Pay and Performance in the National Football League: An Analysis of How Contract Type Affects Quarterback and Running Back Salaries

This paper studies the pay and performance of National Football League quarterbacks and running backs. Key to this analysis is the recently created performance metric nflWAR (Wins Above Replacement). My empirical method employs an ordinary least squares and fixed-effects regression of a salary function. I find that rookie quarterbacks earn 112 percent less than quarterbacks on extension contracts, while rookie running backs, free agent quarterbacks and free agent running backs earn 63 percent less than their extension counterparts. Further, my research concludes that the Scully three-step method—used to calculate monopsonistic exploitation ratios—cannot be implemented on NFL data. The NFL, because of revenue sharing and its16 game regular-season schedule, is fundamentally different from baseball and other team sports leagues