likely to give one or two of the rookies as well as Evans opportunities to earn minutes as well. The bench is an improvement over last year but may not be as strong as the 2014-15 squads.

Overall Assessment

I believe the 2019-2020 squad is better than the championship team of 2015. The starting lineup features the core 3 players who have improved since then, D’Angelo Russell who was an all-star last year, and a solid center in Willie Cauley-Stein making the edge substantial. Looney as 6th man is already giving evidence of future stardom. While he was not quite the Andre Iguodala of 2014-15, the difference is modest, and Looney continues to improve. The 2014-15 bench appears superior to that of next season, but the edge is not great as the newer group should be stronger defensively and is not far off the older group as scorers – the question will be how well they gel and how much the Curry/Klay factor improves their scoring. Finally, I think Kerr is a better coach today than he was given the last 5 years of experience.

They May Have Improved vs 2014-15, but so has the Competition

ESPN and CBS power rankings reflect the fact that multiple teams have created new “super star” two-somes:

  • Lakers: Lebron and Anthony Davis
  • Clippers: Kawhi Leonard and Paul George
  • Houston: Harden and Westbrook (in place of Chris Paul)
  • Nets: Kyrie Irving and Durant

Contenders also include improving young teams like Boston, Philadelphia, Denver, and Utah plus an improved Portland squad. This makes the landscape much tougher than when the Warriors won their 2015 championship. Yet, none of these teams seem better than the Cleveland team (led by a younger LeBron, Kyrie Irving and Kevin Love) the Warriors beat in 2015. So, assuming Klay returns by late February and is back to par, I believe the Warriors will remain strong contenders given the starting team with four all-stars augmented by Willie Cauley-Stein and an improving Kevon Looney as 6th man. However, it will be much tougher going in the early rounds in the playoffs, making getting to the finals longer odds than in each of the past 5 years.

SoundBytes

  1. An examination of Table 2 reveals several interesting facts:
  2. Curry, once again is the leader among top scorers in effective shooting and the only one over 60%
  3. Antetokounmpo is only slightly behind despite being a very poor 3-point shooter. If he can improve his distance shooting, he may become unstoppable
  4. Russell Westbrook, once again, had the worst effective shooting percent of anyone who averaged 20 points or more. In fact, he was significantly below the league average. Part of the reason is despite being a very poor 3-point shooter he continues to take too many distance shots. Whereas most players find that taking 3s increases their effective shooting percent, for Westbrook it lowers it. I haven’t been able to check this, but one broadcaster stated that he has the lowest 3-point percentage of any player in history that has taken over 2500 3-point shots!
  5. I believe that Westbrook has a diminished chance to accumulate as many triple doubles next season as he has in the past. There is only one ball and both he and Harden tend to hold it most of the time. When Chris Paul came to the Rockets his assists per game decreased by about 15% compared to his prior 3 season average.

Ending the Year on a High Note…or should I say Basketball Note

Mike Kwatinetz Golden State Warriors, Metrics, NBA, Sports , , ,

Deeper analysis on what constitutes MVP Value

Blog 35 photo

In my blog post dated February 3, 2017, I discussed several statistics that are noteworthy in analyzing how much a basketball player contributes to his team’s success. In it, I compared Stephen Curry and Russell Westbrook using several advanced statistics that are not typically highlighted.

The first statistic: Primary plus Secondary Assists per Minute a player has the ball. Time with the ball equates to assist opportunity, so holding the ball most of the time one’s team is on offense reduces the opportunity for others on the team to have assists. This may lead to fewer assisted baskets for the whole team, but more for the individual player. As of the time of the post, Curry had 1.74 assists (primary plus secondary) per minute he had the ball, while Westbrook only had 1.30 assists per minute. Curry’s efficiency in assists is one of the reasons the Warriors total almost 50% more assists per game than the Thunder, make many more easy baskets, and lead the league in field goal percentage.

The second statistic: Effective Field Goal Percentages (where making a 3-point shot counts the same as making 1 ½ 2-point shots). Again, Curry was vastly superior to Westbrook at 59.1% vs 46.4%. What this means is that Westbrook scores more because he takes many more shots, but these shots are not very efficient for his team, as Westbrook’s shooting percentage continued to be well below the league average of 45.7% (Westbrook’s was 42.5% last season and is 39.6% this season to date).

The third statistic: Plus/Minus.  Plus/Minus reflects the number of points your team outscores opponents while you are on the floor.  Curry led the league in this in 2013, 2014, and 2016 and leads year-to-date this season. In 2015 he finished second by a hair to a teammate. Westbrook has had positive results, but last year averaged 3.2 per 36 minutes vs Curry’s 13.8. One challenge to the impressiveness of this statistic for Curry is whether his leading the league in Plus/Minus is due to the quality of players around him. In refute, it is interesting to note that he led the league in 2013 when Greene was a sub, Durant wasn’t on the team and Thompson was not the player he is today.

The background shown above brings me to today’s post which outlines another way of looking at a player’s value. The measurement I’m advocating is: How much does he help teammates improve? My thesis is that if the key player on a team creates a culture of passing the ball and setting up teammates, everyone benefits. Currently the value of helping teammates is only measured by the number of assists a player records. But, if I’m right, and the volume of assists is the wrong measure of helping teammates excel (as sometimes assists are the result of holding the ball most of the time) then I should be able to verify this through teammate performance. If most players improve their performance by getting easier shots when playing with Westbrook or Curry, then this should translate into a better shooting percentage. That would mean we should be able to see that most teammates who played on another team the year before or the year after would show a distinct improvement in shooting percentage while on his team. This is unlikely to apply across the board as some players get better or worse from year to year, and other players on one’s team also impact this data. That being said, looking at this across players that switch teams is relevant, especially if there is a consistent trend.

To measure this for Russell Westbrook, I’ve chosen 5 of the most prominent players that recently switched teams to or from Oklahoma City: Victor Oladipo, Kevin Durant, Carmelo Anthony, Paul George and Enes Kantor. Three left Oklahoma City and two went there from another team. For the two that went there, Paul George and Carmelo Anthony, I’ll compare year-to-date this season (playing with Westbrook) vs their shooting percentage last year (without Westbrook). For Kantor and Oladipo, the percentage last year will be titled “with Westbrook” and this year “without Westbrook” and for Durant, the seasons in question are the 2015-16 season (with Westbrook) vs the 2016-17 season (without Westbrook).

Shooting Percentage

Table 0

Given that the league average is to shoot 45.7%, shooting below that can hurt a team, while shooting above that should help. An average team takes 85.4 shots per game, so a 4.0% swing translates to over 8.0 points a game. To put that in perspective, the three teams with the best records this season are the Rockets, Warriors and Celtics and they had first, second and fourth best Plus/Minus for the season at +11.0, +11.0 and +5.9, respectively. The Thunder came in at plus 0.8. If they scored 8 more points a game (without giving up more) their Plus/Minus would have been on a par with the top three teams, and their record likely would be quite a bit better than 12 and 14.

Curry and His Teammates Make Others Better

How does Curry compare? Let’s look at the same statistics for Durant, Andrew Bogut, Harrison Barnes, Zaza Pachulia and Ian Clark (the primary player who left the Warriors). For Barnes, Bogut, Pachulia and Durant I’ll compare the 2015 and 2016 seasons and for Clark I’ll use 2016 vs this season-to-date.

Table 1

So, besides being one of the best shooters to play the game, Curry also has a dramatic impact on the efficiency of other players on his team. Perhaps it’s because opponents need to double team him, which allows other players to be less guarded. Perhaps it’s because he bought into Kerr’s “spread the floor, move the ball philosophy”. Whatever the case, his willingness to give up the ball certainly has an impact. And that impact, plus his own shooting efficiency, clearly leads to the Warriors being an impressive scoring machine. As an aside, recent Warrior additions Casspi and Young are also having the best shooting percentages of their careers.

Westbrook is a Great Player Who Could be Even Better

I want to make it clear that I believe Russell Westbrook is a great player. His speed, agility and general athleticism allow him to do things that few other players can match. He can be extremely effective driving to the basket when it is done under control. But, he is not a great outside shooter and could help his team more by taking fewer outside shots and playing less one/one basketball. Many believed that the addition of George and Anthony would make Oklahoma City a force to be reckoned with, but to date this has not been the case. Despite the theoretic offensive power these three bring to the table, the team is 24th in the league in scoring at 101.8 per game, 15 points per game behind the league leading Warriors. This may change over the course of the season but I believe that each of them playing less one/one basketball would help.

They got it right: Why Stephen Curry deserves to be a First Team All-Star

Mike Kwatinetz Golden State Warriors, NBA, Sports , ,

Curry vs. Westbrook

Much has been written about the fact that Russell Westbrook was not chosen for the first team on the Western All-Stars. The implication appears to be that he was more deserving than Curry. I believe that Westbrook is one of the greatest athletes to play the game and one of the better players currently in the league. Yet, I also feel strongly that so much weight is being placed on his triple doubles that he is being unfairly anointed as the more deserving player. This post takes a deeper dive into the available data and, I believe, shows that Curry has a greater impact on winning games and is deserving of the first team honor. So, as is my want to analyze everything, I spent some time dissecting the comparison between the two.  It is tricky comparing the greatest shooter to ever play the game to one of the greatest athletes to ever play, but I’ll attempt it, statistic by statistic.

 

Rebounding

Westbrook is probably the best rebounding guard of all time (with Oscar Robertson and Magic Johnson close behind). This season he is averaging 10.4 rebounds per game while Curry is at 4.3. There is no question that Westbrook wins hands down in this comparison with Curry, who is a reasonably good rebounding point guard.  But on rebounds per 36 minutes played this season, Westbrook’s stats are even better than Oscar’s in his best year. In that year, Robertson averaged 12.5 rebounds playing over 44 minutes a game which equates to 10.2 per 36 minutes vs Westbrook’s 10.8 per 36 minutes (Magic never averaged 10 rebounds per game for a season).

 

Assists

You may be surprised when I say that Curry is a better assist producer than Westbrook this season. How can this be when Westbrook averages 10.3 assists per game and Curry only 6.2?  Since Oklahoma City plays a very different style of offense than the Warriors, Westbrook has the ball in his hands a much larger percentage of the time. They both usually bring the ball up the court but once over half court, the difference is striking. Curry tends to pass it off a high proportion of the time while Westbrook holds onto it far longer. Because of the way Curry plays, he leads the league in secondary assists (passes that set up another player to make an assist) at 2.3 per game while Westbrook is 35th in the league at 1.1 per game. The longer one holds the ball the more likely they will shoot it, commit a turnover or have an assist and the less likely they will get a secondary assist. The reason is that if they keep the ball until the 24 second clock has nearly run out before passing, the person they pass it to needs to shoot (even if the shot is a poor one) rather than try to set up someone else who has an easier shot. For example, if a player always had the ball for the first 20 seconds of the 24 second clock, they would likely have all assists for the team while on the court.

Table 1: Assist Statistic Comparison

Curry vs. Westbrook Assists
*NBA.com statistics average per game through Feb 1st, 2017

When in the game, Westbrook holds the ball about 50% of the time his team is on offense, he gets a large proportion of the team’s assists. But that style of play also means that the team winds up with fewer assists in total. In fact, while the Warriors rank #1 in assists as a team by a huge margin at 31.1 per game (Houston is second at 25.6), Oklahoma City is 20th in the league at 21.2 per game. If you agree that the opportunity to get an assist increases with the number of minutes the ball is in the player’s possession, then an interesting statistic is the number of assists per minute that a player possesses the ball (see Table 1). If we compare the two players from that perspective, we see that Curry has 1.27 assists per minute and Westbrook 1.17. Curry also has 0.47 secondary assists per minute while Westbrook only 0.13. This brings the total primary and secondary assist comparison to 1.74 per minute of possession for Curry and 1.30 for Westbrook, a fairly substantial difference. It also helps understand why the Warriors average so many more assists per game than Oklahoma City and get many more easy baskets. This leads to them having the highest field goal percentage in the league, 50.1%.

 

Shooting

Russell Westbrook leads the league in scoring, yet his scoring is less valuable to his team than Stephen Curry’s is to the Warriors. This sounds counterintuitive but it is related to the shooting efficiency of the player: Curry is extremely efficient and Westbrook is inefficient as a shooter. To help understand the significance of this I’ll use an extreme example. Suppose the worst shooter on a team took every one of a team’s 80 shots in a game and made 30% of them including two 3-point shots. He would score 24 baskets and lead the league in scoring by a mile at over 50 points per game (assuming he also got a few foul shots). However, his team would only average 50 or so points per game and likely would lose every one of them. If, instead, he took 20 of the 80 shots and players who were 50% shooters had the opportunity to take the other 60, the team’s field goals would increase from 24 to 36. Westbrook’s case is not the extreme of our example but none-the-less Westbrook has the lowest efficiency of the 7 people on his team who play the most minutes. So, I believe his team overall would score more points if other players had more shooting opportunities. Let’s look at the numbers.

Table 2: Shot Statistic Comparison

shots-table
*NBA.com statistics average per game through Feb 1st, 2017

Westbrook’s shooting percentage of 42.0% is lower than the worst shooting team in the league, Memphis at 43.2%, and, as mentioned is the lowest of the 7 people on his team that play the most minutes. Curry has a 5.5% higher percentage than Westbrook. But the difference in their effectiveness is even greater as Curry makes far more three point shots. Effective shooting percentage adjusts for 3 point shots made by considering them equal to 1½ two point shots. Curry’s effective shooting percentage is 59.1% and Westbrook’s is 46.4%, an extraordinary difference. However, Westbrook gets to the foul line more often and “true shooting percent” takes that into account by assuming about 2.3 foul shots have replaced one field goal attempt (2.3 is used rather than 2.0 to account for 3 point plays and being fouled on a 3-point shot). Using the “true shooting percentage” brings Westbrook’s efficiency slightly closer to Curry’s, but it is still nearly 10% below Curry (see table 2). What this means is very simple – if Curry took as many shots as Westbrook he would score far more. In fact, at his efficiency level he would average 36.1 points per game versus Westbrook’s 30.7. While it is difficult to prove this, I believe if Westbrook reduced his number of shots Oklahoma City would score more points, as other players on his team, with a higher shooting percentage, would have the opportunity to shoot more. And he might be able to boost his efficiency as a shooter by eliminating some ill-advised shots.

 

Turnovers vs Steals

This comparison determines how many net possessions a player loses for his team by committing more turnovers than he has steals. Stephen Curry averages 2.9 turnovers and 1.7 steals per game, resulting in a net loss of 1.2 possessions per game. Russell Westbrook commits about 5.5 turnovers per game and has an average of 1.6 steals, resulting in a net loss of 3.9 possessions per game, over 3 times the amount for Curry.

 

Plus/Minus

In many ways, this statistic is the most important one as it measures how much more a player’s team scores than its opponents when that player is on the floor. However, the number is impacted by who else is on your team so the quality of your teammates clearly will contribute.  Nonetheless, the total impact Curry has on a game through high effective shooting percent and assists/minute with the ball is certainly reflected in the average point differential for his team when he is on the floor. Curry leads the league in plus/minus for the season as his team averages 14.5 more points than its opponents per 36 minutes he plays.  Westbrook’s total for the season is 41st in the league and his team averages +3.4 points per 36 minutes.

 

Summing Up

While Russell Westbrook is certainly a worthy all-star, I believe that Stephen Curry deserves having been voted a starter (as does James Harden but I don’t think Harden’s selection has been questioned). Westbrook stands out as a great rebounding guard, but other aspects of his amazing triple double run are less remarkable when compared to Curry. Curry is a far more efficient scorer and any impartial analysis shows that he would average more points than Westbrook if he took the same number of shots. At the same time, Curry makes his teammates better by forcing opponents to space the floor, helping create more open shots for Durant, Thompson and others. He deserves some of the credit for Durant becoming a more efficient scorer this year than any time in his career. While Westbrook records a far larger number of assists per game than Curry, Curry is a more effective assist creator for the time he has the ball, helping the Warriors flirt with the 32-year-old record for team assists per game while Oklahoma City ranks 20th of the 30 current NBA teams with 10 less assists per game than the Warriors.

An Analysis of Kevin Durant’s Free Agency Decision

Mike Kwatinetz Golden State Warriors, NBA, Sports

There is much controversy over whether Kevin Durant should leave OKC and if so, what team he best fits with. In evaluating what makes the most sense for him I’d like to cut through emotional clutter and start with objectives:

  • To be rated among the best ever, a basketball player needs to win championships – which is why LeBron James left Cleveland originally and why Bill Russell (8 championships) usually gets rated above Wilt Chamberlain (2 championships) despite the fact that Wilt was clearly a much more complete player and why you don’t typically see the great Patrick Ewing, Allen Iverson or Elgin Baylor (all 0 championships) getting ranked that high among the greatest players of the century .
  • When you win championships, people soon forget how stacked your team may or may not have been – LeBron is sometimes referred to as a failure in his first Cleveland stint despite taking the worst team in the league to the NBA finals and few talk about how good Michael Jordan’s supporting cast was in making the playoffs even when he was playing baseball instead of basketball.
  • I believe Durant understands that and his primary objective is to win championships so that he can rank higher among the greats.

How can he best accomplish that?

  • Kevin Durant could stay in OKC because of the emotional concept that it’s “his team” and he should not abandon them. The idea being that helping them win is somehow better than helping someone else win. If he does, his chance of winning a championship would be less than 12.5% (1 in 8) since they would probably need to beat San Antonio, Golden State and Cleveland and it’s hard to rate them as favorites in any of those matchups.
  • If Durant went to Golden State they would likely win the Western Conference again and have an easier schedule than a Durant led OKC could have in the playoffs. They are already the favorite to win the title even without Durant and the odds of them winning would increase significantly should they land him. Golden State is also a perfect fit for him as it plays a team game that would improve the quality of his shot opportunities. How does a team simultaneously double team Durant, Curry and Thompson? So not only would this increase his chance of winning, it also would likely increase his shooting percent and his assists.
  • The other team that he could pick with the best opportunity to win would be Cleveland but there is no cap space there and it’s unlikely that this would be a fit.
  • The third strong opportunity is San Antonio. While this would be a fit, the path to a title would not be as likely as Golden State or Cleveland because several key players are aging. However, adding Durant would create a strong trio that could challenge Golden State and possibly would be favored over them. But not the overwhelmingly favorites that the Warriors would be with Durant. Also going from one small market to another would not add the media draw that would lead to maximizing endorsement income.
  • Although there are rumors of Boston, Los Angeles, New York, Washington, Houston and Miami also courting Durant, none of these teams would solve any of his objectives. None would give him a high probability of winning a championship and would solve even less for the emotional component of the decision.
  • The question that was rattling around all year was “Why would the Warriors want Durant.” The answer is obvious and even more obvious after their game 7 loss – he will make them better. Adding one of the 5 best players in basketball, who shoots for a high percentage, plays defense well and is team oriented makes any team better.
  • What about the argument that adding Durant would use up so much cap space that the Warriors would need to shed other key players? I agree that they would not be able to keep Harrison Barnes and Festus Ezeli. But the reality is that Ezeli is not a key player and they should not match the high price he is likely to get in the free market, regardless of whether or not they get Durant. By Durant (and in the future Curry) taking less than a max salary, the Warriors could make sure that they kept Iguodala and Livingston plus all starters (including Andrew Bogut) other than Barnes. The rest of the team could be filled in and I would predict the Warriors could attract others who are willing to take lower salaries in order to be on a championship team. So, I suspect the remainder of the supporting cast will be as good as this year. If Durant is willing to take a salary that enables keeping the 6 key players mentioned, then he will maximize his chance of winning a title. When the cap goes up next year, he and Curry could take higher, but not maximum, salaries so that the team around them could continue to include Iguodala and Livingston.
  • What about the argument that Durant should maximize his compensation? My answer is that he will maximize his compensation by taking a lower salary and going to the Warriors because his endorsement money will increase by far more than any salary he forgoes since he would be playing on the highest profile team in a major market and winning championships. To quantify the opportunity, Michael Jordan made more in 2015 from endorsements (12 years after his last retirement) than he did in all 15 years in NBA earnings. Curry is already proving that and can easily take a lower than max salary when his contract expires in another year as his endorsements will dwarf his salary. And winning more championships will only increase all the key players’ outside revenue dramatically.

 

The Argument for Curry as a Unicorn

Mike Kwatinetz Golden State Warriors, NBA, Sports, Unicorns, Valuation , , ,

In our previous post we posed the potential for Stephen Curry to become a Unicorn (in venture this is a company that reaches $1 billion in value). While it was mostly for fun, on reflection we decided that it actually could prove valid. This post will walk you through why an athlete like Curry (or potentially James Harden, Russell Westbrook or Anthony Davis) could become a Unicorn should they be elevated to the elite status of a LeBron James.

curry unicorn

The Precedent for Creating a Corporation Owning an Athlete’s Earnings Exists

In April 2014, Vernon Davis offered stock in his future earnings via a venture with Fantex, Inc. as part of a new financial instrument being sold by Fantex. Davis offered a 10% share of all future earnings from his brand marketing company to Fantex, which would then turn around and divide it into shares of a tracking stock that can be traded within their own exchange. The offering was 421,100 shares, valued at $10 each, for a total of $4.2 million. This implied a total value of the “Vernon Davis Corporation” of $42 million. Davis’ current salary is $4.7 million and endorsement income about $1.75 million for a total income of $6.5 million. Given that the longevity of football players is rarely into their mid-thirties coupled with Davis being over 30 at the time, it seems likely that he had no more than 3-4 years left in his playing career. Putting those facts together makes it appear that Davis was unlikely to earn much more than $42 million going forward and might earn less as we would expect his income to drop precipitously once he retired. So buying the stock was probably viewed as more of a symbol of support for Davis and its “market cap” appears about equal to his expected future earnings.

NBA Stars are Among the Highest Earning Athletes’

The current highest earner of endorsements in the NBA is LeBron James at about $44 million per year (Kevin Durant is second at $35 million). The highest contract in the league is Kobe Bryant at about $23 million per year (and had been $30 million previously) with the 10 highest players in the league making an average of over $21 million. Given the new TV contract scheduled to go into effect in the 2016-2017 season, it’s been projected that the cap will increase from about  $63 million today to $90 million in 2017 and be nearly $140 million by 2025 (10 years from now, at age 37, Curry should still be playing). Let’s make the following assumptions:

  1. Curry’s salary will go from a current level of $11 million in 2015 and 12 million in 2016 (4 other Warriors will be paid more that year) to about $30 million in 2017 assuming the top salaries tend to be about 1/3 of their team’s cap as they are today.
  2. It will be up to $40 million in 2025, or less than 1/3 the projected $140 million cap.
  3. His endorsements will reach midway between the current levels experienced by LeBron and Durant, to about $40 million by 2017 (they are currently at about $5.5 million from Under Armour)
  4. His endorsement income will rise by about 10%/year subsequently, through 2025 to reach $92 million in 2025
  5. He will continue to earn endorsement income (but will retire from playing) subsequent to the 2025 season.
  6. The level post 2025 will average $60 million per year for 10 years and then go to zero.

The last assumption is based on observing the income of retired stars like Michael Jordan (earning $100 million/year 12 years after retirement), David Beckham (earned about $75 million the first year after retiring), Arnold Palmer (earned $42 million/year 40 years after winning his last tournament), Shaq ($21 million), Magic Johnson is now worth over $500 million. Each are making more now than the total they made while playing and, in several cases, more per year than in their entire playing careers. So assuming Curry’s income will drop by 1/3 after retirement is consistent with these top earners.

chart

This puts his total income from 2016 through the end of 2035 at over $1.5 billion. All of the above assumptions can prove true if Curry continues to ascend to super-star status, which would be helped if the Warriors win the championship this year. They could even prove low if Curry played longer and/or remained an icon for longer than 10 years after retiring. Thankfully, Curry has remained relatively injury free and our analysis assumes that he remains healthy. Curry is not only one of the most exciting players to watch, but is also becoming the most popular player with fans around the league. Curry now ranks second overall in total uniform sales, behind LeBron James.

So while the concept of Stephen Curry as a Unicorn (reaching $1 billion in value) started as a fun one to contemplate with our last post, further analysis reveals that it is actually possible that Fantex or some other entity could create a tracking stock that might reach that type of valuation.

As a VC, I would love to invest in him!

SoundBytes:

  • In the recent game against the Blazers there was further validation of Curry’s MVP bid. Curry delivered eight 3-pointers, hit 17 of 23 shots and went 7-of-7 in his 19-point fourth quarter. His last two threes were a combined distance of 55 feet, setting a new record for threes in a season and breaking his own record!
  • To understand just how well Curry shot, his Field Goal Efficiency was 91% (he had 8 threes bringing his equivalent field goals to 21/23). Not only was this higher than anyone who scored 40 points this year or took at least 20 shots in a game, we believe it may be among the highest ever for someone taking 20 shots in a game.
  • As a comparison, the two Portland stars, Aldredge and Lillian, each had strong games and scored 27 and 20 points, respectively. But, to do that, they took 46 shots between them (double that of Curry) and only scored 2 more points in total for the extra 23 shots!
  • The 4th quarter performance by Curry, cited above, translates to a 114% FGE rating, which is averaging more than 100% shooting as he scored 16 points on 7 shots. When foul shots are taken into account, his True Shooting % was 137% as he scored 19 points on 8 field goal attempts (counting the one on which he was fouled).To draw a comparison, when Russell Westbrook scored 54 points against Portland on April 12 he took 43 shots, 20 more than Curry (23 more if we include shots that led to foul shots).

Is Stephen Curry Becoming a Unicorn?

Dan Park Golden State Warriors, NBA, Sports, Unicorns , , ,

Why Curry should be the clear NBA MVP

Much has been written about the importance of discovering and investing early in “Unicorns”, companies that eventually cross the $1 billion valuation threshold. In basketball, teams make tough decisions as to whether to sign individual players to contracts that can be worth as much as $120 million or more over six years. The top few players can earn a billion dollars over their career when endorsements are added to the equation, assuming they can last as long as a Kobe Bryant or Tim Duncan. Clearly part of the road to riches is getting the recognition as one of the elite. This year, several players previously thought of as “quite good” are emerging in the quest to be thought of as “great”. Nothing can help a player put his stamp on such a claim as much as winning the MVP. In the spirit of trying to identify a future “Unicorn” in professional basketball, I thought it would be fun to analyze the current crop of contenders.

Given an unusual emergence of multiple stars, this year’s NBA MVP race is one of the most hotly contested in years. There are five legitimate candidates: Stephen Curry, Russell Westbrook, James Harden, Anthony Davis and LeBron James. All of them are having spectacular seasons and in most years that would be good enough for them to win. But only one can take the MVP crown. LeBron is the reigning king of the league and has long ago hoisted his flag atop the mountain. But, he has won the MVP title a number of times and while he remains a solid choice, he is not a clear choice. Therefore, it appears almost certain that most voters will favor a candidate who has yet to win. In the last few weeks Davis seems to have faded from consideration so, in this post, I will provide the analysis that has led me to determine that Curry is a more worthy recipient than Westbrook and Harden.

Scoring

Basketball columnists and analysts often focus too much of their evaluation of success on a player’s scoring average. In an attempt to help understand a player’s full value, John Hollinger created a Player Efficiency Rating (PER) that incorporates several statistics in the hope it provides a single rating that determines the best player. While it is a truly worthy effort, we feel there is quite a bit of judgement incorporated in what value to place on different statistics.  For example, it rewards players who take more shots even when the extra shots are 2-pointers at a low field goal percentage (taking extra 2-point shots at over a 31% increases the rating even though that is well below what the rest of his team would likely shoot). We would place more value on giving the ball up (and having a lower scoring average) than taking a low percentage shot.

I am surprised that the simplest calculation of scoring efficiency does not surface as a regularly reported statistic. Some sources occasionally report an “Adjusted Field Goal Percentage” (AFG%) that counts a 3-point field goal as worth 1.5 times a 2-point field goal. We believe this is the correct way of viewing a shooter’s effectiveness and called it field goal efficiency (FGE%). It calculates the percentage as the equivalent of 2-point field goals made per field goal attempt (FGA):

FGE% = (2-point shots made + 1.5 x 3-point shots made)/FGA

There is one statistic that analysts call True Shooting Percentage (TS%) that goes one step further. It also takes foul shots into account. It assumes that 1 of every 9 foul shots is part of a 3-point (or 4-point) play and therefore considers 2.25 foul shots as the same as one field goal attempt (since most pairs of foul shots replace a field goal attempt). TS% is calculated by adding the field goal attempt equivalent of foul shots to normal field goal attempts to determine the equivalent number of attempts used by a player. By dividing points scored by 2 we know how points scored equates to 2-point field goals made (FGME). This translated to the following formula for TS%:

Equivalent field goal attempts (EFGA) = FGA + FTA/2.25

FGME = points scored/2

TS% =FGME/EFGA

Now let’s compare Curry, Harden and Westbrook based on these statistics all on a per game basis:

Slide1

Harden and Westbrook are neck-and-neck in scoring average, each about four points per game higher than Curry. But Curry plays fewer minutes per game and takes fewer shots. His shooting efficiency at 58.6% is by far the highest of the three by a significant amount (a full 14% higher than Westbrook and 7% higher than Harden). It is also the highest in the league for players that have taken at least 8 shots per game (which includes all of the top 100 players by scoring average). At over 90%, Curry is the number one foul shooter in the league. But Harden and Westbrook are also hitting roughly 85% of their foul shots. Therefore, the fact that they get fouled much more than Curry brings each of their TS%s closer to Curry’s. Still, Curry is a whopping 10% higher than Westbrook and 2.5% higher than Harden. It is apparent that the scoring average advantage is more a function of Curry playing fewer minutes and being more selective in his shots.

To see the impact of this we calculated their scoring average per 36 minutes played (which we consider about average for a team’s star) and points scored per 25 equivalent field goals attempts:

Slide2

So, even if he played the same amount of time as Harden and Westbrook, Curry would trail in average points per game, primarily because he still would take fewer shots. But if he took the same number of equivalent shots he’d have a higher scoring average than both.

A Few Other Statistical Comparisons

While scoring efficiency is an important measure of a players value to his team, several other statistics like assists, rebounds, and steals are also considered quite relevant. To make comparisons fair, we adjusted to the average per 36 minutes for each:

Slide3

For steals, Westbrook and Curry are close to dead even with Harden about 11% behind. However, Westbrook is the clear leader in rebounds and has 7% more assists than Curry with both well ahead of Harden.

Each of these three players leads their team’s offense. They all control the ball attempting to score themselves or assist others in scoring without turning the ball over, as every turnover is a lost scoring opportunity. The ratio of assists to turnovers helps capture effectiveness as a guard. On the defensive end they each can compensate for a portion of their turnovers by stealing the ball. The ratio of steals to turnovers captures how well they are able defensively to partly compensate for depriving their team of a scoring opportunity. But attempts to steal the ball can lead to more personal fouls. The ratio of steals to personal fouls helps understand defensive effectiveness. Here are the comparisons:

Slide4

Harden and Westbrook are 25%-40% behind Curry in all of these categories. What the first ratio tells us is that Curry passes the ball more accurately and/or takes less risk so that he gets his assists without turning the ball over as frequently as the others. Another way of looking at it is that the extra 0.6 assists that Westbrook averages per 36 minutes comes at the expense of one extra turnover vs Curry.  The steal/turnover ratio tells us that for every 3 turnovers Curry has, he is able to get the ball back twice through steals. The others recover less than half of their turnovers through steals. Finally the steals/personal foul ratio shows that Curry is quite effective defensively with a ratio that is over 30% better than either of the others.

 

Curry Creates the Most Team Success

So, what is the bottom line that helps capture the impact of the various statistics we have shown? Of course one measure is the fact that Curry has helped his team achieve a much better record. What other measure should be considered in evaluating a potential MVP’s impact on a team? Given Curry’s extremely high Field Goal Effectiveness, does his taking fewer shots help the team more than Harden and Westbrook taking more shots and scoring more? The league average for scoring per game is roughly 99.9 points (through about 76 games of the season). Each of the three help their team score at a higher rate than that, but Curry has led the Warriors to the highest scoring per game in the league. The comparison:

charts

A natural question is whether this superior offensive performance comes at the expense of inferior defense.  So we should include the average points given up per game by each team to round out the picture. Notice the Warriors allow fewer points per game than the league average while both the Thunder and the Rockets allow more than the league average. The combination for the Warriors means that they have the highest plus/minus in the league by quite a bit (the Warrior’s 10.4 is 60% higher than the Clippers who are second at 6.5), and it is nearly double the sum of the plus/minus for the Rockets and Thunder combined.

Slide6

The league also maintains plus/minus differential by player. That is how many more points a team scores than opponents when that player is on the floor.  In all three cases, it seems clear the players are driving the team’s effectiveness as their differential exceeds that of the teams (meaning that without them on the floor, the other team, on average, outscores their team). This statistic takes offense and defense into account and helps measure the influence a player has on his team’s effectiveness.

Slide7

This means that Curry is responsible for a 12.0-point improvement in plus/minus when on the floor versus how the team does when he isn’t, while both Westbrook and Harden improve their team’s plus/minus by 5.0 points. Given his top score in plus/minus, much higher Field Goal Effectiveness and TS%, combined with driving the Warriors to the top record in the league, it seems that Curry should be the league MVP and is on his way to becoming a Unicorn. As a VC, I would love to invest in him!

SoundBytes:

  • The recent ESPN selection of the top 20 players of the past 20 years is quite enlightening in how well the NBA markets their elite players compared to other sports. Despite the fact that football and baseball have a multiple of the number of players and are more popular sports, five of the 20 were from the NBA:
    • Number 1: Michael Jordon
    • Number 2: LeBron James
    • Number 8: Kobe Bryant
    • Number 11: Shaquille O’Neal
    • Number 14: Tim Duncan
  • There were 3 from football (all quarterbacks) and 2 each from baseball, tennis and soccer. And one each from 6 other sports (hockey, boxing, golf, swimming, track and cycling).
  • The four emerging stars (this includes Anthony Davis) we have discussed all have the potential to be on a future such list but their status among the greatest will also be dependent on their ability to win multiple championships. Winning MVPs makes a player great, winning multiple championships makes them one of the greatest.
  • Last night’s game against the Blazers was further validation’s of Curry’s MVP bid. Curry delivered eight 3-pointers, hit 17 of 23 shots and went 7-of-7 in his 19-point fourth quarter. His last two threes were a combined distance of 55 feet, setting a new record for threes in season and breaking his own record!