Free agency isn’t an entirely new concept to football, the Bosman ruling is almost 30 years old now, but it is certainly evolving with the times. The era of player empowerment, increased globalisation and changes in the economics of the game have meant that superstars are starting to wake up to the leverage they have in running down their contracts.
Part of that is from observing other sports leagues and even outside sports entirely. People in these fields are more used to free agency; they are more experienced with using their freedom of movement to maximise their value. As such neither teams nor players are coming into this blind. Others have been managing these situations for years now, and it has led to in-depth study of the psychology and economics of an athlete with an expiring contract. So, what does the research say?
Starting with football based research, Professor Bern Frick of Paderborn University has conducted studies into the relationship between contract stage, player performance and player remuneration. His work shows a considerable variation in performance across the length of a contract. The study has two major observations that pertain to the subject. The first is that the more time remaining on the contract, the poorer and more varied the performance of the player.
The second that performance will improve (statistically) and variance decrease during the final year of a player’s contract. Professor Frick states in his work: “I find robust evidence that player performance… increases in the last year of the contract. In addition, the variance in player performance is significantly lower in the last year of the contract.”
The research shows that players do indeed seem to get paid more in line with their final year performance than the previous years, which suggests it makes sense from a personal financial standpoint for the players to vary effort. This also implies teams are making decisions based upon this final year performance, rather than contextualising it within the player’s broader career. The studies do however call for greater and more detailed use of the statistical models developed to give a clearer picture of the situation.
Professor Frick’s statistical analysis also lines up with other work, like White II and Sheldon’s 2014 study “The contract year syndrome in the NBA and MLB: A classic undermining pattern”. This research for the University of Missouri-Columbia was similar to Professor Frick’s work in subject, but was based on the greater available data of basketball (NBA) and baseball (MLB) and analysed it’s results through a psychological lens, rather than an economic one. Their work was building and expanding upon previous research such as that of Berri and Krautmann 2007 and Helin 2012.
Their data turned out broadly similar to Frick’s as well; players’ statistical output increased during the final year of their contracts, and then dipped markedly in the first year of their subsequent contract. Yet again players were financially rewarded for their greater statistical output, and the teams found themselves with less than they bargained for. White II and Sheldon suggest that the extrinsic motivation of a new bumper contract gives players a boost over their normal intrinsic motivations, as well as nudging them into more “sellable” styles of play.
This last point is noticeable because of the increase in obvious performance like scoring, but limited variance in more subtle metrics of performance. Basketball players’ scoring increased by almost 5% in their contract years, but assists decreased by around 2%. This fits with their psychological model given the focus on individual performance and scoring when evaluating National Basketball Association athletes for new contracts
On top of which the works of Frick, White II & Sheldon, Helin and others are in line with other research into the Contract Year phenomenon outside of sports. The same trends are observed within the business world too. Most interestingly, the studies into CEOs up for renewal shows that people are commonly more interested in visible good, above long term prudence. Acts like aggressively slashing costs or manipulating the timing and style of news released about the business can make the company temporarily appear to be succeeding, therefore garnering the CEO a better contract, but can be negative for the long term health.
The weight of the research shows that the Contract Year phenomenon is a real thing. Therefore this uncertainty is a threat to teams’ squad building that must be accounted for. Stumping up big for a player who has just had a breakout year can often be a millstone the team carries for years. It can hamper multiple coaching administrations, several squads, affect team morale, and derail players’ careers.
When the Colorado Rockies baseball team signed Mike Hampton, the top pitcher in the market in 2001, they were confident he would continue the form that saw him win 37 games in his 2 prior years, with an 85% win rate and even come second in the National League’s Cy Young Award (the award given to the best pitcher) voting in 1999. This is why they gave Hampton an 8 year, $121 million dollar contract, at that time the largest sporting contract in history.
Yet in his first year in Denver, he was giving up almost twice as many runs as he had been previously, and had a winning percentage only a hair above 50%. A year later, they traded him to Miami, who instantly traded him to Atlanta. He won 42 total games over the remaining 8 years of his career. He had gone from 18 wins a year to 7.
This phenomenon extends outside of baseball. Mention Chandler Parsons to a Basketball fan or Albert Haynesworth to an American football fan and they’ll likely recoil or guffaw depending on their affiliation. It remains to be seen who will be the first true blockbuster flop in football. But teams will be hoping he’s not pulling on their jersey.
It is of course crucial to note that the other sports studied tend not to have transfer systems like football does. Free agency and trades are the most common forms of player movement in most American sports, and as such football teams must consider it slightly differently. The expense of transfer fees adds extra value to avoiding them entirely and signing a player directly. And to compound this complication is the subject of offloading a player afterwards. A player signed to a massive contract will not be keen to take a pay cut, and as such teams are limited in who can take a player deemed unnecessary of their hands.
The best course of affairs to avoid falling victim to the Contract Year boost is simply including it as a factor when scouting. Noticing the deviation from prior performance and accounting for it. Factoring the post-contract regression of players and how much the team can “afford” for them to regress into the calculation of value is essential. And they will have to be prudent when recruiting to do so. The data shows that teams will not avoid it entirely, it applies across all fields and demographics, so their goal must be simply damage limitation. The contract year phenomenon is like injuries. Inevitable and frustrating, but manageable with proper preparation.
