Thanks to everyone for their constructive feedback to my first post.
In particular thanks to squeeky, I’ve made an adjustment to PERM where I scale it down if the total minutes played for the team exceeds the maximum 19,680 available in a season. This is labelled "Adjusted PERM" in the tables below.
I want to acknowledge blacknoiseNW, who has pointed out that a more complex version of PERM already exists in ESPN and is called "Value Added". I thought something like this had to have been out there but had not come across it in my searches.
Also a couple of you pointed out that the error of the predictive model was high and it was remiss of me to not publish the standard error statistics.
Well here is the ANOVA table output for a linear version of the regression. This was not the best fitting function but I was not able to produce the output table for the Power function that I used in my first post.
As you can see from the output table, the P value for the X variable (Adjusted PERM) is well below 0.01. From this we can conclude that it is statistically significant at a 99% significance level.
What I would like to do now is identify other significant variables to form a multiple regression that has a higher R-squared and lower standard error. I will report my results once firmed up and would welcome suggestions. My ideas so far include Coaches record, Strength of schedule, defensive ratings etc.
2013-14 Conference Rankings
Thanks to sabonis11 for suggesting a league wide ranking based on PERM. Here it is, split by conferences.
The teams with the most depth (eg Clippers, Brooklyn, Denver) marginally place above the teams with the better individual players (eg Miami, Oklahoma). One thing I’m playing around with is to get a Superstar variable into the equation to ensure teams like Miami and Oklahoma are more properly rated.
Charlotte and Golden State look like the real shockers. Charlotte looks way too high but they do have some surprisingly productive players in Kemba Walker, Gerald Henderson and now also Al Jefferson. Golden State is penalised for losing two productive players (Landry and Jack) in exchange for one star player (Iguodala). Also, Klay Thompson and Harrison Barnes only posted PERs last season of 12.7 and 11 respectively.
Other most notable teams placing above consensus expectations were Cleveland and Dallas. Cleveland is boosted by assigning Andrew Bynum’s 2011-12 productive season – but will he ever play to that level again?
Other teams placing below consensus expectations were Oklahoma City, Chicago and Atlanta. OKC has not replaced the productive Kevin Martin and is instead relying on Jeremy Lamb to step up after playing few minutes last season. Chicago is penalized because Derrick Rose’s last season played was only 39 games out of the 66 game 2011-12 season. They also miss the production of Nate Robinson and Marco Belinelli.
Despite the Blazers high PERM they only just make 8th in the loaded Western Conference.
Conference wise, it’s clear that the West continues to look stronger than the East based on this metric.