Submission Date

4-28-2025

Document Type

Paper

Department

Business & Economics

Adviser

Scott King

Committee Member

Jennifer VanGilder

Committee Member

Kelly Sorensen

Department Chair

Jennifer VanGilder

Project Description

This study investigates the economic and institutional factors that influence lengthening contracts in Major League Baseball. Using a dataset of 652 free agent position players that signed for two years or longer from 1991 to 2025, this paper explores how factors such as age, relative player performance, collective bargaining agreements, and risk management strategies affect contract length. Results from the regression model show that younger players that are higher performing are more likely to receive long-term deals. Additionally, those that are extended a qualifying offer also typically sign for longer term deals as suggested by the regression results. A separate shirking regression in the paper found no strong evidence that players participate in shirking behaviors in the form of decreased performance after signing a deal. This suggests that teams do not have to heavily consider shirking when offering these contracts. The results for a split regression for short- and long-term contracts indicated that the 2022 CBA has contributed to increased contract length for top of the market free agents. These results show how union agreements can potentially shape contract structures in professional sports. The study could be built upon with the incorporation of emerging data on player health and emerging projection models to better understand perceived risk for clubs in future contract negotiations.

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