The contract year phenomenon: investigating the effect of contract uncertainty on NBA player performance

This article investigates whether NBA player performance is affected by their uncertain contract status. Although our regression results suggest a statistically insignificant change in four advanced metrics for regular season performance during a player’s contract year compared to his pre-contract year, we find that these measures of player performance dip significantly in the regular season following the contract year. On the other hand, player performance during the NBA postseason is unaffected by contract status. Our results provide evidence of shirking by NBA players during the regular season after signing a new contract, whereas the goal of winning a championship provides a strong incentive to always exert high effort during the playoffs.