Authors: Kevin Sigler

Corresponding Author:
Kevin Sigler, PhD
601 College Road
Department 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 in the Cameron School of Business, UNC Wilmington

Are NBA Players Paid to Perform in the Clutch?

ABSTRACT

The star players in the National Basketball Association (NBA) are paid extremely well.  In the 2018-19 season there were 60 players in the NBA that were paid $17 million or more for their services.  Stephen Curry was the highest paid at $37.5 million (Table 1).  LeBron James, Chris Paul, and Russell Westbrook tied for second at salaries of $35.7 million (1).  This study examines if the highest 60 paid NBA players are compensated for performing in the clutch.  The research finds that the pay for the sample of highly paid NBA players is related to their field goal percentage and to assists to other players during the last four minutes of close games when the score is within five points.  Their pay is tied significantly to field goal attempts in the last minute of close games as well.  It appears from the results that NBA organizations reward players who at the end of close games make shots, are able to handle the ball, and set up their teammates to score as well as be willing to take shots in the last minute of tightly contested games.

Keywords: National Basketball Association, players, salary, clutch

INTRODUCTION                           

The star players in the National Basketball Association (NBA) are paid extremely well.   In the 2018-19 season there were 60 players in the NBA that were paid $17 million or more for their services (Table 1).  This study examines if NBA organizations pay highly compensated players for performing in the clutch, producing for their teams when the game is on the line in the last minutes of play. 

Stephen Curry was the highest paid NBA player in the 2018-19 season paid at $37.5 million (Table 1).  LeBron James, Chris Paul, and Russell Westbrook tied for second at 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 either a max or super-max contract lasting no longer than five years. 

Table 1: Top 60 Paid NBA Players 2018-19
Name Team Salary
Stephen Curry
Chris Paul
LeBron James
Russell Westbrook 
Blake Griffin
Gordon Hayward
Kyle Lowery
Paul George
Mike Conley
James Harden
Kevin Durant
Paul Millsap
Al Horford
Damian Lillard
Demar DeRozen
Otto Porter Jr.
Jrue Holiday
CJ McCollum
Joel Embiid
Andrew Wiggins
Bradley Beal
Anthony Davis
Andre Drummond
Hassan Whiteside
Nikola Jokic
Steven Adams
Giannis Antetokounmp
Marc Gasol
Kevin Love
Harrison Barnes
Chandler Parsons
Nicolas Batum
Rudy Gobert
Kawhi Leonard
DeAndre Jordan
LaMarcus Aldridge
Serge Ibaka
Aaron Gordon
Danilo Gillinari
Victor Oladipo
Jimmy Butler
Ryan Anderson
Kyrie Irving
Jabari Psrker
Zach LaVine 
Tyler Johnson
Tim Hardaway
John Wall
Jeff Teague
George Hill 
Klay Thompson
Allen Crabbe
Goran Dragic
Kent Bazemore
Evan Turner
Draymond Green
Tristan Thompson
Evan Fournier
Reggie Jackson
Bismack Biyombo 		Golden State Warriors
Houston Rockets
Los Angeles Lakers
Oklahoma City Thunder
Detroit Pistons
Boston Celtics
Toronto Raptors
Oklahoma City Thunder
Memphis Grizzlies
Houston Rockets 
Golden State Warriors
Denver Nuggets
Boston Celtics
Portland Trailblazers 
San Antonio Spurs
Washington Wizards 
New Orleans Pelicans
Portland Trailblazers
Philadelphia 76ers
Minnesota Timberwolves
Washington Wizards
New Orleans Pelicans
Detroit Pistons
Miami Heat
Denver Nuggets
Oklahoma City Thunder
Milwaukee Bucks
Toronto Raptors
Cleveland Cavaliers
Sacramento Kings
Memphis Grizzlies
Charlotte Hornets
Utah Jazz
Toronto Raptors
New York Knicks
San Antonio Spurs
Toronto Raptors
Orlando Magic
New York Knicks
Indiana Pacers
Philadelphia 76ers
Phoenix Suns
Boston Celtics
Washington Wizards
Chicago Bulls
Phoenix Suns
New York Knicks
Washington Wizards
Minnesota Timberwolves
Milwaukee Bucks
Golden State Warriors
Brooklyn Nets
Miami Heat
Atlanta Hawks
Portland Trailblazers
Golden State Warriors
Cleveland Cavaliers
Orlando Magic
Detroit Pistons
Charlotte Hornets 		$37,457,154
$35,654,150
$35,654,150
$35,654,150 
$32,088,932
$31,214,295
$31,200,000
$30,560,700
$30,521,115
$30,421,854
$30,000,000
$29,230,769
$28,928,709
$27,977,689
$27,739,975
$26,011,913
$25,976,111
$25,759,766
$25,467,250
$25,467,250
$25,434,263
$25,434,263
$25,434,263
$25,434,262
$24,605,181
$24,157,303
$24,157,303
$24,119,025
$24,119.025
$24,107,258
$24,107,258
$24,000,000
$23,241,573
$23,114,067
$22,897,200
$22,347,015
$21,666,667
$21,590,909
$21,587,579
$21,000,000
$20,445,779
$20,421,546
$20,099,189
$20,000,000
$19,500,000
$19,356,932
$19,200,127
$19,169,800
$19,000,000
$19,000,000
$18,988,725
$18,500,000
$18,109,175
$18,089,887
$17,868,853
$17,469,565
$17,469,565
$17,150,000
$17,043,478
$17,000,000
  Mean $24,157,049
  Median $24,107,258

MAX AND SUPER-MAX CONTRACTS

A player is eligible to sign for a maximum salary for the 2018-19 season of $25,467,250 or 25 percent of the cap if he has six or less years of experience (2).    A player with 7-9 years in the league can get 30 percent of the cap or $30,560,700 and with 10 years or more can receive up to 35 percent of the cap or $35,654,150 (Table 2). 

Table 2: Max Salaries and Projected Max Salaries
A player re-signing with his own team (8% annual raises, up to five years)
Year 6 years or less 7-9 years 10+ years
2018-19
2019-20
2020-21
2021-22		 $25,467,250
$27,504,630
$29,542,010
$31,579,390		 $30,560,700
$33,005,556
$35,450,412
$37,895,268		 $35,654,150
$38,506,482
$41,358,814
$44,211,146
 
A player signing with his a new team (5% annual raises, up to 4 years)
Year 6 years or less 7-9 years 10+ years
2018-19
2019-20
2020-21
2021-22		 $25,467,250
$26,740,613
$28,013,975
$29,287,338		 $30,560,700
$32,088,735
$33,616,770
$35,144,805		 $35,654,150
$37,436,858
$39,219,565
$41,002,273

The super-max contract, officially known as the Designated Veteran Player Extension, allows teams to re-sign players to maximum five-year contracts that are worth up to 35 percent of the salary cap with raises of eight percent in each following season.   A player who has seven or eight years of NBA service with one or two years left on his contract and qualifies for the designated veteran extension is eligible for a starting salary worth up to 35 percent of the cap (3)   Other qualifiers for the Designated Veteran Extension are the following:

  • The player was named to an All-NBA team in the season just completed, or in two of the last three seasons.
  • The player was named the NBA MVP in any of the three most recent seasons.
  • The player was named the NBA Defensive Player of the Year for in the season just completed, or in two of the last three seasons.

There are only four players so far who have signed super-max contracts: James Harden, Stephen Curry, Russell Westbrook, and John Wall.

SALARY CAP

The total amount a team can pay in salary to its players is subject to a salary cap ($101.9 million in 2018-19).  However, it is a soft cap in that a team can exceed it to pay its stars.  Teams can exceed the cap to pay its top players if their players meet the Larry Bird Exception.  The Bird Exception (named after the Celtic star who was first to be signed this way) allows teams to exceed the salary cap to re-sign their own free agents at an amount up to the maximum salary.  To qualify as a Bird free agent, a player must have played three seasons without being waived or changing teams as a free agent.   Players can earn Early Bird rights after just twosuch seasons. Virtually all of the same rules that apply to Bird rights apply to Early Bird rights, with the requirements condensed to two years rather than three (4).   A player traded with Bird Rights is still eligible for a max deal if he meets the other criteria. 

Other exceptions allow teams to go above the 2018-19 cap as well.  Any team, whether above the salary cap or luxury tax level, can offer a veteran’s minimum contract to any player (5).  Teams exceeding the cap can also use the mid-level exception to sign a player.   If teams are above the cap but below the luxury tax level ($123.7 million in 2018-19) in total salary, they can use the full mid-level exception ($8.641 million in 2018-29) to sign a player.  Teams that were above the tax level the previous season but are below it by the time free agency starts have access to a mini mid-level exception ($5.337 million in 2018-19).  Teams cannot use either of these exceptions if it takes them over the tax threshold.

If the total team salary exceeds $123.7 in 2018-19 season when using the exceptions, any salary above the amount is subject to a luxury tax.  It is a progressive tax.  The rate is: 150 percent for amounts up to $5 million over the threshold, 175 percent from $5-10 million, 250 percent from $10-15 million, 350 percent from $15-20 million, 375 percent from $20-25 million and increases 50 percent for every increment of $5 million past $25 million  The rate is even higher for repeat offenders.  For a team that pays out total salaries of $140.7 million in 2018-19, they would be subject to a luxury tax on $17 million ($140.7 – $123.7).  That results in a luxury tax of $35.75 million for the season (6).

Rookies whether super stars or not, have set pay schedules depending upon their draft position and are not eligible for massive payouts like their veteran teammates. Each rookie drafted in the first round has his salary set by the league.  For instance, Zion Williamson was the first player drafted in the 2019 NBA draft so he was eligible to received $6.8 million for his rookie season and $7.9 million in his second season.   The NBA also has a requirement that teams must spend a minimum of 90 percent of the salary cap so the minimum team salary for 2018-19 was $91.682 million.

DATA AND METHODOLOGY

This study investigates if performing in the clutch is significant in determining the salary for the top paid players in the NBA for the 2018-19 season.   In a previous study, Lyons et al. (2015) discovered in the 2013-14 season that points per game, rebounds, personal fouls, and field goal percentage are statistically significant in determining NBA players’ salary (7). Simmons and Berri (2011) found that pay for NBA players is related to points scored, rebounds, blocks, and assists (8). Xu Li (2011) discovered that points and the experience of the player are significant in explaining player pay using a sample from 2003-2010 (9).

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

  • Salary – Salaries of the 60 highest paid NBA players for 2018-19 season
  • Points – Total points in the last 4 minutes of games within 5 points (clutch time) scored by highest paid players
  • Field goal percentage – The percent of shots made during clutch time by highest paid players
  • Assisted field goal percentage – The percent of team total assists the highest paid players made 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 taken by highest paid players in last minute of close game
  • Last minute field goal percentage – The percentage of last minute shots 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 the independent variables are significant in explaining the size of the dependent variable, and the adjusted R-squared for the model of .89 demonstrates a very good fit in accounting for the size of the compensation for the top 60 paid players in the NBA.  According to the model, two clutch variables are significant at a one percent level in explaining NBA player salaries: field goal percentage and assisted field goal percentage in the last four minutes of tightly contested games.  In addition, the independent variable, last minute field goal attempts, is significant at a five percent level.  The variables, block field goal percentage and last minute field goal percentage, are statistically insignificant and have VIF (variance inflation factors) over 10, indicating multi-collinearity statistical problems (10).  

Table 3: Multiple Regression Results
Dependent Variable – NBA Player Pay for Top 60 paid Players for 2018-19 (in $000)
Independent Variables Coefficients p-values VIF
Points 2.1 .967 4.26
Field Goal % 2505 .4 .0006 *** 0.59
Assist Field Goal % 11021.4 .0085 *** 0.27
Block FG % -1969.5 .7254 57.82
Last Minute FGA 470.9 .0236 ** 4.26
Last Minute FG% 2717.9 .5006 58.11
R-Squared .91, Adjusted R-Squared .89, F 103.0, N=60
*** Significant at .01, ** Significant at .05, * Significant at .10
Dependent Variable: Salary – Salary paid to highest paid players for 2018-19 season
Independent Variables:
Points – total points scored in the last 4 minutes of games within 5 points (clutch time) by highest paid players
Field Goal % – the percent of shots made during clutch time by highest paid players
Assist Field Goal % – the percent of team total assists the highest paid players made during clutch time
Block FG% – the percent of team blocked shots made by the highest paid players during clutch time
Last minute FGA – shots taken by highest paid players in last minute of close games
Last minute FG% – the percent of last minute shots made by highest paid players in a close games

The model is re-specified eliminating the two independent variables with multi-collinearity problems, and the results are presented in Table 4.  The same three independent variables are statistically significant: field goal percentage and assisted field goal percentage at a one percent level and last minute field goal attempts at a 10 percent level.  The variable, points scored in the last four minutes of games with five points was again insignificant in the model.  The fit of this equation is very high with the same adjusted R-squared of .89 as Table 3.  The F statistic of 139.6, indicating the model is significant in explaining player pay, is higher than the F statistic from the previous model.  The results from Table 4 presents evidence that players receiving the highest compensation in the NBA are performing when the game is on the line.  Making their shots, and distributing the ball to allow teammates to score late in tight games as well taking shots in the last minute of close games are significant in explaining the large salaries for the top 60 paid players in the NBA.

Table 4: Multiple Regression Results
Dependent Variable – NBA Player Pay for Top 60 paid Players for 2018-19 (in $000)
Independent Variables Coefficients p-values VIF
Points 25.4 .6252 4.23
Field Goal % 24893.2 .0004 *** 0.59
Assist Field Goal % 11839.9 .0068 *** 0.27
Last Minute FGA 395.6 .0632 * 4.05
R-Squared .91, Adjusted R-Squared .89, F 139.6, N=60
*** Significant at .01, ** Significant at .05, * Significant at .10

Surprisingly, the independent variable, points scored in the last four minutes of close games, is statistically insignificant for the models in Tables 3 and 4.  It appears from these results that NBA organizations pay for their highly compensated players to facilitate scoring for the entire team by assisting other players for points and shooting a high percent when they take shots during the last few minutes of close games instead of attempting to score the majority of points themselves.  It is evident from the model, however, that highly paid players take the shots for their teams in the last minute of tight contests.

CONCLUSIONS

This study examined if the highest paid NBA players are paid for performing in the clutch.  The research finds that the pay for highly compensated NBA players in the sample is related to their field goal percentage and to their assists to other players during the last four minutes of close games when the score is within five points.  Highly paid players’ salaries are also linked to field goal attempts in the last minute of close games, according to the analysis.  It appears from the results that NBA organizations reward large salaries to players who at the end of close games: make shots, are able to handle the ball and set up their teammates to score as well as be willing to take shots in the last minute of close games.

APPLICATIONS IN SPORTS

The highest paid players in the NBA appear to receive large salaries from their NBA teams because they come through in the last minutes of games when the score is close (in the clutch). Their pay is related to the percentage of shots they make and the assists they provide their teammates when the game is on the line.  They are also paid on to take shots in the last minute of close games.  This information may be relevant for those seeking positions as salary analysts and managers with NBA franchises when considering pay treatments for players. 

ACKNOWLEDGEMENTS

None

REFERENCES

  1. NBA Statistics, 2017-18 Season,  Retrieved from http://www.espn.com/nba/statistics
  2. Urbina, F. (2018). What is an NBA Max Salary, Retrieved from  https://hoopshype.com/2018/10/21/nba-maximum-salary/
  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 from https://basketball.realgm.com/article/239564/CBA-Encyclopedia-Bird-Rights.
  5. Coon, L. (2019). NBA Salary Cap Facts Retrieved from http://www.cbafaq.com/salarycap.htm
  6. Urbina, F. (2018). How does NBA Luxury Tax work? Retrieved from https://hoopshype.com/2018/10/11/nba-luxury-tax/
  7. Lyons, R., Jackson, E., & Livingston, A. (2015). Determinants of NBA player salaries, the Sport Journal. Retrieved from https://thesportjournal.org/article/determinants-of-nba-player-salaries/
  8. Simmons, R., and Berri, D. (2011). Mixing the prince and the paupers: Pay and performance in the National Basketball Association, Labour Economics (3), 381-388.
  9. Xu Li, Is NBA basketball player performance indicative of their salary? Retrieved 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.
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