Testing the Correlation Between Team Payroll and Win Percentage in the National Basketball Association : 1998-2016

Abstract

This study investigates the relationship between team payroll and win percentage in the National Basketball Association from 1998 to 2016. The economic necessity for a league wide competitive balanced is highlighted, followed by a discussion of early player market restrictions in baseball and the existing player market restrictions in the NBA. The findings of past scholars testing the correlation team payroll and team performance in professional sports leagues are also reported and used as standards of comparisons to the results. This study then tests the correlation between team payroll and team win percentage for each season from 1998 to 2016, and for each individual team over the same time period.