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In his career at Lafayette, Thomas Bruggink, professor of economics and business, has involved a number of students in his research on the economics of professional sports. His research has been published in numerous academic journals and books and has been cited in many newspapers, including The Wall Street Journal and USA Today. In March 2003, Bruggink’s coauthored article with mathematics-economics major Colin Roosma ’01, “The Attendance Boost is Over-Rated for Interleague Baseball, and The Big Mac Attack is a Hit on the Road: All This and More from the Within-Season Demand Model for Major League Baseball,” was published by Journal of Business and Economics Research.
Bruggink also has mentored students in their own explorations of sports economics. For example, he guided economics and business major Christopher Turano ’04 (Clifton, N.J) in a yearlong honors research project on the possibility of contraction within Major League Baseball, which Turano presented in April at the 18th annual National Conference on Undergraduate Research.
The following account from the economics and business department describes Bruggink’s recent research on the link between free agency and player performance in professional baseball and basketball:
Javy Lopez is a fine catcher. In his first 11 seasons with the Atlanta Braves he had a .281 batting average and hit 15 home runs per season. In 2003 his performance improved markedly, batting .328 and belting 40 home runs. Did Lopez wait until the season prior to his eligibility as a free agent to have a “career” season? Lopez’s story has been repeated so often that many fans suspect that professional athletes expend extra effort in the season prior to free agency, which implies, of course, that they may be holding something back in other seasons.
Because providing peak effort toward some goal is laudable and provides both professional and personal rewards, we would expect to see outstanding performances when the correct incentives prevail. But even the most focused professional cannot continuously sustain the intense focus necessary to achieve optimal performance.
While the individual may revel in superlative acts, employers will distinguish between the exceptional from the expected, the outstanding from the repeatable. The employer is forced to ask whether the player’s recent accomplishment reflects a unique episode or whether it signals a fundamental and lasting improvement in productivity. Professional sports offer a laboratory to study the incentive effects of employee behavior when contracts are regularly renegotiated.
Every professional sport now allows for free agency, or the renegotiation of labor contracts after a predetermined number of years. During this period, athletes are allowed to sign with any team willing to offer them a contract. Entering into the last year of a contract may provide players with additional motivation to achieve. It provides the last opportunity for players to improve their statistics and show team owners that they merit a significant increase in compensation.
Owners, too, may face changed incentives with improvements in a player’s performance. If they fail to ink a contract with a markedly better player, they will miss an opportunity to improve their team and, perhaps more importantly, open themselves up to criticism from ticket-buying fans. Collaborating with two former students, Thom Bruggink, professor of economics and business, is investigating the free-agent bounce in performance in baseball and basketball.
In a study of professional basketball, Constantinos Yiannapoulos’99 and Bruggink studied the performance of 192 players with substantial playing time, including 54 players who would become free agents after the current season and 138 players who did not (the control group). With the exception of pending free agency, the free agents and the control group were similar, each with about 6.5 years of playing experience.
Employing multiple regression analysis, the study finds that, after controlling for years of experience, playing time, and position, pending free agents scored 0.82 more points and gathered 0.33 more rebounds per game compared to the control group. While these appear to be small improvements, both reflect an approximately 8 percent improvement in performance. It is notable how close the free-agency effect is to the classic 110 percent (effort) that athletes regularly comment on. The study also finds that pending free agency had no effect on assists per game, perhaps because pending free agents would rather shoot than pass.
The baseball study, written with Sarah Bellows’02, considered each player’s entire career rather than the year prior to free agency. To be included in the study, players needed to have declared free agency at some point during their first 10 years in the league and played long enough and often enough to have established a reliable basis for comparison.
Multiple regression results for 72 hitters reveal that position players hit modestly more doubles during their free-agent year, after controlling for years of experience and position. There was no free agent effect on home runs or batting average. Among 28 pitchers, the strikeout-to-walk ratio improved in the free agency season, but not earned-run average.
What does this mean for team owners and business managers? In the face of improved short-term performance, owner-employers must be wary in their evaluations. There may be a danger of placing too much emphasis on recent performance when it may represent an unsustainable and non-repeatable period of peak performance. Thus, in a market with competitive bidding, where emotions run high, there may a danger of placing too much weight on recent performance and overcompensating average players.