How are championship teams built?

As painful as it is to say, I am a New York Knicks fan and yes I have even attended a game during the Isiah Thomas era.

Having watched the many blunders committed by Thomas during his reign it has made me wonder; what is the proper way to build a basketball team? Is it through the draft? Trades? Free Agency? Veterans or Rookies?

Using data from basketball-reference.com and realgm.com I was able to provide what I hope is some insight into these questions.

First what I did is I recorded the win totals of every team from the past two seasons and then took the top eight players based upon win shares from each of these two teams. The reason I used win shares is because win shares is a fairly good representation of how much the player contributed to the team’s success (or lackthereof).

The number of total win shares available is based on the team’s total wins (a team with 55 wins has 165 win shares available 55*3 = 165).

Next offensive win shares and defensive win shares are divided up based on the team’s performance in terms of points per possession as compared to the rest of the league. An example used is the 2003-2004 San Antonio Spurs; in that season they scored 559.18 points more than the expected total and allowed 1265.3 points less than allowed.

Then offensive and defensive win shares are distributed among team players based on possessions and how the player compared to the norm; they gain win shares at the marginal increase (or decrease) in points scored or allowed while the player was on the court at the offensive or defensive end. Using Duncan as an example he contributed 174.26 points at the margin; this is divided among the total team marginal points and the same is done at the defensive end. I wrote a very brief and rudimentary explanation of how it works because this is not an article about win share calculation; a more detailed explanation can be found at:
http://www.basketball-reference.com/about/ws.html.

Using RealGM I was able to determine how the team had acquired these players and how much experience they had in the league.

I came to some interesting conclusions and will address each method of acquiring a player one at a time.

Twenty teams during this time period acquired at least four of their top eight players through the draft. They had a combined record of 807-833 for a .492 winning percentage. These teams are listed below:

Four of top Eight players from DRAFT

Team/Yr	Won	Lost
Washington-05	45	37
Toronto-05	33	49
Seattle-05	52	30
Philly-05	43	39
Memphis-05	45	37
LAC-05	37	45
Indy-05	44	38
GSW-05	34	48
Chicago-05	47	35
Boston-05	45	37
Toronto-06	27	55
Seattle-06	35	47
Philly-06	38	44
NO-06	38	44
LAC-06	47	35
Indy-06	44	38
GSW-06	34	48
Dallas-06	60	22
Boston-06	33	49
Atlanta-06	26	56
Total	807	833

Theory would tell us that if you build through the draft patience is required and you cannot expect immediate results when building through the draft. However, the italicized teams essentially stuck with the drafting strategy; both years listed at least four of their top eight contributors were acquired through the draft; and yet only one out of six, the Clippers improved. And the Clippers improvement could be largely attributed to Sam Cassell’s arrival as well as Cuttino Mobley’s. It seems that perhaps patience isn’t required, it is simply more talented players or perhaps a change of scenery. While drafting can be a viable strategy to building a team around, it seems that it is entirely dependent upon several stellar draft classes in a row or winning big in the draft twice as the San Antonio Spurs did in 2002-2003 when they won the championship with a team built around the draft or the Houston Rockets in the ’94-’95 seasons or the Chicago Bulls in the early 90’s. Note that all of these teams drafted a player who is talked about as one of the top five players ever at his position. Essentially, unless a team can grab a Michael Jordan, an Olajuwon or a Duncan through the draft they are better off trying to build through other ways and letting others roll the dice with the young folks.

So perhaps trading is the way to the promised land. The next table shows how teams who acquired four of their top eight players through trading fared over the past two seasons.

Four of top Eight players from TRADES

Team/Yr	Won	Lost
Sacramento-05	50	32
Portland-05	27	55
Orlando-05	36	46
New York-05	33	49
New Jersey-05	42	40
LAL-05	34	48
Houston-05	51	31
Detroit-05	54	28
Denver-05	49	33
Dallas-05	58	24
Cleveland-05	42	40
Boston-05	45	37
Washington-06	42	40
Sacramento-06	44	38
Phoenix-06	54	28
Orlando-06	36	46
New York-06	23	59
New Jersey-06	49	33
Miami-06	52	30
Memphis-06	49	33
LAL-06	45	37
LAC-06	47	35
Indy-06	41	41
Houston-06	34	48
Detroit-06	64	18
Denver-06	44	38
Total	1145	987

These teams had a combined winning percentage of .537.

Teams who were faithful with the players who they traded for had mixed results the following year; Houston and Denver saw their teams regress (although Houston could blame injuries) while the Lakers, Pistons and Nets all gained from the trading experience. These results make sense; when teams swap players it is fairly likely that someone will gain and someone will lose although occasionally owners will engage in mutually advantageous trades which is the cause of a slightly higher than .500 winning percentage for the trade based teams. Championships can be won with smart trades as in the case of Miami or a team can be turned into a laughingstock as is the case of my beloved Knicks.

The last way a player can be acquired is through free agency; perhaps the answer lies in this way.

Building through FREE AGENCY

Team/Yr	Won	Lost
Utah-05	26	56
Spurs-05	59	23
Phoenix-05	62	20
Mil-05	30	52
Miami-05	59	23
Utah-06	41	41
Spurs-06	63	19
Mil-06	40	42
Total	380	276

Note that each and every team that has tried to build through free agency and kept the roster intact fared better in year two then in year one; overall the group had a combined winning percentage of .579. This result is surprising at first glance but not as much upon further examination.

In economics there is something known as auction theory. This theory holds that in an auction each participant places a bid upon an item based upon how much they believe the item to be worth. Often times the ‘winner’ of the auction will actually be the loser because they will have bid more than the item was actually worth. Auction theory is significant in sports. However, if we carry auction theory out all the way we can see that those teams who are the most successful (in sports with a salary cap) tend to be the ones who have bid upon resources the most efficiently. If a team bids efficiently, it very may well end up with three or four free agents who are significant role players on the team; but did not splurge on the star at the tail end of his career (as has happened to Chicago at the point in the season that this is being written with Ben Wallace). When the team then allows the players to stay together, the team tends to gel and increase its success from the previous year and thus the teams that build through free agency tend to be successful. In fact, if we throw out the records of the Spurs, Utah and Bucks from 2004-2005 the new winning percentage is .646 and those teams improved by an average of 9 wins. It seems that free agency is the best way to build; provided that the money is distributed among several players.

Finally, I wanted to see if experience had any correlation with win shares. To find this what I did is I regressed years and years^2 with win shares because I expected that once a player had passed his prime the win shares would go down. Years experience were statistically significantly positively correlated with win shares and years experience^2 were statistically significantly negatively correlated with win shares. This last table shows where the peak productivity level is (assuming that the player is good enough to be among the team’s top 8) in terms of win shares.

Building through FREE AGENCY

Yrs	yrs^2	Total expected win shares
0	0	10.19
1	1	11.48
2	4	12.58
3	9	13.51
4	16	14.26
5	25	14.82
6	36	15.21
7	49	15.42
8	64	15.45
9	81	15.29
10	100	14.96
11	121	14.45
12	144	13.76
13	169	12.89
14	196	11.83
15	225	10.60
16	256	9.19
17	289	7.60
18	324	5.83
19	361	3.88
20	400	1.75

Based on this, a good player who is among the top 8 on his team will reach his peak in his 8th year with a significant drop-off occurring after year 11.

Clearly there is no formula that will accurately predict how successful a team will be; but I hope that this information is useful to teams as they go about attempting to build championship level teams.

Patrick Andrade was born and raised in Noblesville, Indiana and graduated from Indiana Wesleyan University with a bachelors in economics last spring. Currently a graduate student at the University of Louisville on a fellowship, he is interning at a non-profit organization in their public policy department.