Does Spending In The NBA Get You Wins?

It's Sunday, May thirty first. The NBA Finals start Wednesday. It's the Knicks against the Spurs, which means it's New York City, population twenty million, the most famous arena in basketball, courtside seats going for two hundred and eighty thousand dollars a pair, against San Antonio, Texas, a city most Americans have thought about exactly once in their lives because of the Alamo. The Knicks haven't won a championship in fifty three years. The Spurs have won five since 1999. And the obvious narrative is "small market beats big market," except that's not really what's happening here, because the NBA has a salary cap, and the salary cap exists specifically to make market size irrelevant. So if the money is equalized, and every team can spend roughly the same amount on players, why are the Spurs in their seventh Finals while the Knicks spent most of this century being one of the worst teams in basketball? The answer has nothing to do with money. Which, if you think about it, is way more interesting. Real quick on how the NBA's salary cap works, because it matters for understanding why the Knicks' incompetence is so impressive. The NBA has what's called a soft salary cap, which this year sits around a hundred and forty one million dollars. "Soft" means teams can exceed it through various loopholes, the biggest being Bird rights, which let you re-sign your own players even if it puts you over the cap. The real financial wall is the luxury tax, a separate, higher threshold around a hundred and seventy million. Go above that line and you're paying a penalty, roughly a dollar fifty to four dollars in tax for every dollar you spend over. Go way over, and it gets punitive fast. Big market teams like the Knicks can afford the luxury tax because they generate more revenue from ticket sales, local TV deals, and sponsorships. The Knicks pull in about four hundred and forty three million in annual revenue, tops in the NBA, roughly forty million more than the Warriors. So in theory, they can outspend smaller teams by absorbing luxury tax penalties that a team in San Antonio or Memphis couldn't stomach. And they have. Since the luxury tax was instituted in 2002, the Knicks have been hit with the penalty eleven times. They have spent more on luxury tax than any team in the NBA this century. They have also, in that same stretch, had the worst overall record in the NBA. Let me say that again because I want to make sure it lands: the team that spent the most money won the fewest games. Over a twenty-plus year sample size. That's not bad luck. That's a system telling you that spending doesn't determine outcomes, and one franchise spending two decades proving it in the most expensive way possible. The Spurs' approach during their dynasty years was almost comically boring. Pop, which is what everyone calls Gregg Popovich (pah-PAH-vich) because his full name sounds like a Bond villain, coached the team for twenty six seasons. R.C. Buford ran the front office for most of that stretch. Peter Holt owned the team. The three of them stayed in sync for decades, which in a league where coaches get fired every two years and GMs last about as long, is practically unheard of. Their strategy was designed around one admission that most big-market teams refuse to make: we can't attract the best free agents. Nobody is choosing San Antonio over Miami or Los Angeles for the nightlife. So instead of competing in free agency, which is the basketball equivalent of a bidding war, the Spurs invested in two things that don't require a glamorous zip code: the draft and international scouting. Tim Duncan, drafted first overall in 1997. Tony Parker, drafted twenty eighth in 2001, a French point guard most teams passed on. Manu Ginobili (jee-NOH-bee-lee), drafted fifty seventh in 1999, which is basically the round where teams draft guys they don't expect to hear from again. Parker and Ginobili are both Hall of Famers. The Spurs found two of the best players of their generation at picks twenty eight and fifty seven, developed them in-house, and kept them for over a decade because they'd built a culture where players actually wanted to stay. Five championships in fifteen years, and they stayed under or near the luxury tax for most of it. Now they're doing it again with Victor Wembanyama (wem-ban-YAH-mah), a seven-foot-three French center they drafted first overall in 2023 who is, and I don't think this is an exaggeration, the most physically gifted basketball player who has ever lived. He's twenty one. He led the Spurs to a 62-20 record this year. Their coach, Mitch Johnson, is a longtime Popovich assistant who was promoted from within. Tim Duncan hangs around the practice facility. Ginobili is there. Popovich, who suffered a stroke in 2024, is there as president of basketball operations. One rookie described walking into the gym and seeing Duncan, Popovich, and Ginobili all in the same room and said "that's not something you'll see in any organization." The Spurs are running the same playbook they've been running for twenty five years: draft the best player available, surround him with smart role players, promote coaches from within, and build a culture so strong that it regenerates itself. If the salary cap makes spending roughly equal, and market size doesn't determine championships, then what does? The honest answer is boring and nobody wants to hear it: organizational decision-making. Drafting the right players. Hiring the right coaches and not firing them after two bad seasons. Building a front office with a coherent philosophy and giving it time to work. Avoiding the panic moves that feel decisive in the moment and look catastrophic three years later. The Knicks under James Dolan were a masterclass in what not to do. Dolan, who inherited the team from his father in 1999, was willing to spend unlimited money but had what Bloomberg described as "little to no idea of how to spend it effectively." He hired Isiah Thomas to run basketball operations. Thomas traded away draft picks, signed players to contracts that didn't match their talent, and was eventually fired after the team's record got worse and a sexual harassment lawsuit was filed against him. The Knicks were valued at 4.6 billion dollars and had the worst record in basketball. They sold out Madison Square Garden every night because it's New York and people will pay to watch basketball regardless of the product. The business succeeded while the team failed, which may be the most honest explanation for why bad teams in big markets stay bad: there's no financial incentive to get better when you're already the most valuable franchise in the league. The Spurs had the opposite incentive structure. In San Antonio, if you're bad, nobody shows up. There's no brand loyalty strong enough to fill an arena for a losing team in the twenty ninth largest TV market. The Spurs had to be good to survive, so they built an organization designed to be good, and they stuck with it through decades of not being sexy or famous or covered on ESPN every night. This is the part that applies beyond basketball, and it's the part I keep coming back to. The salary cap is supposed to create parity, and in terms of spending, it does. Every team has roughly the same budget. What the cap can't equalize is the quality of decisions. You can give two teams the same amount of money and one will build a dynasty and the other will pay luxury tax eleven times and have the worst record in the league. The resource that matters most isn't financial. It's organizational intelligence, and there's no cap on that. So if this comes up in conversation, here's how to think about it. The NBA Finals start Wednesday: Knicks versus Spurs, New York versus San Antonio, the biggest market versus one of the smallest. But the salary cap makes market size mostly irrelevant for roster building. The Knicks have spent the most luxury tax this century and won the fewest games. The Spurs stayed under the tax for most of their dynasty and won five championships. The difference isn't money. It's decision-making. The Spurs draft well, develop players internally, hire from within, and build a culture that sustains itself across generations of players. The Knicks spent two decades proving that you can be the most valuable franchise in basketball and still be the worst team, because no amount of spending fixes bad judgment. Game 1 is Wednesday in San Antonio. Courtside seats at MSG for Game 3 are going for nearly four thousand dollars. For that price, you'd better hope the basketball is worth watching. Stay informed, stay curious, and we'll see you tomorrow.