Are NBA players paid to appear on Clutch? (2023)

Authors:Kevin Sigler

Corresponding author:
Kevin Sigler, PhD
601 University Street
Institute of Economics and Finance
Cameron School of Business
UNC Wilmington
Wilmington, NC 28403
siglerk@uncw.edu
910-200-2076

Kevin Sigler is Professor of Finance at the Cameron School of Business, UNC Wilmington

Are NBA players paid to appear on Clutch?

ABSTRACT

National Basketball Association (NBA) star players are extremely well paid. In the 2018-19 season, 60 NBA players received $17 million or more for their services. Stephen Curry was the highest paid with US$ 37.5 million (Table 1). LeBron James, Chris Paul and Russell Westbrook were second with salaries of $35.7 million (1). This study examines whether the 60 highest-paid players in the NBA are compensated for their clutch performance. The research found that the pay of a sample of high-paid NBA players was related to the percentage of shots and assists by other players in the last four minutes of a game played, when the score was less than five points. Your payout is significantly tied to field goal attempts, even in the last minute of Closegames. The results indicate that NBA organizations reward players who can shoot late in a close game, hold the ball and prepare their teammates for the goal and are willing to shoot in the last minute of close games.

key words: National Basketball Association, Players, Salary, Clutch

INTRODUCTION

National Basketball Association (NBA) star players are extremely well paid. In the 2018-19 season, 60 NBA players received $17 million or more for their services (Table 1). This study examines whether NBA organizations pay high-paying players to clutch and produce for their teams when the game is on the line in the final minutes of the game.

Stephen Curry was the highest paid NBA player in the 2018-19 season with a salary of $37.5 million (Table 1). LeBron James, Chris Paul and Russell Westbrook were second with salaries of $35.7 million (1). However, there are limits to the amount a team can pay its players. The most a team can pay a player is a maximum or super maximum contract lasting no more than five years.

Table 1:The 60 Best Paid Players in the NBA 2018-19

MAX AND SUPER MAX CONTRACTS

A player can sign a maximum salary of $25,467,250 or 25% of the 2018-19 season cap if they have six (2) years of experience or less. A player age 7-9 in the league can earn 30 percent of the cap or $30,560,700 and aged 10 and over can earn up to 35 percent of the cap or $35,654,150 (Table 2).

Mesa 2:Maximum wages and projected maximum wages

The Super Max contract, officially known as the Designated Veteran Player Extension, allows teams to re-sign players worth up to 35% of the salary cap for a maximum of five years, with increases of eight percent each season thereafter. A player with seven or eight years of service in the NBA and one or two years remaining on his contract who qualifies for the Designated Veteran Extension is eligible for a starting salary of up to 35% of the threshold. (3) Other qualifications for the Designated Veteran Extension are as follows:

• The player was named to an All-NBA Team in the season just ended or two of the last three seasons.
• The player was named NBA MVP in one of the last three seasons.
• The player was named NBA Defensive Player of the Year in the season just ended or two of the last three seasons.

Only four players have signed Super Max contracts so far: James Harden, Stephen Curry, Russell Westbrook and JohnWall.

PERSONALITY

The total amount a team can pay its players in salary is subject to a salary cap ($101.9 million in 2018-19). It's a soft cap, however, as a team can exceed it to pay their stars. Teams can exceed the threshold for paying their top players if their players meet the Larry Bird exception. The bird exemption (named after the Celtic star who was the first to be signed in this way) allows teams to break the salary cap to re-sign their own free agents for up to the maximum salary. To qualify as a free agent for the Bird, a player must have played three seasons without being released as a free agent or changing teams. Players can purchase Early Bird rights after justtwosuch seasons. Virtually all of the rules that apply to bird rights also apply to early bird rights, with the requirements being reduced to two years instead of three (4). A Bird Rights traded player is still eligible for a Maxdeal if they meet the other criteria.

Other exceptions allow teams to exceed the 2018-19 limit. Any team, whether above the salary cap or the luxury tax level, can offer any player the minimum veteran contract (5). Teams that exceed the cap can also use the mid-tier exception to sign a player. If teams are above the total salary cap but below the luxury tax cap ($123.7 million in 2018-19), they can take advantage of the full mid-level exemption ($8.641 million in 2018-29). Free agency releases have access to an aminimide-level exemption ($5.337 million in 2018-19). Teams cannot take advantage of any of these exceptions if it causes them to exceed the tax threshold.

If the team's total salary exceeds $123.7 in the 2018-19 season using the exemptions, any salary that exceeds this amount will be subject to a luxury tax. It is a progressive tax. The rate is: 150% for amounts over $5 million over the threshold, 175% for $5 million to $10 million, 250% for $10 million to $15 million, 350% for $15 million to $20 million dollars, up 375% from $20 million to $20 million $25 million and forever increasing 50% increase from $5 million to $25 million. The rate is even higher for repeat offenders. For a team paying total salaries of $140.7 million in 2018-19, it would be subject to a luxury tax of $17 million ($140.7 to $123.7). This works out to a luxury tax of $35.75 million for season (6).

Rookies, whether superstars or not, have fixed pay plans based on their draft position and are not eligible for massive paychecks like their senior teammates. Any rookie picked in the first round will receive their league salary. For example, Zion Williamson was the first player drafted in the 2019 NBA draft, making him eligible for $6.8 million in his rookie season and $7.9 million in his second season. The NBA also requires teams to spend at least 90% of the salary cap, so the minimum team salary for 2018-19 was $91.682 million.

DATA AND METHODOLOGY

This study examines whether clutch performance matters in determining the salaries of the highest paid NBA players in the 2018-19 season. In a previous study, Lyons et al. (2015) found in the 2013-14 season that points per game, rebounds, personal fouls and shooting percentages are statistically significant in determining the salaries of NBA players(7). Simmons and Berri (2011) found that NBA player pay was related to points, rebounds, blocks, and assists scored (8). Using a sample from 2003-2010, Xu Li (2011) found that player points and player experience are important in explaining player pay (9).

This study uses data from the NBA Miner Clutch Time Statistics. This data consists of statistics from the last four minutes of NBA games with scores within five points. The study includes clutch performance variables available from NBA Miner Data that match variables in other studies (for the whole game) that were statistically significant. The dependent variable in the study is NBA salaries for the 60 highest paid players in the 2018-19 season. Salary data is from the ESPN NBA website shown in Table 1(1). Variables include the following:

• Salary - Salaries of the 60 highest paid players in the NBA in the 2018-19 season
• Points - Total points in the last 4 minutes of games within 5 points (clutch time) scored by the highest paid players
• Shots From the Field Percentage - The percentage of shots made by the highest paid players during clutch time
• Field Goals Assisted Percentage - The team's total assist percentage for the highest-paid players scored during clutch time
• Block Field Goal Percentage - The percentage of the team's total blocked shots attributed to the highest paid players during clutch time
• Last Minute Field Goal Attempts - Shots by highest paid players in the last minute of a tight game
• Last Minute Shooting Percent - The percentage of last minute shooting made by the highest paid players in a close game.

DISCUSSION AND RESULTS

Table 3 shows the results of the regression equation. The F statistic of 103 indicates that the independent variables are significant in explaining the size of the dependent variable, and the adjusted R-squared for the model of 0.89 shows a very good fit in explaining the size of pay for the top 60 well paid. NBA players. According to the model, two clutch variables are significant in explaining NBA player salaries at a percentage level: field goal percentage and field goal percentage assisted in the last four minutes of highly competitive games. Furthermore, the independent variable, last-minute goal attempts, is significant at a five percent level. The variables percentage of field goal and percentage of last minute field goal are not statistically significant and have a VIF (variance inflation factor) greater than 10, indicating statistical problems with multicollinearity (10).

Point 3:Multiple regression results
Dependent Variable - NBA Player Salaries for the 60 Highest Paid Players in 2018-19 (in $000)

R squared 0.91, adjusted R squared 0.89, F 103.0, N=60
*** Significant at 0.01, ** Significant at 0.05, * Significant at 0.10
Dependent variable: Salary – Salary paid to the highest paid players in the 2018-19 season
Independent variables:
Points - Total points scored in the last 4 minutes of games within 5 points (clutch time) by the highest paid players
Field Goal % - the percentage of shots made during clutch time by the highest paid players
Assist Field Goal % - the percentage of total team assists that the highest paid players scored during clutch time
Block FG% - the percentage of team blocked shots made by the highest paid players during clutch time
Last Minute FGA - Last minute goals from highest paid players in tight games
Last Minute FG% - the percentage of last minute shots made by the highest paid players in tight games

The model is respecified by eliminating the two independent variables with multicollinearity problems and the results are shown in Table 4. The same three independent variables are statistically significant: field goal percentage and field goal percentage assisted at a percentage level and last-minute shooting attempts at a 10 percent level. The variable, points scored in the last four minutes of five-point games, was again irrelevant in the model. The fit of this equation is very high with the same adjusted R squared 0.89 from Table 3. The F statistic of 139.6, which indicates that the model is significant in explaining player payout, is greater than the F statistic of the previous model. The results in Table 4 show that the highest paid players in the NBA play when the game is on the line. Making his shots and scattering the ball to allow teammates to score late in tight games, as well as making shots in the last minute of tight games, are significant in explaining the high salaries of the 60 highest-paid players in the NBA.

Table 4:Multiple regression results
Dependent Variable - NBA Player Salaries for the 60 Highest Paid Players in 2018-19 (in $000)

R squared 0.91, adjusted R squared 0.89, F 139.6, N=60
*** Significant at 0.01, ** Significant at 0.05, * Significant at 0.10

Surprisingly, the independent variable, points scored in games played in the last four minutes, is statistically insignificant for the models in Tables 3 and 4. From these results, it is clear that NBA organizations are paying their highly compensated players to make it easier for the whole team to score goals, helping other players earn points, and shooting a high percentage by shooting in the closing minutes of a tight game, rather than trying to score the most points himself. However, the model shows that high-paying players call the shots for their teams in close, last-minute battles.

CONCLUSIONS

This study looked at whether the highest paid NBA players are paid to play in the clutch. The research found that the pay of highly paid NBA players in the sample was related to the percentage of shots and assists to other players in the last four minutes of games played, when the score was within five points. High-paid player salaries are also linked to last-minute field goal attempts in close games, according to the analysis. The results show that NBA organizations reward high salaries for players who, at the end of tight games: make shots, handle the ball, prepare their teammates to score, and are ready to play the shots in the last minute of a close game.

APPLICATIONS IN SPORTS

The highest paid NBA players seem to receive high salaries from their NBA teams because they arrive in the final minutes of games when the score is close (in clutch). Their pay depends on the percentage of shots they make and the assists they give to teammates when the game is on the line. They also get paid to make last minute shots of tight games. This information may be relevant to those seeking salary analyst and manager positions at NBA franchises when considering player salary treatment.

THANKS

None

REFERENCES

1. NBA stats, 2017-18 season, retrieved fromhttp://www.espn.com/nba/statistics
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3. Diven, K. (2019). Explained: What is an NBA Supermax contract and how does it work? Retrieved from https://www.nbcsports.com/washington/wizards/explained-what-nba-supermax-contract-and-how-does-it-work
4. LeRoux, D. (2015). CBA Encyclopedia. retrieved fromhttps://basketball.realgm.com/article/239564/CBA-Encyclopedia-Bird-Rights.
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8. Simmons, R., and Berri, D. (2011). Mixing the Prince and the Poor: Pay and Performance in the National Basketball Association,labor economy(3),381-388.
9. Xu Li, is the performance of an NBA basketball player an indicator of his salary? Taken from Prezi.com, 2011.
10. Mertler, C.R. & Vannetta, R.A. (2004). Advanced and Multivariate Statistical Methods: Practical Application and Interpretation, 3rd Edition, Glendale, CA: Pyrczak Publishing.