The contract was signed by Ruth, American League president Ban Johnson and Red Sox owner Harry Frazee, who famously agreed to sell Ruth to the New York Yankees in December 1919.
The $1.02 million winning bid Saturday night represents the highest price ever paid for a sports contract, surpassing the record previously held by the document that sent Ruth to the Yankees, which sold for $996,000 in 2005.
The New Jersey-based Goldin Auctions said the person who bought the contract wished to remain anonymous.
The auction took place at the Sports Legends Museum in Baltimore and was meant to coincide with the 100th anniversary of Ruth's major league debut this weekend.
A Babe Ruth bat from his early career sold for $215,000 and a signed ball sold for $96,000, but one of the most intriguing items up for auction -- the very first home run ball that Ruth hit at Yankee Stadium -- failed to sell. The auction company said the ball was retrieved by a construction worker in February 1923, when Ruth was called to the new stadium to test out its dimensions. But the ball failed to get the required $100,000 reserve.
Other Yankees items sold in the auction included a glove believed to have been used by Mickey Mantle in the mid-1960s ($180,000), a full set of ticket stubs from the clinching game of each of the Yankees' 27 championships ($58,000), and the bullpen phone used in 2013, from which came many calls for Mariano Rivera in his final season ($5,000).
Two notable championship rings sold in the auction: a Super Bowl VII ring from the 1972 Miami Dolphins' perfect season presented to a part-owner's son ($19,000), and the Super Bowl XXXV Ravens ring given to backup quarterback Tony Banks, which went for $36,000.
Mint Condition: Unique Ruth Treasures
Goldin Auctions founder Ken Goldin breaks down some of the Babe Ruth memorabilia, including one of his playing contracts, that his company has up for auction.