Wednesday, August 19, 2009

Decision Making in a Dispersal Draft

At the end of 2008 the WNBA's Houston Comet's exited the league. With the unfortunate demise of the Comet franchise, Comet players - except free agents - were redistributed to other WNBA teams via a dispersal draft. One of the things that interests me as a sports economist is decision making in cases like this. The problem is that as an academic empirical exercise there are not enough observations (players in the dispersal draft) to be able to draw any statistical reliable conclusions. Yet, WNBA general manager's still have to make a decision as to who to draft. So how might this be done?

Suppose you are the general manager with the first pick in the dispersal draft, who do you draft; or what factors should you take into account in making the pick? Some will suggest to take the best player available. But you would want to also look at your current players and if the best player available is not as marginally productive as choosing another player, then choosing the best player (in terms of total productivity) may not be the best option. The reason is that choosing a player at another position that has a higher marginal productivity will lead to a better team. This is an important distinction that economists make - the difference between total productivity and marginal productivity.

Let's use a simplified example and assume that WNBA players total productivity can be measured as a number, much like we do with NBA players in The Wages of Wins.

Suppose the team's starting five players have the following total productivity values.
Position #1 = 30
Position #2 = 25
Position #3 = 26
Position #4 = 20
Position #5 = 31
and the best player in the dispersal draft plays Position #1 and has a total productivity = 32. This player is better than the team's current player, but is this a good choice? It depends on the other choices the general manager has. Suppose the next best player plays Position #4 and has a total productivity = 28. Choosing the 2nd best player will increase the teams total productivity by 8, while choosing the best player only increases the team's total productivity by 2. Hence, choosing the best player available is good if all players are equally and less productive than the best player, but if not, choosing the best player strategy is not the best option.

So far we have focused on the benefits of drafting a player, but there is another side to the coin, that of player cost. Given that different players have different salaries, the most productive player may not always be the best economic choice - especially if the cost is very high. Other factors that might influence a general manager's draft choice are payroll cap considerations, the number of years the player is under contract, the player(s) the team has drafted (or expects to draft) and the teams expectations in regard to free agents they can sign.

Thus a relatively straightforward problem has a number of complicating factors for the GM to make an optimal decision.

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