Monday, August 19, 2013

Even More Tanking: When Should You Tank?

"Here's your expensive cup of pretension, sir"

Just a quickie today (on tanking, because the conversation just never dies). I've argued pretty staunchly against tanking, especially for this year's iteration of the Toronto Raptors. However, that's not to say that tanking is a bad idea absolutely; there are instances where I think tanking is warranted. It's a matter of marginal benefits.




Quick Economics Lesson: Marginal Benefits
What do I mean by 'marginal benefits'? Simply put, marginal benefit is the additional value of an action, or object. It represents how much you benefit from something. This is not to be confused with absolute benefit, which is not dependent on context. For example, an apple has an absolute value of 1 unit of happiness, whereas its marginal benefit will differ depending on how hungry you are (ie: when you're starving, it's 5 units, when you're full, it's 0).

Marginal 'this', and marginal 'that' dominates basic and advanced economic theories. Take labour economics, for example. If you're a coffee-shop manager; how do you know how many baristas to hire?

Ideally you'd hire when the marginal product of labour (meaning, how much they add to the coffeeshop) equals wage. This doesn't always work out (ie: you can't just randomly fire/hire guys at whim), but this general principle dominates most profit-maximizing enterprises (at least when it comes to low-level employees).

So what does this mean? Let's say you own a Starbucks (like the one I'm in at the corner of Runnymede and Bloor; no I'm not rich enough to live in Bloor West village). You have the coffee beans, wooden furniture and pretentiousness; you just don't have anyone to pour your overpriced 'grande' drinks. The easy solution is to hire some hot white brunettes baristas (face the light, Schultz; they're as much a part of your business model as your lounging couches are; you've got one on your logo, for pete's sake).

The first barista provides a lot of marginal value (ie: with/without them, they make a huge difference). But "Christina" can't whip $5 hot chocolates fast enough! Shit! Hire another one (let's call her Jenn). Dammit! Jenn and Christina can't satisfy the line of hipsters either! Who's going to (wo)man the counter while they're swamped for orders of chai lattes?

Obviously, you hire until you reach an equilibrium. That equilibrium is when the marginal product of labour equals wage. If you hire past that point, you start to lose money. It's all about marginal benefits. You buy until your marginal benefit is equal to zero.

TANK: when you expect to be really bad (going into the season)
Let's assume that you're Michael Jordan...of 2013, meaning you own the Charlotte Bobcats (but hey, you're still Michael fucking Jordan!). You're not going anywhere as a franchise. MKG has the tools, except that one...what is it again? Oh, right. He doesn't have a jumpshot. You know who has a great jumper? Third overall pick Bradley Beal. Whoops.

Anyway, your team is going nowhere. You'll win 20 games next season. Moving from 20 to 25 wins represents an absolute value of 5 wins, but what's the real marginal value?

Well, it's kinda negative, isn't it? 25 wins doesn't get you into the playoffs, and it costs you in terms of lottery seeding. You might as well stay at 20 wins and roll the dice again (although MKG, Biyombo, Zeller...wow). The marginal benefit of that extra 5 wins is negative. They should probably just tank instead.

Wait, what? They signed Al Jefferson? But I was just talking about marginal benefits, and how moving from 20 to 25 is a net negative. Wow. Okay.

TANK: when it turns out you're really bad (during the season)
On the flip side, consider the case of the 1996-1997 San Antonio Spurs. Coming into the season, the veteran-laden roster was expected to contend. David Robinson was flanked by capable veterans such as Dominique Wilkins, Vernon Maxwell, Vinny Del Negro, Avery Johnson and Sean Elliot.

It all went to shit when David Robinson injured his back, and basically missed the entire season (he played in 6 games). Without 'The Admiral', the Spurs were going nowhere (they started 3-15). Then general manager Gregg Popovich fired his head coach, and anointed himself as head coach (fucking awesome power move), and proceeded to captain the tank-job. They finished the season 20-62, and landed the first overall pick, which turned out to be Tim Duncan. The rest is history, as they say.

So what did the Spurs do correctly? Popovich wanted to compete, but when it turned out that his team was going to be terrible (mostly due to injuries), he tanked to get the first pick. It's important to note that this tank-job wasn't a concerted effort from the get-go; they did intend to compete. However, once it became apparent that championship contention (and the playoffs) were out of the picture, Pop tanked and was generously rewarded.

Pop realized that the marginal benefit of losing actually outweighted the marginal benefit of winning, so he made the smart move. Popovich is the best.

How does this pertain to the 2013-14 Toronto Raptors?
Should the Raptors tank? Well, as of right now, no they should not. They aren't Bobcats-bad. In fact, they may very well be better than most people think.

However, should things go awry (like Lowry, Johnson and Valanciunas get injured [knocks on wooden Starbucks furniture]), then yeah, they should probably copy the Spurs. It worked out pretty good for them. They did land Duncan and win four championships, after all.

Economics; it's more applicable than you'd think.

7 comments:

  1. Popp is my hero.

    100% agree with you. Gotta see what this team has. Marginal improvements across the board, and some cohesion is all it will take.

    When was the last time we had basically zero turnover in an offseason.

    ReplyDelete
    Replies
    1. Almost never. Colangelo tilled the roster each year like an overzealous farmer.

      Delete
  2. I would add another reason to tank would be if a trade comes up that provides good return in terms of picks or young players beyond the "equilbrium" state the raptors are in now

    ReplyDelete
  3. True, but this always applies. Maximize your assets.

    ReplyDelete
  4. Another reason to tank. When a team is in danger of becoming stuck on the mediocrity treadmill. Or, when your "best" player is Rudy Gay and he's being paid $18 million.

    And I already stated in the previous post's comments that your 47 win projection is probably way off. Of course, the last time the Raptors won 47 games, they had an incredibly bright future with yearly playoff appearances and deep playoff runs. Oh, wait....

    ReplyDelete
  5. So basically, they should have tanked last year when they were 4-19

    ReplyDelete
    Replies
    1. They didn't have their draft pick. Made no sense.

      Delete