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Updated: November 13, 2009, 5:56 PM ET

Explaining Hollinger's Power Rankings

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By John Hollinger
ESPN Insider
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Editor's note: To see the Hollinger Power Rankings, click here.

By now, you might have noticed our daily version of power rankings is back up on ESPN.com's NBA page.

These rankings are based on a formula I devised, and they are updated every day, automatically.

I created these rankings to give a quick assessment of all 30 teams so far in the season, since sometimes the standings can be misleading in this department.

Here is some background to help you as you look through the rankings each day.

Scoring margin
One of my goals was to create a system that told us more about a team's quality than the standings do.

So instead of winning percentage, these rankings use points scored and points allowed, which are better indicators of a team's quality than wins and losses.

This might not sound right at first, but studies have shown scoring margin to be a better predictor of future success than a team's win-loss record. Thus, scoring margin is a more accurate sign of a team's quality.

That explains why, for instance, three seasons ago the Spurs ranked ahead of the Mavericks even though they had won nine fewer games -- San Antonio's scoring margin was superior. That ultimately proved to be prophetic, as Dallas lost in the first round of the playoffs while the Spurs won the championship.

Strength of schedule
Yes, this matters in the NBA, too. It is not as profound in the pro game as in the college game, because the 30 NBA teams are more evenly matched, but it still affects a team's results.

This comes into play mainly in the early part of the season, when there can be wide disparities in the quality of competition, but even at the end of the season, there will be differences among teams -- particularly when one conference is far better than the other.

Recent performance
Another key variable in the formula is recent performance, which I included for two reasons.

First, it stands to reason that more recent games are more valid indicators of how strong a team is currently.

Second, I wanted these rankings to follow the model of Marc Stein's "human" power rankings, on the site each Monday, in which a team's recent play is a huge factor.

To accomplish this, I weigh a team's full-season results by two-thirds and its most recent games by another one-third, so the overall ranking gives greater weight to recent games.

You're probably wondering at this point what I mean by "recent." It varies depending on where we are in the season.

For the first 40 games of the season, it means a team's past 10 games.

From that point forward, however, it means the most recent 25 percent of a team's schedule. The net result is that, after the first 40 games, a team's most recent 25 percent of its schedule will account for 40 percent of its ranking.

Home and road
The final variable here is home and road games.

In each game, a team's scoring margin is adjusted by the 3.5-point advantage we (and by "we," I mean the Vegas books, of course) expect the home team to have in a game between otherwise equal opponents.

This can have a large effect at certain points in the season for some teams, as their home and road numbers can get way out of line. This is particularly true for the two "circus/rodeo" teams -- Chicago and San Antonio -- who take at least one extended road trip every season because their arenas are being used for special events and thus end up with a big home-road disparity.

Caveats
Since this is an entirely automated ranking, you'll notice certain "human" factors missing.

It doesn't know which players are about to come back from injury or which teams have been playing without their best players for the past 10 games.

Along the same lines, it doesn't take into account injuries, trades, controversial calls or any other variables -- just the scores, please.

Nonetheless, it can be very useful because it allows us to see what the landscape looks like when we remove our usual filters.

We hope you enjoy our daily power rankings.

John Hollinger writes for ESPN Insider. To e-mail him, click here.