The Effect of Basketball Analytics Investment on National Basketball Association (NBA) Team Performance

In the National Basketball Association (NBA), basketball data and analytics is an area of significant financial investment for all 30 franchises, despite there being little quantitative evidence demonstrating analytics adoption actually improves team-level performance. This study seeks to measure the return on investment of analytics on NBA team success in a time of great demand for analytical front office personnel. Using a two-way fixed effects modeling approach, we identify the causal effect of analytics department headcounts on regular season wins using 12 years of season-level data for each team. We find a positive and statistically significant effect, suggesting clubs that invest more in analytics tend to outperform competitors when controlling for roster characteristics, injuries, difficulty of schedule, and team-specific and time-specific effects. This research contributes to the body of literature affirming the value of data analytics for organizational performance and supports current investments in analytics being made by NBA teams.