Nylon Calculus: NBA’s new lottery odds have changed rebuilding strategy

The NBA’s new draft lottery odds may have cut incentives for tanking to the bottom … and just moved them up a few slots.

Conventional wisdom in the NBA states that the worst place to be from a franchise-building perspective is in the middle. As teams begin to hit a low ceiling, the theory goes that it’s better to blow it all up and start from scratch, hope to be at the bottom, and nail some juicy No. 1 picks in the draft lottery.

While this line of thought may have had its merits in years past, the 2019 change in the lottery odds has drastically shifted incentive structures for every team facing a rebuild. Smart franchises are going to be the ones that realize how dangerous it is to totally bottom out, and building from within the 5-10 range of the lottery will become much more en vogue.

Why has blowing it up become a dangerous philosophy? Let’s look at the new odds to find out.

The NBA changed the lottery odds dramatically with the goal of reducing tanking at the very bottom, and in that regard, they succeeded. All three teams at the bottom have the same pick odds in the lottery, and the fourth team isn’t far behind. But the decision to draw for an extra pick has also changed the incentives significantly, and in ways that are not obvious.

Under the old system, the league only drew for the top three and picks 4-14 were allotted by the record of the remaining teams. Now, teams all draw for the fourth pick as well. That has made the probability of moving up in the lottery significantly higher for teams in the middle of the lottery.

What this boils down to is that teams in the 5-13 range have sometimes two or even three times as high of a chance of jumping up in the lottery as they did in the old system. The draft has gotten significantly rosier for them, while teams in the bottom four have seen their draft bailouts shrink.

Things have gotten particularly bad for the worst team in the league, especially if its plan was to be bad over the course of multiple years. That strategy depended heavily on drafting a superstar with the over-sized value of the no. 1 pick. That pick is going to be much more evenly distributed now.

Consider that if you were planning a five-year rebuild, if you were the worst team in the league for all five years, you would expect to get at least one No. 1 pick about 76 percent of the time under the old system. That number is now down to 53 percent. And it is definitely possible to be stuck at the bottom for five years without even drafting better than third (it will happen with 23 percent likelihood as opposed to only 7 percent in the old system. Play around with the odds for yourself with my lottery simulator).

That is a grim reward for being that bad for that long, and the bottom line is that the NBA has succeeded in killing rebuild strategies like The Process. The payouts are so bad for multi-year tanking rebuilds that all but the most degenerate gamblers will avoid it. It is going to be way harder to dig yourself out once you fall that far as a franchise.

On the other hand, building from the middle has gained a ton of appeal. Anecdotally, we saw this with the New Orleans Pelicans last year after they hit on their six percent shot at the No. 1 pick. While that is obviously a long shot, the 5-14 range collectively is now almost flipping for a chance at the No. 1 pick with the bottom four teams (their field odds have gone up from 27.6 percent to 45.5 percent).

Teams like the Pelicans are going to be the norm, not the exception. We are going to see a ton of rosters with a decent nucleus get a huge infusion of talent by lucking into a top-four pick. This will shock a lot of people, but it shouldn’t if you just take a few minutes to study the odds.

As an ancillary to this idea, the NBA will ultimately succeed in stopping the NBA’s primary goal of tanking at the very bottom. But it won’t fix tanking altogether. Instead, tanking will shift from the very worst teams into that middle 5-10 range of the lottery. And those teams are going to get a rocket fuel boost in their developmental trajectories.

It used to be that moving from the second-worst to the worst team in the league would gain you about a five percent chance at the No. 1 pick. Now, that number is zero. But the incentives have shifted into the 5-10 range. For every spot a team moves up in that ranking, it gains between a 5-6 percent chance of moving up in the lottery. When teams have little to play for at the end of the season, those teams should all be racing towards the bottom with much more fervor than they did under the old system. The Pelicans did it last year and it paid off for them.

It will become much more common for mediocre teams to get lucky in the lottery, and rebuilding from within that 5-10 range looks like the way to go. It offers the dual benefits of not having to start completely at ground zero coupled with significantly improved odds of moving into a top-four pick as compared to the pre-2019 system.

Blowing it up no longer makes sense from a strategic or monetary (selling tickets) standpoint. Teams will quickly figure out that intentionally bottoming out is a bad play, and those that are at the bottom are going to be stuck there for a long time due to gross ineptitude rather than strategy. And in truth, that’s the way that things probably should be.