Using Monetary Value to Determine Replacement Level

Today, I have decided to try to find the Replacement Level for NBA players using the value of an individual win.  In an article written in November, Andres Alvarez of the Wages of Wins determined that the  players’ portion of the Basketball-Related Income under the former Collective Bargaining Agreement divided by the total number of wins equaled $1.7 million.  I will use that as my benchmark.

This is my formula for determining Replacement Level using monetary value:

Replacement Level=(rookie minimum/value of a win)/(500/48)

The second divisor was used as a variable.  My rationale is that 500 minutes should be the minimum sample size to obtain valuable data when looking at player results.  The division by 48 was necessary to keep the calculations on a per-48 minute basis.  The actual data was:

Replacement Level=(472,604/1,700,000)/(10.41667)

I would have carried out the result of 500/48 to more decimals if Excel had initially done so.  In the end, this method showed that the Replacement Level for an NBA player is 0.026745 Wins Per 48 minutes.  In the end, this should probably be round to either 0.025, 0.026, or 0.030.  In my future calculations, I will use 0.025.

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