Playing for the Money: How Players Fare in Their Contract Years

by Jon Nichols

The NBA is a business.  It is a business for team owners, but it is also a business for the players.  The better a player performs, the more money he makes.  Contracts are based almost entirely on the most recent year.  Therefore, common sense tells us that players on the last year of their contract will raise the level of their play in order to receive more money in the future.  This questionable idea is suggested, if not assumed, by many people when discussing the reasons for breakout performances by certain players.  The case of Jerome James is frequently used as an example.

Is this common sense true?  Do players really save their best for contract years?  Do they really only care about getting paid?  I decided to perform a study to see if we can answer these questions.

Thanks to the salary database at USAToday.com, I was able to compile a list of all the players in their contract years since 2001.  The main statistic I used to judge player performance was PER.  For each player, I first looked at their PER during their contract year season.  PER, or Player Efficiency Rating, was developed by ESPN’s John Hollinger.  According to Hollinger, “Player Efficiency Rating is a rating of a player’s per-minute productivity.”  The league average is set at 15.  More information can be found here: http://www.alleyoop.com/prates.shtm.

Next, I calculated the average of the PER’s of the two seasons surrounding their contract year (before and after).  I then calculated the difference between their contract year PER and their surrounding years’ PER.

130 players were included in the study.  The study includes the 2001-2005 seasons (2006 was not used because we can not use the data from the current season, which is necessary to calculate the surrounding PER for 2006).  Players on 1-year contracts were excluded from the study.  I decided to do this because a majority of those players have very unreliable data, many times because of age.  Also, players whose contracts included a player option or team option after the season were not included.

So what does the data tell us?  On average, a player performs 0.595 PER points better in his contract year than the years before and after that season (for the statistically curious, the median is 0.6, so there are not too many outliers affecting the average).  This data is significant at the 1% level, indicating that there is clearly something going on.  In addition, players experience a decrease in PER of about 0.839 in the seasons following their contract year.

Although the data is statistically significant, is it substantial?  On average, a player performs about 5% better in his contract year in terms of PERe.  Player PER’s generally fluctuate more than that on a season-by-season basis.  Also, we must not forget that PER is only a summary of a player’s statistics.  The factors that cannot be measured (including many defensive ones) are not considered in this study.

In other words, we can say with a great deal of certainty that players, whether intentionally or not, perform better during their contract years.  On average, however, this difference is relatively small.  Basketball ability is still the most important factor, and players can only improve their level of play to a certain extent.  Don’t expect Luke Walton to become Michael Jordan just because he’s trying to get paid.

Below I included a few tables that might be of interest.  Although the data suggests that the improved performances in contract years aren’t usually substantial, you can see some cases where the difference clearly is a big deal.

 5 Best Contract Year Performances Player Year Contract Year PER Surrounding PER Difference Larry Hughes 2005 21.6 15.8 5.8 Eric Piatkowski 2003 16 11.25 4.75 Othella Harrington 2005 14.5 10.05 4.45 Rasual Butler 2004 14 9.9 4.1 Milt Palacio 2005 12.5 8.65 3.85
 5 Worst Contract Year Performances Player Year Contract Year PER Surrounding PER Difference DeSagana Diop 2005 6.3 10.95 -4.65 Steve Blake 2005 8.4 12.7 -4.3 Flip Murray 2005 9.9 13.45 -3.55 Charles Oakley 2002 6.6 9.95 -3.35 Kwame Brown 2005 10.4 13.7 -3.3
 5 Biggest New Contract Disappointments Player Year Contract Year PER Following PER Difference Larry Hughes 2006 21.6 14 7.6 Eric Piatkowski 2004 16 8.7 7.3 Donyell Marshall 2006 19.9 13.4 6.5 Rodney Rogers 2003 17 11.7 5.3 Brian Scalabrine 2006 11 5.9 5.1

Information from USAToday.com and basketball-reference.com was used in this study.