In the NBA Draft Lottery, Little Help for the League's Losers

Never mind competitive balance. The lottery keeps fans interested.
Cleveland Cavaliers owner Dan Gilbert and son Nick after winning the overall number one pick during the 2013 NBA Draft Lottery in New York, on May 21, 2013 Photograph by Jesse D. Garrabrant/NBAE via Getty Images

Nick Gilbert, the 16-year-old son of boisterous Cleveland Cavaliers owner Dan Gilbert, stole the show at last night’s NBA draft lottery in New York. Decked in red bow tie and thick-rimmed glasses, Nick sat at the podium as the official Cavs representative and delivered the highlight of the night when he calmly told the emcee, “Well, where I’m at now is the lottery.” To top it off, Cleveland pulled a mild upset to win the first pick of the 2013 draft, confirming Nick’s status as the franchise’s good luck charm. The event, televised in prime time on ESPN, is one of a kind in U.S. sport. The NHL introduced a trimmed down version of a lottery in 1995, but no other league has managed to turn a labor-rights procedure that does not actually involve any players into such successful show business.

Some NBA scholars trace the origins of the lottery to April 13, 1984, when, in the second-to-last game of the Houston Rockets season, a 38-year-old Elvin Hayes played all 53 minutes of an overtime loss to the San Antonio Spurs. “He looked like he needed an IV stuck in his arm out there,” Rockets beat reporter Fran Blinebury would later say. Houston had a lot riding on the game. They were in a close contest for the worst record in the Western Conference. The winner had a 50-50 chance, depending on a coin-flip, of landing Hakeem Olajuwon with the first pick of that summer’s draft. The Rockets needed to lose. So the 10,789 on hand at the Summit watched Hayes’s once mighty legs turn to mush.

The following year, the NBA changed the draft rules to try to prevent teams from doing what the Rockets had done. Instead of teams selecting players in inverse order of their win-loss records, with a coin flip between the bottom two teams for first pick, the league adopted a random drawing for the teams that failed to make the playoffs. This took away the incentive to lose but led to a new complaint: Terrible teams found themselves on the same footing as the merely mediocre. The point of a draft, they argued, is to to help the worst teams get better.

The NFL doesn’t bother with a lottery because a 16-game schedule doesn’t usually afford much opportunity for tanking, and franchise-saving players are even harder to find in football. Baseball’s draft is a long, complicated affair in which a team’s hope is that at least a couple of the players selected eventually make the Major League roster. Tanking to move up a spot in this process would be a fool’s errand.

In 1987, the NBA changed the rules again to benefit the worst teams. Since then, the league has tweaked the system twice more to weight the lottery in their favor. As it stands, 14 teams are in the lottery, with the bottom team given a 25 percent chance at the first pick and the top team assigned a 0.5 percent chance. The system is a long-deliberated compromise between trying to maintain competitive balance and prevent tanking. And it’s not much good for either.

“The whole thing is a bit of a mess,” says David Berri, a professor of economics at Southern Utah University and the co-author of The Wages of Wins: Taking Measure of the Many Myths in Modern Sport. “It doesn’t do what it’s supposed to do.” In a 2010 paper (pdf) in the Journal of Sports Economics, Berri and his colleagues found more evidence of tanking under the current system than in the pre-1985 days. And there is no evidence, Berri says, that the draft helps create parity. While it’s true that getting the first pick in a season when an obvious superstar such as LeBron James or Shaquille O’Neal is available can change the fate of a franchise, those picks and players are rare. Most of the time, the draft is an inefficient market for marginal talent. “Even if you did it exactly right,” says Berri, “there is just a short supply of really talented players.”

Talk of balance, says Kevin Quinn, an economist at St. Norbert College and author of Sports and Their Fans, is a distraction from the real purpose of the draft. ”That might be a well-meaning goal, but the main reason is to keep a lid on the auction process,” he says. “You are paying players less than what their market value would be.” A draft, however you organize it, gives teams exclusive rights to a player. That’s the point. Combined with the NBA’s pay scale for first-year players, the draft saves teams tens of millions in potential outlays. The draft model, Berri notes, was the brainchild of an NFL owner who’d been beaten in a bidding war for a college linebacker in 1933.

By adding a gesture toward parity to a dubious labor practice, the NBA has managed to create a media event. The lottery can deliver real moments of drama—from David Stern pulling the envelope that delivered Patrick Ewing to the New York Knicks and launched a thousand conspiracy theories, to the Orlando Magic beating the odds to land Shaquille O’Neal, to LeBron James being delivered to his hometown. “It’s a way to create buzz when it’s February and you know your team is not going anywhere,” says Quinn. “There is entertainment value in that that may sound inefficient to myself and my fellow economists, but I think they’ve dialed it in pretty well, quite frankly.”

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