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National Hockey League guaranteed contracts: A principal agent problem impacting on performance

Landry, Jon, Edgar, David, Harris, John, Grant, K. (2015) National Hockey League guaranteed contracts: A principal agent problem impacting on performance. Management Research Review, 38 (12). 1306 -1330. ISSN 2040-8269. (doi:10.1108/MRR-06-2014-0146) (KAR id:52993)

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– This paper aims to investigate, through the lens of the principal–agent problem, the relationship between payment of National Hockey League (NHL) salaries and player performance during the period of 2005-2011 and explore the inherent issues within the NHL player compensation and incentive structure.


– This paper quantifies potential inefficiencies of NHL league contracts and defines the parameters of the principal–agent problem. It is identifies that player performance generally increases with salary, is higher in the first year of a contract and despite decreasing over the life of the contract, will usually peak again in the final year of the contract.

Practical implications

– Entry-level or first contracts are good for all teams and players because they provide incentive to perform and a reduction of risk to the team should a player not perform to expectations. The same can be said for players at the other end of the spectrum. Although not typically used much, performance bonuses for players over the age of 35 allow clubs to “take a chance” on a player and the player can benefit by reaching attainable bonuses. These findings therefore provide contributions to the practicing managers and coaches of NHL teams who can consider the results to help shape their approach to management of players and the planning of teams and succession planning for talent.

– The paper presents a comprehensive and current perspective of the principal–agent problem in NHL and extends the work of Purcell (2009) and Gannon (2009) in understanding player performance enhancement.

Item Type: Article
DOI/Identification number: 10.1108/MRR-06-2014-0146
Subjects: H Social Sciences > HB Economic Theory
Divisions: Divisions > Kent Business School - Division > Kent Business School (do not use)
Depositing User: Kevin Grant
Date Deposited: 09 Dec 2015 21:45 UTC
Last Modified: 16 Feb 2021 13:31 UTC
Resource URI: (The current URI for this page, for reference purposes)
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