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Betting

Checking out Tradesports' NBA championships contracts, I see you can buy Detroit for 37, San Antonio for 26, Miami for 10.7, Dallas for 11.0, and Phoenix for 9.2 among the teams with realistic shots at winning. The Spurs seem overvalued to me at this price. I think they're the best team in the league. I say six times out of ten they beat the Mavs in round two. Six times out of ten they beat the Amare's back Suns in the Conference finals. And six times out of ten they beat Detroit in the finals. That gives them a 21.6 percent chance of winning all three series, and I think a strong case could be made that I'm being too generous to San Antonio.

The big five put together have a combined value of 93.9 which is too low. The odds that some other team is going to win have to be much less than six percent. Buying all five is a certain winner. Buying Detroit, Miami, Dallas, and Phenix for 67.9 isn't a sure winner, but I think it improves your expected value.

February 28, 2006 | Permalink

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I'd take Phoenix at that price. In fact, maybe I will..

Posted by: Steve | Feb 28, 2006 1:52:00 PM

detroit is the one that's ridiculously overvalued. detroit's just not that far ahead of dallas or SA in the standings to justify a 40% chance they win it all by comparison to where dallas and SA stand. i think the heat have to be bit higher given how shaq is playing of late and how close they came to beating detroit last year. as for dallas, i still think they're likely to fail again the playoffs, but they've got to have a better shot relative to the others than just 10%. for me, phoenix is the real wildcard, i won't even bother to try to figure them out without knowing where amare will be, how their new guys will handle the playoffs, how the injury to thomas factors in, etc.

Posted by: dj superflat | Feb 28, 2006 1:53:19 PM

Detroit deserves to have much more expensive contracts even if you think the Pistons are slightly worse than San Antonio and Dallas. To win the championship, SA needs to beat the Mavs, then the Suns, and then the Pistons. Detroit has a much easier road and their high contract price reflects that.

Posted by: Matthew Yglesias | Feb 28, 2006 2:17:44 PM

"I say six times out of ten (SA beats) the Mavs in round two."

Not if they don't get home court, they don't.

Given the nasty series against the Clippers the 4 seed is facing, I wouldn't want to be the road team in that series.

-----

San Antonio has a nasty vibe this year. Between Duncan's fragility and the reliance on Finley, I think this is the weakest San Antonio has looked in quite a while. And Dallas has a really good vibe. They're incredibly stocked and playing with a real focused intensity.

If the odds were identical, I'd be happier buying a Dallas contract than a San Antonio contract, and the odds are obviously not identical.

In fact, given the odds, Dallas is the best bet by far among the five teams. 11 cents on the dollar? You gotta be kidding. That's a no brainer. Miami is also slightly undervalued at 10 cents, but only slightly.

If I were trying to put together real odds, I'd come up with:

30 Detroit
24 Dallas
20 San Antonio
15 Miami
08 Phoenix
03 Field

Posted by: Petey | Feb 28, 2006 2:20:34 PM

I dunno, Petey. Yeah, Dallas is looking good here and SA ain't. But, you know, SA wasn't looking all that great going into the playoffs last year either, and then look what happened. SA is a playoff tested team in a way that Dallas (and PHX) just aren't, and I think that counts for a lot.

BTW, Matthew's right about everything he wrote. I would put the odds of some other team beside the Big Five winning it all at about 1%.

Posted by: Al | Feb 28, 2006 2:34:55 PM

Phoenix is overvalued. They have no shot - they can't beat the Mavs or the Spurs over a seven game series as currently constituted, and they don't have time to work Amare back into the flow of things. Next year, they might be monsters.

Posted by: SomeCallMeTim | Feb 28, 2006 2:36:14 PM

I think Petey's right - if the Mavs get home court, this is the year that they get by the Spurs.

Posted by: SomeCallMeTim | Feb 28, 2006 2:39:26 PM

As a fairly involved Tradesports/Intrade watcher, one thing that I often think about is the rate of return on capital. Suppose the contract for the Knicks winning the championship is at 1. Should I go short? Probably not. Sure, I'm guaranteed a 1% return on my investment. But I have to tie up a big chunk of capital for a few months, unless the market suddenly comes to its senses and drops the Knicks to 0. It's why I pretty much only buy contracts below 50, and short-sell contracts above 50.

I actually have an open order for the Suns at 8. The thinking is that however good they are now, they'll be that much better when Amare returns. I'd also be interested to see how well the Amarefied Suns would play against Detroit. Would they be able to run their fast break so quickly that Detroit wouldn't be able to set up its halfcourt defense?

Posted by: Neil the Ethical Werewolf | Feb 28, 2006 2:44:14 PM

Maybe SA's odds are even worse than the 21-22 percent I give them, but my main point is just that 26 percent is clearly too high and fails to take into account the difficult schedule. Phoenix is clearly the hardest team on the list to rate; my guess is that they're undervalued. The Heat are arguably undervalued since the question of Shaq "turning it on" for the playoffs is har to evaluate. So I'll stick with my observation that a mass Suns-Mavs-Pistons-Heat buy is a good bet which lets you avoid assessing some of the harder questions here in favor of the easy ones.

Posted by: Matthew Yglesias | Feb 28, 2006 2:45:00 PM

Sucker bets.

Posted by: Chad | Feb 28, 2006 2:49:43 PM

"I would put the odds of some other team beside the Big Five winning it all at about 1%."

You do understand just how low a chance 1% assigns? Two years ago, Detroit might not have been in the top five at this point. One in thirty is still pretty remote, but it's not as remote as once every hundred years.

"But, you know, SA wasn't looking all that great going into the playoffs last year either"

And they had two gimmie rounds to do a spring training camp. They won't have that luxury this year.

If SA doesn't get the 1 seed, they're going to have a really hard time coming out of the West. And I'd bet on them not getting the 1 seed. Thursday's game is actually pretty important for March.

Posted by: Petey | Feb 28, 2006 2:49:58 PM

"I actually have an open order for the Suns at 8. The thinking is that however good they are now, they'll be that much better when Amare returns."

It's a bit of a sucker play. Even if Amare is close to 100%, working him back in is likely to involve several disruptions. And "good as they are now" is good, but not "elite good".

However, it's simultaneously not a sucker play just due to the bracketing. The Suns are looking at two easy rounds to get their vibe back together while San Antonio and Dallas are bashing each other's brains in.

Phoenix has far more "ifs" than any of the other teams in the Big Five, but their easy procession to the West finals means that they just have to get hot for three weeks to win the thing. Unlikely, but possible. 8 cents on the dollar seems fair value to me. But you'd do better betting on Dallas.

Posted by: Petey | Feb 28, 2006 2:58:24 PM

"Phoenix is clearly the hardest team on the list to rate; my guess is that they're undervalued. The Heat are arguably undervalued since the question of Shaq "turning it on" for the playoffs is hard to evaluate."

The thing is that "hard to evaluate" translates as "lots of open questions". And open questions drive down the value of a contract.

To evaluate Miami, you have to answer two questions: what are Miami's chances of winning if they have their act together in May, and what is the chance of them having their act together in May?

The fact that the second question is in such doubt is why I'd value them at 15 cents on the dollar instead of higher. (In case folks have forgotten, when Shaquille rumbles, it's a force as inexorable as gravity.) Similar dynamics are at play in an even more extreme version with Phoenix.

The more significant open questions a team poses, the lower the true value of their contract.

Posted by: Petey | Feb 28, 2006 3:17:45 PM

i rate phoenix's chances of winning as equal to the rest of the field: 0.

detroit-miami-dallas-san antonio: one of those 4 is your 2006 champion....

Posted by: howard | Feb 28, 2006 3:49:00 PM

To evaluate Miami, you have to answer two questions: what are Miami's chances of winning if they have their act together in May, and what is the chance of them having their act together in May?

The fact that the second question is in such doubt is why I'd value them at 15 cents on the dollar instead of higher. (In case folks have forgotten, when Shaquille rumbles, it's a force as inexorable as gravity.)

I think your ranking of Detroit 30 vs. Miami 15 seems fair enough, Petey, but I don't quite agree with your logic. Shaq was rumbling just fine the last time they played the Pistons, with 31 points, which was his best game of the season, and about as strong a game as he's physically capable of putting together at this point in his career, certainly in terms of consistent production throughout a 7-game series. Wade was also in the zone in the 4th quarter of that game, with 37 points total, and yet...the Heat were only able to win at the buzzer because Detroit went into a very uncharacteristic 4th quarter collapse on offense, a Portland 2000 Game 7-level collapse. The Pistons somehow managed to blow a 13-point lead after 3, which they built up in spite of Shaq's dominance (very few of his points came in the 4th). I don't think the Heat are going to manage a whole lot better than that in the conference finals against Detroit.

Posted by: Haggai | Feb 28, 2006 4:35:10 PM

You do understand just how low a chance 1% assigns? Two years ago, Detroit might not have been in the top five at this point. One in thirty is still pretty remote, but it's not as remote as once every hundred years.

Technically speaking, I think 1% is "pretty low". But I don't think it's unreasonable to think that. After all, are there ANY teams that have even a remote chance of making the Finals in the East other than DET and MIA? I mean, Cleveland? Uh, uh. Other years, that's probably not quite the same...

Posted by: Al | Feb 28, 2006 4:42:38 PM

"But I don't think it's unreasonable to think that. After all, are there ANY teams that have even a remote chance of making the Finals in the East other than DET and MIA?"

Cleveland has a slim shot. Hughes gets back and clicks. LBJ is on track to raise his game a level at some point - why not this May? Z finds a groove at the right time. Detroit gets an injury and Miami never clicks.

It's not likely, but it's not unfeasible. Run the rest of this NBA season 100 times, and Cleveland will come out of the East at least once.

It's the same with the field for the title. Detroit gets an injury to any of the starting five. Miami never clicks. Duncan is gimpy. An easy path opens up for a team that finds its groove. And suddenly you're in the Finals. Then you just have to win one series you really shouldn't win.

Think about Detroit two years ago. Think about the Knicks about five years ago, although they couldn't win the Finals. There was a .500 Houston team that lost to the Celtics in the 80's. It's more than a hundred year storm.

Posted by: Petey | Feb 28, 2006 5:36:01 PM

"I think your ranking of Detroit 30 vs. Miami 15 seems fair enough, Petey, but I don't quite agree with your logic. ... I don't think the Heat are going to manage a whole lot better than that in the conference finals against Detroit."

The real logic is that Miami hasn't been taking the regular season seriously until now, and they'll be able to turn it and tune it up with the time remaining.

Remember that a Shaq/Wade team seemed clearly better than the Pistons last spring absent the leveler of injuries. The odds on Miami are high because they've had a lot of turnover and because the history of teams being able to turn it on late is spotty, but if they can produce as effective a team as last year's with a healthy Shaq and Wade, they should be able to take down Detroit. That's a big 'if', of course.

Posted by: Petey | Feb 28, 2006 5:43:01 PM

Think about the Knicks about five years ago, although they couldn't win the Finals. There was a .500 Houston team that lost to the Celtics in the 80's. It's more than a hundred year storm.

I thought we were talking about winning the championship, not just making the Finals. The only team to win the championship since 1980 that might not have been among the best five in the league was Houston '95, and of course they had won the championship the year before, so it wasn't exactly a fluke.

Posted by: Al | Feb 28, 2006 5:47:05 PM

If we're talking about betting, there's plenty of ways to make money on an underdog that makes it to the finals but loses -- you'll be able to sell back the futures for a profit before the finals start.

That's basically how I'm betting on Feingold for the '08 nomination.

Posted by: Neil the Ethical Werewolf | Feb 28, 2006 5:52:07 PM


leaving aside the impossible to predict yet possible season destroyers -- billups breaks his head, nash tears his achilles, whatever -- and the fairly easy to predict and possible season destroyers -- shaq falls apart again, duncan never gets over his foot problems -- the math's very hard to do because of the matchup issues. that is, while i think SA is better than dallas (with all sorts of caveats), i actually think detroit is less of a problem for dallas than SA. whereas, i think SA has fewer problems with miami than (e.g.) phoenix and perhaps dallas. the joy of dependent variables. and i also think indy is capable of taking detroit to the limit yet again, if not beating detroit if the pistons fall asleep again. put another way, i don't think flip magically transforms the pistons from a team that has trouble paying attention in the playoffs. if he does, however, the pistons may warrant their price. (regardless, i don't think markets can be wrong, so the pistons are worth what they're worth.)

Posted by: dj superflat | Feb 28, 2006 5:54:06 PM

"If we're talking about betting, there's plenty of ways to make money on an underdog that makes it to the finals but loses -- you'll be able to sell back the futures for a profit before the finals start."

Not to mention the fact that Tradesports has separate markets for conference champs...

---

The timing on Phoenix should be to sell on the eve of the West Finals. They have a very easy road to the final four, at which point they should be trading a bump above where they are today. If you can buy at 8 and can sell then at 14, considering how likely it is for them to get there, that's a nice play.

Posted by: Petey | Feb 28, 2006 6:20:18 PM

"Remember that a Shaq/Wade team seemed clearly better than the Pistons last spring absent the leveler of injuries."

I'm less bullish on the Heat, precisely because Shaq is past his prime, isn't in great condition and one can assume -- rightly or wrongly -- that he is a greater injury risk his competitors in the NBA over the next 30 games of the regular season and the, 10-14 games in the playoffs before they even reach the Pistons.

And the whole idea that Hughes comes back at full strength and be able to guard Arenas/Carter/Butler/Jefferson effectively after a week of tune-up games (if that)? Uh, no. Not going to happen. Cleveland has less of a chance of doing damage to Det/Mia than NJ, Washington or Indiana, imho.

Posted by: Chris R | Feb 28, 2006 6:20:23 PM

"I thought we were talking about winning the championship, not just making the Finals."

You're the one who brought up likelihoods of getting out of the East...

"The only team to win the championship since 1980 that might not have been among the best five in the league was Houston '95"

OK. That's a twenty five year storm, not a hundred year storm. 4 cents on the dollar.

And I think Detroit of two year's ago is a candidate as well. Wouldn't the betting public have rated at least five of the following six higher than the Pistons right after Rasheed arrived - LA, Minny, SA, Sacto, New Jersey, and Indy?

If Detroit counts, it's now a twelve year storm measuring from 1980. That's 8 cents on the dollar, not 1 or even 3.

And what if the 1980 - 2003 era is atypical, and Detroit's victory signaled a return to an era more like the 70's? One couldn't imagine a non-superstar team like Detroit ever winning in the 1980 - 2003 era. One can make a decent case that changes in the CBA and, more importantly, rule changes reducing the value of isolation play have created an era that could see left-field teams winning more frequently than in the 1980 - 2003 era.

Posted by: Petey | Feb 28, 2006 6:38:49 PM

I basically agree with Petey's assessment of the Pistons' run two years ago. As much of a fan as I was then, and now, I felt like they prevailed because they were the least injured team in teh playoffs. That, and a reputation for "tough defense" produced (perversely) a lot of questionable defensive calls going their way.

Posted by: DJ Ninja | Feb 28, 2006 6:55:36 PM

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