Lautier, Jackson
This paper presents the first known framework to estimate a return on investment for player salaries in the National Basketball Association (NBA). We propose a novel player credit estimator, the Wealth Redistribution Merit Share (WRMS), which allocates an asymptotically consistent fractional performance-based credit to players using any per-game player evaluation metric. This fractional credit is then used to allocate an estimated dollar value of a single game to each of its players, and using a player’s salary as an initial investment, creates a sequence of cash flows that may be evaluated using traditional financial analysis. We illustrate all methods with empirical data from the 2022-2023 NBA regular season by utilizing a new logistic regression-based player performance model we propose and including a break-even analysis between high-performing players with frequent missed games and average-performing players with consistent availability.