Tag Archives: Draft Lottery

The way to fix the NBA Draft: Make it an auction

7 Aug

We all know the NBA’s draft system is broken. Tanking — look at some of the lineups the Suns threw out in March and April — is pervasive among bad teams, and it hurts the league, the fans and even the idea of true competition, right down to the last second of every 82-game season.

Teams like the Suns are doing nothing wrong by losing on purpose when they have no chance at making the playoffs. In fact, they’re playing the system the right way. A lottery system based on reverse standings incentivizes bad teams to be as bad as possible. The saying goes that the worst NBA team is the one stuck in the middle, with no chance at contention and a slim chance at getting a franchise-altering prospect. Why win so-called meaningless games when you can lose, on purpose, for a better chance at getting a superstar player at the top of the draft?

The answer is, of course, that there is no reason for Phoenix to win those games. It’s in the franchise’s best interest to ensure the highest possible draft pick. And that’s the problem: the NBA’s system pigeonholes teams into continually performing this behavior, so they’re obviously going to keep doing it.

NBA draft reform is not a new topic and many other interesting treatises have been written on it —  the Wheel method Zach Lowe wrote about for Grantland is the best alternative theory currently out there — but the one I propose is a brand-new one, and it’s one that would eliminate the benefits of losing, reward teams for being good, help to level the competitive playing field and possibly even shift the balance of power away from billionaire owners toward players.

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The basic premise is simple: eliminate all record impact on draft order. This is an easy starting point, and it eliminates the incentive to tank. The 76ers could lose all 82 games and they’d have an equal chance at the No. 1 pick as a 74-8 Warriors team. Wins and good performance are rewarded instead of punished. Novel stuff, I know.

There are 60 draft picks each June, two for each of the 30 NBA teams with one in the first round and one in the second. Under the current system, based on record and, for non-lottery playoff teams, postseason performance, each team is allocated a pick in each round. The fifth-worst team gets the No. 5 overall pick (before trades and other transactions) and No. 35 overall pick.

So, it would follow, the better a team is in the regular season and playoffs, the worse draft position they’re in. That makes sense for theoretical talent distribution but it does nothing to dissuade teams from gaming the system to hoard high draft picks by putting out a subpar product every night. The Sam Hinkie special.

What we need is a way to — in advance, before the quality of each relative draft class is known — allocate these picks in a way that is independent of on-court performance but also allows for every team to have a fair chance at getting potentially franchise-altering players.

My proposal is for the creation of what I will, for the rest of this article, call draft waves.

The idea behind draft waves is that each is a set amount of years long (I was thinking four years for the length of a maximum college career but the exact number is fungible; this is at its core just a thought exercise, not a hardened policy prescription). Since the current CBA is set to expire after the 2023-24 season — there’s an opt-out clause for either side after the 2022-23 season, however — the first such wave would be implemented with the advent of a new agreement. The league year starts on July 1st, so without the early termination option, the first affected draft would be the one right after the 2024-25 season.

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The first big change of this wave proposal: the complete elimination of record-based pick-slotting. No more lottery, no more consideration of reverse standings. Enter open-market bidding.

You heard me right, let’s open this baby right up. The NBA has (essentially) open-market bidding for free agents — restricted free agency and the presence of the salary cap aside — so why not introduce it for drafting as well? First, let’s go over the rules.

1: Each team needs to have two picks every season, one 1st and one 2nd

Simple enough. For each four-year wave period, a team will “buy” a total of eight picks. A more complicated version could get rid of the two-pick-a-year requirement and allow teams to stack multiple 1sts or 2nds for a particular draft class they like more than others, but that’s not necessary for our purposes.

2: There’s a hard cap on money to be used to buy picks

I had in mind a $60 million or so pot of money ($15 million, in theory, for each draft) that each team has available to spend on the market for picks, money which would be similar to money paid to the league for fines. Those funds are then transferred to the NBA’s charitable partners.

Currently, in each league year, teams have a total of $3.5 million to use as filler in any trade they desire, be it for a player or draft pick. With the wave system, that $3.5 million would just be folding into the larger pot. So, the additional financial burden on team would really only rise by $11.5 million. For owners, that’s a small drop in the bucket, especially with franchise valuations rising as rapidly as they have in the last 5-10 years.

The other ramification of this limited pool of money available is that teams need to be smart with how they spend their $60 million. If the 76ers, for example, really want the top prospect for the 2025 draft and outbid other teams for the No. 1 pick with a $25 million offer, they would only have $35 million for the seven other picks in the cycle. Smart, long-term thinking general managers would reap massive rewards from this system, which should bode well for a league that benefits from responsible front offices in terms of parity and the like.

Win-now versus win-later philosophies would become an even more fascinating debate with this system. If the Warriors could buy the top pick in the next draft, would teams like the Cavaliers and Rockets try to bid the price up to force Golden State out of the market? Also, since teams need to account for the future variability of adjudicating the value of a draft that’s four years away, how much more “expensive” would the 2028 No. 1 overall pick be as compared to the 2025 No. 1 overall pick?

3: Goodbye, Stepien Rule

Initially created to limit Cleveland’s free-dealing owner Ted Stepien from trading anymore of the Cavaliers’ first rounders, the rule has led to teams like the Nets going years and years into the future to trade picks in the pursuit of short-term star players.

Now, with the advent of the four-year waves, such a rule isn’t necessary since picks outside of the current wave can’t be traded since they don’t belong to any one particular team…yet. Teams can trade any of the eight picks they buy in the draft wave at any time, which should give all 30 teams the opportunity to become major players in the trade market, obviously depending on which picks they choose to purchase on the market.

The Stepien Rule outlived its purpose, which was to rein in over-aggressive owners and general managers, instead evolving to hamstring organizations for longer periods of time when they did have less-than-responsible management leading the way. A benefit of the draft wave system is that it gives teams a blank slate to work with every couple of years. And if a team is led by a good general manager that makes good decisions, they aren’t worse for the wear, either.

4: Trades of all kinds are fair game

As far as I can envision, the encouragement of any type of draft pick trade would only serve the benefit the draft wave system. Team outlooks can change every season but with the waves lasting four years, a franchise might choose to change its course just one-quarter of the way through a full cycle.

So, said team should be able to trade any of its purchased picks should they so desire. This may change the so-called balance of trading power from draft selections — which are so sought-after in today’s NBA that one could make the argument they’ve become overvalued — to actual players or cash considerations. As mentioned before, the annual $3.5 million cap on trade-related funds would be gone with the draft waves, so teams can spend however much money they want to garner extra picks or players in trades.

Won’t that just lead to small market teams strictly selling off their picks to the highest bidder even after the initiation of the new four-year wave, thus circumventing the entire system? In all likelihood, yes but to a degree. This is probably the best way the draft wave system helps out the Milwaukee’s and Sacramento’s of the league; to help them take advantage of the deep pockets of the New York’s and Los Angeles’.

But, to make sure the money those teams get in trades is re-invested back into the franchise and not the wallets of owners leads us to the final official rule of the draft waves…

5: 100% of trade revenue has to be spent on player contracts (or it’s forfeited)

This is probably the least fleshed-out aspect of the system but in theory, it makes sense. The current salary floor is one way teams are forced to spend money on players but it doesn’t go far enough. The requirement is for each team to spend at least 90% of the salary cap; if it doesn’t, it has to pay the difference between its total payroll and what the floor is. Basically, teams have to spend 90% of the cap (or more, if they choose), regardless of the specific allocation they use.

So let’s say a team like the Bucks sells its 2027 first round pick (No. 10 overall) to the Lakers for $8 million.

The reasons for such a move are negligible but in our case, the Bucks have become a perennial title contender since the 2025 draft (when the cycle started) and would rather spend money on established veterans than a rookie. The Lakers are also a good team and, since they’re struggling to get out of the middle of the pack in the West, want to have an extra first round pick to take a chance on a shooting guard they like out of Duke, for example.

With their deep pockets, the $8 million doesn’t matter much to the Lakers but it’s vital for a team like the Bucks, who still struggle to draw huge crowds (even in their new-for-2018 area) and thus have to cut unnecessary costs where they can. When buying the 2027 pick back in 2025, Milwaukee management thought it would be an important part of their franchise going forward.

Championship timelines change, as do teams’ needs. The only way to accommodate that in draft waves — without record affecting draft position — is to allow such trades, and the negative repercussions of the elimination of the cash budget are avoided by forcing teams to spend what they earn, essentially. And, like the salary floor, teams that don’t spend the extra money they receive in trades on their own roster — during the span of the current wave — are simply fined that amount by the league. It’s use it or lose it.

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That’s the draft wave concept. It’s not too complicated and should be fairly easy to understand while seeming to get rid of a few major problems the league is struggling with right now, and has been for years. But, as with any policy proposal in any field — even outside of the world of sports — there are possible downsides. I could come up with two major ones, although there are assuredly others:

1: What’s in it for good teams?

This is a fair critique; there’s so outward draft benefit for good teams with the draft waves system. But, the very nature of team sports would obviously make a draft order based on regular season standings an exercise in polarization. The good teams would always get the top talent while bad teams would be left scrounging for scraps at the end of the first and second rounds. While it’s possible to unearth previously passed-over gems (the Draymond Green, Manu Ginobili and Isaiah Thomas types), it’s an unsustainable method.

Where the benefit lies for good teams in draft waves is that organizations with well-defined goals and well-structured future plans can use their foresight to scoop picks and cash from those that are in a transition state. Still, though, since the waves are only four years long, bad teams get a fresh start every couple of seasons to get out from a particularly rough pick-purchasing year.

2: Regulating a free market is almost impossible

What’s good about the NBA’s current draft model, while flawed, is that it’s very predictable. The lottery throws a kink into that, to a certain extent, but when you step back a bit and analyze how much of an effect the lottery actually has on most team’s draft position (as opposed to reverse standings), it’s minimal.

That predictability goes out the window in draft waves, in which teams’ willingness-to-pay for draft picks is more or less unrestricted. Teams can basically do whatever they want and with no limit on how much money teams can offer (or be offered) in trades, there’s no real way of knowing who is really buying any one draft selection.

The Hornets could make a massive bid for the 2028 No. 1 pick but, in actuality, be “buying” the pick for a Clippers team that has already reached its $60 million cap and is willing to go above and beyond the pay Charlotte for the right to the top pick in said draft. Such freedom could lead to shady, back-room deals being done by teams to get around the (limited) restrictions of the system.

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As with any radical change to a system that has been in place for as long a time as the NBA’s draft lottery has (since 1985), there are bound to be issues with a replacement.

However, the draft waves strategy, in my opinion, eliminates two of the biggest problems the league is facing: tanking and the divide between big- and small-market teams. That, on its own, makes it a more-than-viable alternative to the lottery, which has helped smaller-market teams luck into stars every now and then but — far too often — financial and other basketball and non-basketball related concerns constrain those teams’ potentials.

Draft waves, in getting rid of illogical tanking incentives and introducing a way for all 30 teams to be on a somewhat more-level playing field, make parity more attainable. And, with the relatively quick turnaround — four years is the same length as rookie contracts for first-round picks — there’s enough time for a team to evaluate what they have in their (presumed) four first-rounders from the previous cycle to determine their path forward.

The system is best as a thought exercise, one to be considered as a frame of mind for thinking of how the league can be improved. Maybe the exact details aren’t perfect — the $60 million pot for four years probably should be bigger –but the idea remains. In order to make the NBA better, convention has to be challenged.

What better way to do that than with fixing the mechanism through which the vast majority of players enter the league?