Contract Year Phenomenon in the National Hockey League

Contract Year Phenomenon in the NHL addresses the issue of employee incentives by examining the performance of professional hockey players. The statistical book-keeping in hockey offers a unique opportunity for examining employee performance, something most business settings lack. By first examining how NHL general managers unevenly weight performance in the final year of a player's contract we create motive for shirking. We then individually regress each statistical category on itself, with a dummy variable for contract year, to determine if player performance is statistically different in the final year of a contract. Our findings challenge the current method in which general managers quantify the value of players. With these results a general manager would have the information to eliminate inefficiencies in the current method giving them an information advantage when evaluating free agents. They also suggest that a different contract structure would be more effective in maximizing a player's incentives; which, in turn would maximize their statistical output and give their team the best chance of success.