This thesis investigates whether players in the National Hockey League overperform during the last year of their contract. This phenomenon is called the contract year phenomenon and suggests that players have financial incentives to perform better during this specific season. Previous research has shown evidence of this phenomenon in the National Basketball Association and some evidence in Major League Baseball. To investigate this we have used data from 6 season in the NHL between 2016 to 2022. A linear regression was conducted to identify the relationship between points per hour and contract year. A negative relationship between the variables were identified, probably due to the fact that worse players tend to sign shorter contracts, getting a contract year more often. When fixed effect regression was conducted to compare individual players with themselves over time, no significant relationship between the variables was observed, indicating that there is no evidence of the contract year phenomenon in the NHL. The non existing effect remains when looking at specific contract statuses and position in combination with the contract year variable.

Past work in sports economics has examined evidence of how the incentives created by contract structure influence player performance, specifically looking at two types of behavior. The contract year phenomenon refers to an increase in production in the final year of a player’s contract. The shirking effect refers to a reduction in performance in the early years of long-term contracts. While previous studies have investigated these effects separately, they are interrelated and should be integrated into a common analysis. I begin by testing for evidence of each effect independently, using various performance measures. I then combine my test of these phenomena into a single examination. Separate analysis produces weak evidence of a contract year phenomenon and strong evidence of a shirking effect. However, in the combined analysis, the contract year phenomenon drops out while the shirking effect persists. This suggests that the contract year phenomenon does not exist, and that evidence of it found in some previous studies may actually be due to a failure to incorporate the shirking effect in the analysis.

Thesis advisor: Michael Grubb / The contract renewal incentive effect is an economic topic that has been controversial in the National Basketball Association (NBA). This study investigates whether or not the performance and effort of NBA players tend to increase in contract years and decrease afterward. With the most recent data set, this paper evaluates performance and effort variables, conducts multiple linear regressions, and presents discussions related to the real world. The results conclude that based on the reality-based metric, performance decreases by approximately 1.3 points and 0.7 points in contract years and post-contract years, respectively, while effort persists at the same level. From the perspective of basketball fans, this surprising finding provides a reference when understanding the world of basketball. / Thesis (BA) — Boston College, 2023. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Departmental Honors. / Discipline: Economics.

The present study uses a novel measure of over performance (percent deviation from career average) to analyze the contract year phenomenon in the NBA. Historically, the literature has pointed toward over performance across almost all statistical measures of performance. However, previous research has assumed that all players are universally affected by the presence of a contract year in the same manner. The present study finds significant results that contradict previous research by dividing the sample of players into subgroups by age, career PER and position. Furthermore, the results of this paper’s statistical analysis illustrate the first examples of systematic underperformance in a contract year. More specifically, this study finds that for certain subsets of players, shooting percentage, usage percentage and field goal attempts decrease in the presence of a contract year.