This is a REPOST, I accidentally posted this before as private.

1. NBA Wage Study
By Ty Candler
February 22nd
2017
Department of Economics
Central Washington University

2. 1
LEGEND
Section Page
1. Introduction……………………………………………………………………………………………………………… 2
2. Determinantsof NBA PlayerWages ………………………………………………………………………….. 3
3. Positional ImpactonPlayerWages……………………………………………………………………………. 4
4. PlayerWagesEffectonPerformance ………………………………………………………………………… 5
5. Conclusion………………………………………………………………………………………………………………… 7
6. References ………………………………………………………………………………………………………………… 9
7. Appendix …………………………………………………………………………………………………………………… 9

3. 2
1. Introduction
Ever yearinthe National Basketball Association(NBA),general managersacrossthe league acquire
newplayersandretaintheircurrenttalentthroughnew heftcontracts.EveryNBA teammust determine
the value of playerstotheirteamand if that player’s value willfitinthe salarycap.In the NBA,each
teamhas a salary cap that limitsthe amountof moneytheymayallottotheirplayers.What
determinantsmightgeneral managersuse toapproximate the value of eachplayer?The purpose of this
studyisto identifyvariablesthatsignificantlycontribute tothe determinationof NBA player’ssalaries.
In the 2016, 2017 NBA seasonthe top paidplayerinthe league isLebronJames;he will make
$30,963,450.00. In the 2015, 2016 NBA seasonLebronJamesaveraged25.3 pointspergameshe played
duringthe season.KevinDurant,onthe otherhand,averaged28.2 pointspergameshe playedduring
the season.ButKevinDurantmakes $26,540,100.00. Both LebronJamesandKevinDurantplaythe small
forwardposition.KevinDurantscored more pointsthanLebron Jamesthatseason. Durant’steamwas
rankednumber2 comparedto James’steamrankednumber4 duringthe 2015, 2016 season.When
lookingatperformance statistics, KevinDurantappearedtohave abetter2015, 2016 season.Though
LebronJames’ssalaryforthe nextseasonwasapproximatelyfourmillionmore dollarsthe Durant’s.
Some wouldsayLebronJamesisbeingoverpaidbythese simple statistics.Some sayJamesis the best
playerof all time andshouldbe the highestpaidplayerinthe league.
The purpose of thisstudyis to identifyperformanceandcharacteristicvariablesmostlikelyto
contribute toNBA playerSalaries.The studyusedamultiple regressionanalysistoanalyze the 2016,
2017 salariesof 345 NBA playersandtheirindividualstatisticsfromthe previous2015, 2016 season.The
variablestestedinthisstudyare:playerposition,gamesplayed,minutespergame,fieldgoal
percentage,three pointfieldgoal percentage,free throw percentage,offensive rebound,defensive
rebounds,assists,turnovers,steals, blocks,pointspergame andteamrank.Some externalitiesexistin
thisstudythat may affectthe salaryof the NBA players.Variablessuchaswhere the playerwasdrafted,
whentheysignedtheircontract,howmanyNBA finalsthe playerhaswonall couldhave an effecton
playersalary.These variablesmayall have aneffect,yetcomparativelyquantifyingvariablessuchas
these couldprove difficult.The variablesusedinthisstudyare quantifiable,comparable andwillprovide
for the purpose of the experiment.

4. 3
2. Determinants of Wages
The purpose of thisstudyis to discoversignificantdeterminantsof NBA playerwages.Todothis,the
studyran a multipleregressionon345 players’salariesand13 performance andcharacteristicstatistics.
To determine if avariable issignificanttothe experiment,fromthe regressionanalysis,itmusthave a p-
value lessthan.1. Outof the 13 variablesinthe study,9 were significanttodeterminingthe wagesof
NBA player’swages. Additionally,the studyproducedanR-squaredvalueof .609. Thissignifies60.9%of
determinantsthataffectthe
wagesNBA playersare
describedinthisstudy.
Figure 1 showsthe
regressionanalysisof the 345
playersandthe significant
determinantsof NBA player
wagesinclude:minutesper
game,three pointfieldgoal
percentage,free throwfield
goal percentage,defensive
rebounds,assists,turnovers,
steals,pointspergame and
teamrank. The coefficients
determine the total effecton
wagesforeach variable.For
instance,the variable minutes
pergame hada coefficient of
131911.25. In theory,forevery
additional minutepergame a
playerplays,theirsalarywill
increase by$131,911.25. For
everyadditional assist aplayerrecords,theirsalarywill increase by$1,482,381.50.
As youcan see inFigure 1, there are negative coefficientsforsome of the determinants.Itiscurious
that a playerearningmore stealswill make lessmoney.Thisislikelydue toplayerspecialization.Inthe
Figure 1: Multiple RegressionAnalysis,All Players
SignificantVariable:P-value<.10
Variable Coefficients P-value
Min per
Game
131911.2574 0.075301733
3-Point
FG %
-37116.36437 0.061574618
Free-
throw FG
%
-34791.91312 0.072888903
Def
Rebounds
1144873.03 0.000135428
Assists 1482381.495 3.19024E-07
Turn-
Overs
-3378335.482 2.38141E-05
Steals -2824703.111 0.001337525
Points
per Game
764307.717 8.89292E-13
Team
Rank
-115205.0736 7.41473E-05
R Square 0.609

5. 4
NBA,a playermayspecialize inacertainsectorof the game;for example,defenseor shooting.Suppose
a defensivespecializedplayerinthe NBA leadshisteaminsteals.Yet,inall otherperformance statistical
categorieshe isworston the team.Therefore,he ispayedmuchlessthanthe playerswhocanscore
points,make reboundsandsteal the ball.Yet,because he hasmore stealsthanthe otherplayers,it
appearsthat the more stealsthe playergetsthe lessmoneythe playermakes.Wheninreality,steals
may be the onlyvariable thisplayeris truly gettingpaidfor. Inthe regression,yes,itshowsthatearning
more stealswill earnyoulessmoneysimilarlywiththree pointshootingpercentage.Inreality,the
playerswiththe moststealsare specializedrole playersandgetpaidlessbecause all theydoissteal the
ball.Thisdoesnotmeana playerwhogetsmore stealswill make lessmoney.Whatthismeansis,
generallyspeaking,playerswithhigherstealstotalsmake lessmoneybecause theydonotdo have high
statisticsinotherperformance categories.Similarlywiththree pointfieldgoal percentage,the players
withthe highestpercentage maybe specializedshooters.The onlythingthese playermightdoisshoot
three pointers.Itmayappeartheyare makinglessbymakinga higherpercentage of theirshotsinthe
regression.Inreality,generallythe playerswiththe highestthree pointshootingpercentageeither
shootthe ball from behindthe arcmuch lessor theyare specializedthree pointshooter.Therefore,this
regressionhasshownus9 determinantsof playersalaryinthe NBA andspecializedskill playersmake
lessmoneythanthose whocan performinall statistical categories.
3. Positional Impact on Player Wages
The purpose of thisstudyis to discoversignificantdeterminantsof NBA playerwages.Inthe NBA,
differentpositionsmightbe more responsible fordifferentfacetsof the game.Forinstance,apoint
guard mayget paidmore for assistswhile acentermaygetpaid more forrebounds.Asdiscussedearlier,
certainplayersspecialize incertainskillsandsome playersare all aroundskilledinall statistical

6. 5
categories. Todiscoversignificantdeterminantsof NBA player’swages,itisimportanttoseparate
positionsasdifferent
positionsrequire
differentskillsand
playersindifferent
positionsare payed
for different
performances.The
studyuseda multiple
regressionanalysis
on playersalaries
withthe same 13
variablesasbefore;thistime the playersare separatedbypositioninordertodiscoverthe different
determinantsof payforthe differentpositionsinbasketball.
The firstpositioninthe analysisinthe pointguardposition;onaverage the thirdhighestpaid
positioninthe NBA.The regressionanalysisranonvariablesaffectingNBA pointguard’s wages
concludedan R-squaredvalue of .698. Thismeansapproximately70% of the determinantsof aNBA
pointguard’swageswere
includedinthe study.Of the 13
variablesinthe study,4
variableswere significant
determinantsof NBA point
guard wages,these variables
include:assists,turnovers,
stealsandpointspergame.
The most significant
determinantof aNBA point
guard’ssalary is assists.For
everyadditional assistpergame aNBA pointguardmakes,intheory,theirsalarywill increase
$2,247,700.11.
Figure 3: Multiple RegressionAnalysis,PointGuards
SignificantVariable:P-value<.10
Variable Coefficients P-value
Assists 2247700.108 0.000159828
Turn-
Overs
-3835835.445 0.030178281
Steals -4218242.244 0.038937467
Points
per Game
747496.4204 0.003592443
R Square 0.698
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
10000000
Avg NBA
Salary
Avg PG SalaryAvg SG Salary Avg SF Salary Avg PF Salary Avg C Salary
Figure2: NBA Salaries by Position

7. 6
The secondpositioninthe analysisisthe shootingguardposition;onaverage shootingguardis
the lowestpaidpositioninthe NBA.The regressionanalysisranonvariablesaffectingNBA shooting
guard’swagesconcludedan R-squaredvalue of
.676. Thismeansapproximately68%of the
determinantsof aNBA shootingguard’swages
were includedinthe study.Of the 13 variablesin
the study,4 variableswere significant
determinantsof NBA shootingguardwages,these
variables include:assists,turnovers,pointsper
game and teamrank. The most significant
determinantof aNBA shootingguard’ssalaryis
assists.Foreveryadditional assistpergame a NBA
shootingguardmakes,intheory,theirsalarywill increase$3,528,062.37.
The third positioninthe analysisisthe small forwardposition;onaverage small forwardisthe
highestpaidpositioninthe NBA.The regressionanalysisranonvariablesaffectingNBA small forward’s
wagesconcludedanR-squaredvalue of .78.This means approximately78% of the determinantsof a
NBA small forward’s wageswere includedinthe study;that’shuge!Of the 13 variablesinthe study,6
variableswere significantdeterminantsof NBA
small forward’swages,these variablesinclude:
defensive rebounds,assists,turnovers,blocks,
pointspergame and teamrank. The most
significantdeterminantof aNBA small
forward’ssalaryisassists.Foreveryadditional
assistpergame a NBA small forward makes,in
theory,theirsalarywill increase$4,030,867.89.
The fourthpositioninthe analysisisthe
powerforwardposition;onaverage power
forwardisthe secondlowestpaidpositionin
the NBA.The regressionanalysisranonvariablesaffectingNBA powerforward’swagesconcludedanR-
squaredvalue of .736. Thismeansapproximately74% of the determinantsof aNBA powerforward’s
wageswere includedinthe study.Similartosmall forwards,of the 13 variablesinthe study,7 variables
Figure 4: Multiple RegressionAnalysis,Shooting
Guards
SignificantVariable:P-value<.10
Variable Coefficients P-value
Assists 3528062.371 0.004307344
Turn-Overs -5051898.477 0.041024736
Pointsper
Game
928687.2993 0.001567784
Team Rank -140193.4921 0.032779163
R Square 0.676
Figure 4: Multiple RegressionAnalysis,Small
Forwards
SignificantVariable:P-value<.10
Variable Coefficients P-value
Def Rebounds 1300923.311 0.095979453
Assists 4030867.889 3.77255E-05
Turn-Overs -4203321.984 0.039519253
Blocks -5100637.259 0.01882857
Pointsper Game 477736.8974 0.050004533
Team Rank -218398.6727 0.002150631
R Square 0.78

8. 7
were significantdeterminantsof NBA powerforward’swages,these variablesinclude:fieldgoal
percentage,free-throwpercentage,defensive rebounds,assists, turnovers,pointspergame andteam
rank. The mostsignificantdeterminantof a NBA powerforward’ssalaryisassists.Foreveryadditional
assistpergame a NBA powerforwardmakes,intheory,theirsalarywill increase $1,704,049.77.
The last positioninthe analysisisthe center
position;onaverage centeristhe secondhighest
paidpositioninthe NBA.The regressionanalysis
ran on variablesaffectingNBA center’s wages
concludedanR-squaredvalue of .41. Thismeans
approximately 41% of the determinantsof aNBA
powerforward’swageswere includedinthe
study. Interestingly,of the 13 variablesinthe
regressionnone of themhada significantpvalue
to the wagesof an NBA center.Inotherwords,the
significantdeterminantsof an NBA center’ssalary
were notincludedinthe study.
4. Conclusion
The purpose of thisstudyis to identifyvariablesthatsignificantlycontributetothe determinationof
NBA player’ssalaries.Fromamultiple regressionon345 players’salariesand13 performance and
characteristicstatistics;the studyfound9significantdeterminantsforanyNBA player’ssalary.Through
thisregression,itwasalsoconcludedthatsome playersinthe NBA are specializedandsome playersare
all aroundskilledplayers.Since the all-aroundskilledplayersare the highestpaid,yetperformworse
than specializedplayersinspecificperformance categories.Itappearsfromthe regressionresultsthat
the betterspecificperformance statisticsaplayerhasthe lesstheygetpaid.In reality,thisconcluded
playersthatspecialize oncertainskills,willearnlessmoneythanplayerswhoare all aroundskilledinall
categories.Tocounterthisphenomenon,the studybroke downNBA playersbypositionandranthe
same regressionon a positional level. Thishelpedfilterthe difference inspecializedplayersandall
aroundplayersbecause generallyspeakingplayersof the same positionwillhave similarskill sets.This
regressionshelpedpaintaclearerpicture of eachindividual positionsdeterminantsof the demand.The
regressionprovedthe hypothesisthatdifferentpositionshave differentskillsetsandthustheirsalaries
Figure 5: Multiple RegressionAnalysis, Power
Forwards
SignificantVariable:P-value<.10
Variable Coefficients P-value
FG% -137298.3066 0.037631787
Free-throw% -98722.80864 0.045517929
Def Rebounds 898109.0881 0.086000665
Assists 1704049.771 0.017088765
Turn-Overs -6020467.668 0.000420644
Pointsper Game 1069034.974 6.13563E-06
Team Rank -113085.8482 0.024536528
R Square 0.736

9. 8
are determinedbydifferentperformancestatistics.Three variablesinthe studieswere consistently
significantthroughoutalmostall the positions:assists,pointspergame andteamrank.In conclusion,
whengeneralizingNBA playersthere are nine significantdeterminantsof wagesincluding:minutesper
game,three pointfieldgoal percentage,freethrow field goal percentage,defensive rebounds,assists,
turnovers,steals,pointspergame andteamrank. WhenviewingNBA players’salariesintermsof
position,differentpositional playersgetpaidfordifferentvariables.Although,throughoutall of the
positions,there are three significantdeterminantsof NBA player’swages:assists,pointspergame and
teamrank. Additionally,NBA playerswhoperforminall statistical categoriesearnhigherwagesthan
those playerswhospecialize inspecificskill sets.
Thisstudyon determinantsof NBA player’swageswassuccessful,thoughitleftsome tobe
desired.The nextstepwouldbe gatheringthe lastapproximate30% of variablesnotincludedinthis
study.Inparticular,the determinantsthataffectspecificallythe centerposition.Some variablestobe
includedinfuture studiesshouldinclude:height,weight,age,IQ,numberof NBA finalswonandwhen
the playersignedthe contract.Anotherimprovementonthe experimentshouldbe filteringout
extremelyspecializedplayers.One waytodo thismaybe to filterthe datafor NBA playerswhoplaya
certainnumberof minutespergame.Thiscouldhelpeliminatethe negativecoefficientsinthe
regression.Byaddingmore variablesmostlikelylinkedtoplayerwagesandeliminatingthe misleading
negative coefficientsthe studywouldprovide amuch

10. 9
5. References
2016-17 Hollinger NBA PlayerStatistics - All Players.(n.d.).Retrievedfromespn.com:
http://insider.espn.com/nba/hollinger/statistics
2016-2017 Hollinger TeamStatistics.(n.d.).RetrievedfromESPN.com:
http://www.espn.com/nba/hollinger/teamstats
NBA player salaries.(n.d.).Retrievedfromhoopshype.com:http://hoopshype.com/salaries/players/
NBA players.(n.d.).Retrievedfrom cbssports.com:
http://www.cbssports.com/nba/playersearch?CONF_ABBR=EAST&print_rows=9999
NBA players.(n.d.).Retrievedfromcbssports.com:
http://www.cbssports.com/nba/playersearch?CONF_ABBR=WEST
yahoo sports .(n.d.).Retrievedfromsports.yahoo.com:
https://sports.yahoo.com/nba/stats/byposition?pos=PG,SG,G,GF,SF,PF,F,FC,C

11. 10
6. Appendix
Figure 1: Multiple RegressionAnalysis,All Players
SignificantVariable:P-value<.10
Variable Coefficients P-value
Min per
Game
131911.2574 0.075301733
3-Point
FG %
-37116.36437 0.061574618
Free-
throw FG
%
-34791.91312 0.072888903
Def
Rebounds
1144873.03 0.000135428
Assists 1482381.495 3.19024E-07
Turn-
Overs
-3378335.482 2.38141E-05
Steals -2824703.111 0.001337525
Points
per Game
764307.717 8.89292E-13
Team
Rank
-115205.0736 7.41473E-05
R Square
0.609

12. 11
Figure 3: Multiple RegressionAnalysis,PointGuards
SignificantVariable:P-value<.10
Variable Coefficients P-value
Assists 2247700.10
8
0.00015982
8
Turn-Overs -
3835835.445
0.03017828
1
Steals -
4218242.244
0.03893746
7
Pointsper Game 747496.420
4
0.00359244
3
R Square 0.698
Figure 4: Multiple RegressionAnalysis,Shooting
Guards
SignificantVariable:P-value<.10
Variable Coefficients P-value
Assists 3528062.371 0.004307344
Turn-Overs -5051898.477 0.041024736
Figure 5: Multiple RegressionAnalysis, Power
Forwards
SignificantVariable:P-value<.10
Variable Coefficients P-value
FG% -137298.3066 0.037631787
Free-throw% -98722.80864 0.045517929
Def Rebounds 898109.0881 0.086000665
Assists 1704049.771 0.017088765
Turn-Overs -6020467.668 0.000420644
Pointsper Game 1069034.974 6.13563E-06
Team Rank -113085.8482 0.024536528
R Square 0.736
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
10000000
Avg NBA
Salary
Avg PG SalaryAvg SG Salary Avg SF Salary Avg PF Salary Avg C Salary
Figure2: NBA Salaries by Position

13. 12
Pointsper
Game
928687.2993 0.001567784
Team Rank -140193.4921 0.032779163
R Square 0.676