Document Type

Thesis - Open Access

Award Date

2016

Degree Name

Master of Science (MS)

Department / School

Economics

First Advisor

George Langelett

Keywords

basketball, free agency, NBA, sports, unrestricted, utility

Abstract

Observably, free agents in the National Basketball Association often make misguided decisions during the free agency period. These decisions may have a direct effect on a player’s performance and salary, affecting their overall utility. Research exists confirming that moving through free agency leads to an effect on player performance, but no study has explored the effect of changing teams through free agency on a player’s salary. As a significant number of players enter this market every year, research on this area is crucially important. The null hypothesis for performance is: H0: moving to a different team through free agency leads to a decrease in player performance. The hypothesis for a player’s salary is that moving to a different team through free agency will lead to an increase in the magnitude on a player’s contract. Ordinary Least Squares regressions were used to test these hypotheses for two datasets. The main findings of this study are that players who re-sign with the team they played for in the previous year (in free agency) will earn an estimated $494,723.60 more on average over the next two years of their contract while performing slightly worse (an average decrease in performance of 4.36%). With an awareness of the potential drop in performance, players who choose in free agency to re-sign could increase their utility by earning a larger salary.

Library of Congress Subject Headings

Free agents (Sports)

Basketball players -- Salaries, etc

Basketball -- Economic aspects

National Basketball Association

Description

Includes bibliographical references (pages 108-111)

Format

application/pdf

Number of Pages

120

Publisher

South Dakota State University

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Rights Statement

In Copyright