NBA Contract Phenomenon: Performing When It Matters
Authors
Warlick, Jordan
McDonough, Sean
Issue Date
2021-05-07
Type
Presentation
Language
en_US
Keywords
Scholarship Sewanee 2021 , Economics , Contract , Contract Phenomenon
Alternative Title
Abstract
The contract year phenomenon is when professional athletes'-performances increase in their final year of a contract in hopes of securing another deal. In this paper we estimate the effect of a contract year on NBA players’ performances. Our data set is composed of 2,397 players from the 2012-2017 seasons. We measure performance by the player efficiency rating (PER), which is a per-minute rating that adds all the player’s positive accomplishments and subtracts the negative ones. When removing the outliers of superstars and players who did not play at least 40 games from a fixed effects regression model indicate that performance increases 2.83%. These results are statistically significant at all conventional levels. As a robustness check we added retirement into the regression and found that it had no effect on performance. However, when we include the outliers contract year it has no statistically significant effect on performance.
Description
Citation
Publisher
University of the South