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In a few recent threads discussing the college v. Pro paths, several posters have mentioned the MLB scholarship program.  I thought it may be productive to drill down a little and flesh out the nuances of the program. (I am not an expert, but have done some research - which is about 8 years old.)

First, for HS draftees and college kids with less than four years of schooling, the draft contract will have a scholarship component. For HS kids, money for college will be available at some time in the future which can be used to pay undergraduate college expenses. Likewise, for college kids who have less than four years of school.

Generally, baseball does not have large numbers of college grads in its ranks. I have been told that less than 20% of the amount MLB sets aside for the scholarship fund is ever used - so by their own historical actions, players do not finish school in time on MLB nickel.  This should demonstrate that even with a portion of costs covered (see below), players find it daunting to finish their degrees.

When Can The Money Be Accessed

Overall, there are time limits by which the MLB money can be tapped. As I understand it, the money MUST begin to be used no later than five years from leaving baseball. (It can be used earlier.) Once the money flow begins, there is a limited period of time the tap can remain open (maybe four years - but I am not sure).  There are various red tape issues which accompany the money - including timing of reimbursements, etc..

How much and What does the player get

The player can receive up to the amount set forth in the contract.  So, if your kid is expecting to attend a private school after retiring with a current price tag of 50k, make sure the private school amount is set forth in the contract (If not, State U costs will be the default).  

The MLB money is used for tuition fees and books and also contains a room and board component. BUT the room and board is pegged to the colleges cheapest options (e.g., the three to single room dorm rather then the single roommate dorm).

AND the amount received is fully taxable.

AND not indexed for inflation.

As a quick and dirty example, take a kid on 50% COA at Vandy (65k COA). Vandy scholarship is tax free 32.5k. Parents need to pony up remaining 32.5k. Over the next three years, parents pay roughly 100k. Kid is drafted and MLB picks up the last year somewhere in the future (note, if the kid doesn't have three full years of credits, MLB will only pay for a single year worth of credits,leaving kid/school/parents to cover any shortfall.)

Take the same kid who signs a pro contract out of HS and retires at 25. Vandy's COA has risen 20% over the seven years and is now 75k. Kid gets 65k (the original amount), taxes drop that to 40k ish. So, kid is 35k short and needs to make that up - and that assumes the kid is single and willing to live in the cheapest dorm; if the kid has picked up a wife and young family along the way, it's more difficult.

For some, say good bye to that academic college

For many kids, admissions standards were lowered when compared to the average non-athlete admit.  I know the local D1 baseball power's regular admits are 1200 (old two part SAT), baseball players magic number is 1000.  So, a kid who was admitted to this school with a 1100, would not have been admitted as a non-athlete.  This hidden mine can be huge!

Take that hypothetical kid from Vandy. If he heads off to the pros directly from HS, does he lose his spot at Vandy; in other words, how can he gain admission to Vandy when he retires?

We faced this problem.

S was recruited to a high academic D1 with scores and grades which matched the average of all admitted students. This is a type of school where your diploma gets you a head start in the real world.  BUT, without baseball there is no way he would have been admitted to any school which paid attention to great essays (his was not very good), community service, depth of passion in areas other than baseball, club presidencies, etc. - in short, he offered little to this school other than baseball.  In discussing the draft with scouts during home visits, we focused on the MLB program and ONLY after the draft did we explore the question "after he retires, where will he go to college?"

After the draft we called the college - which routinely defers admissions for up to two years for its admits - and were informed it would hold his spot in the class for two years and no longer! Quite a monkey wrench thrown into the works. Without going into details, it would have been very difficult (not impossible, but with no certainty of a favorable outcome) to have been able to matriculate. We decided the school was more important and he passed on signing.

(I read the story of the former pro player signed out of HS who is attending Penn. Great read and great story; but, the kid is an outlier. First, my son's college accepts no transfer students - and this kid began at another college and transferred to Penn. Second, as was pointed out in the article, ten years after HS, scores and grades aren't relevant to the school and luck, persistence, and a unique kid carried the day.  So, if your kid passes Stanford, Vandy, or any Ivy to go pro out of HS, recognize that the choice will not foreclose COLLEGE, it will just foreclose THAT COLLEGE.)

Do your homework - no one else will do it for you

The MLB scholarship program is a great PR success. Where else can such a small amount of money actually used (less than 20%) lend the impression that Pro players are merely deferring college rather than foregoing college (the opposite is true).

We found the scouts to NOT be great resources. Most didn't understand the grey areas and nuances (e.g., how long to get reimbursed, how much would be covered, etc.) and in general focused on other aspects of the decision. 

(Posters who have actually gone through the process - or whose kids didn't take advantage of the program, please chime in. I've tried to be accurate, but actual experience trumps my hypothetical analysis.)

Last edited by Goosegg
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Great post (as always) Goosegg.  Timely too.  My oldest is draft eligible this year and attends a high academic university.  This is all part of our conversation within the family as more scouts are in contact and we try to navigate what this all could potentially mean for the rest of his life.  Will be very interested to hear stories and experiences from other posters.

Goosegg posted:

In a few recent threads discussing the college v. Pro paths, several posters have mentioned the MLB scholarship program.  I thought it may be productive to drill down a little and flesh out the nuances of the program. (I am not an expert, but have done some research - which is about 8 years old.)

First, for HS draftees and college kids with less than four years of schooling, the draft contract will have a scholarship component. For HS kids, money for college will be available at some time in the future which can be used to pay undergraduate college expenses. Likewise, for college kids who have less than four years of school.

Generally, baseball does not have large numbers of college grads in its ranks. I have been told that less than 20% of the amount MLB sets aside for the scholarship fund is ever used - so by their own historical actions, players do not finish school in time on MLB nickel.  This should demonstrate that even with a portion of costs covered (see below), players find it daunting to finish their degrees.

When Can The Money Be Accessed

Overall, there are time limits by which the MLB money can be tapped. As I understand it, the money MUST begin to be used no later than five years from leaving baseball. (It can be used earlier.) Once the money flow begins, there is a limited period of time the tap can remain open (maybe four years - but I am not sure).  There are various red tape issues which accompany the money - including timing of reimbursements, etc..

How much and What does the player get

The player can receive up to the amount set forth in the contract.  So, if your kid is expecting to attend a private school after retiring with a current price tag of 50k, make sure the private school amount is set forth in the contract (If not, State U costs will be the default).  

The MLB money is used for tuition fees and books and also contains a room and board component. BUT the room and board is pegged to the colleges cheapest options (e.g., the three to single room dorm rather then the single roommate dorm).

AND the amount received is fully taxable.

AND not indexed for inflation.

As a quick and dirty example, take a kid on 50% COA at Vandy (65k COA). Vandy scholarship is tax free 32.5k. Parents need to pony up remaining 32.5k. Over the next three years, parents pay roughly 100k. Kid is drafted and MLB picks up the last year somewhere in the future (note, if the kid doesn't have three full years of credits, MLB will only pay for a single year worth of credits,leaving kid/school/parents to cover any shortfall.)

Take the same kid who signs a pro contract out of HS and retires at 25. Vandy's COA has risen 20% over the seven years and is now 75k. Kid gets 65k (the original amount), taxes drop that to 40k ish. So, kid is 35k short and needs to make that up - and that assumes the kid is single and willing to live in the cheapest dorm; if the kid has picked up a wife and young family along the way, it's more difficult.

For some, say good bye to that academic college

For many kids, admissions standards were lowered when compared to the average non-athlete admit.  I know the local D1 baseball power's regular admits are 1200 (old two part SAT), baseball players magic number is 1000.  So, a kid who was admitted to this school with a 1100, would not have been admitted as a non-athlete.  This hidden mine can be huge!

Take that hypothetical kid from Vandy. If he heads off to the pros directly from HS, does he lose his spot at Vandy; in other words, how can he gain admission to Vandy when he retires?

We faced this problem.

S was recruited to a high academic D1 with scores and grades which matched the average of all admitted students. This is a type of school where your diploma gets you a head start in the real world.  BUT, without baseball there is no way he would have been admitted to any school which paid attention to great essays (his was not very good), community service, depth of passion in areas other than baseball, club presidencies, etc. - in short, he offered little to this school other than baseball.  In discussing the draft with scouts during home visits, we focused on the MLB program and ONLY after the draft did we explore the question "after he retires, where will he go to college?"

After the draft we called the college - which routinely defers admissions for up to two years for its admits - and were informed it would hold his spot in the class for two years and no longer! Quite a monkey wrench thrown into the works. Without going into details, it would have been very difficult (not impossible, but with no certainty of a favorable outcome) to have been able to matriculate. We decided the school was more important and he passed on signing.

(I read the story of the former pro player signed out of HS who is attending Penn. Great read and great story; but, the kid is an outlier. First, my son's college accepts no transfer students - and this kid began at another college and transferred to Penn. Second, as was pointed out in the article, ten years after HS, scores and grades aren't relevant to the school and luck, persistence, and a unique kid carried the day.  So, if your kid passes Stanford, Vandy, or any Ivy to go pro out of HS, recognize that the choice will not foreclose COLLEGE, it will just foreclose THAT COLLEGE.)

Do your homework - no one else will do it for you

The MLB scholarship program is a great PR success. Where else can such a small amount of money actually used (less than 20%) lend the impression that Pro players are merely deferring college rather than foregoing college (the opposite is true).

We found the scouts to NOT be great resources. Most didn't understand the grey areas and nuances (e.g., how long to get reimbursed, how much would be covered, etc.) and in general focused on other aspects of the decision. 

(Posters who have actually gone through the process - or whose kids didn't take advantage of the program, please chime in. I've tried to be accurate, but actual experience trumps my hypothetical analysis.)

Great post-  I and some others on this board are preparing for this situation if son is fortunate enough to have to make a decision.    There are definitely some grey areas as you stated, and the scouts are NOT very versed in this.  I asked at a forum during the summer about indexing for inflation, and adjusting for taxes and I got blank stares from the area scouts hosting the forum.  HOWEVER, I was told by a very reliable contact I have in a high position within an MLB organization the following:  It's all negotiable.  He said typically his organization would roll over on the scholarship program as 1.  it does not count against bonus pool, and 2.  MLB covers a portion of the cost for the team.     So I think it comes down to how much you educate yourself and what you can negotiate- I would assume that includes the gross up for taxes, and the cost of inflation.     I have not had this conversation with advisor yet, but I intend to in the next couple of months.    I would welcome any information others have on this topic!

 

GOOSEGG, one of the best posts I've read in a long time.  One thing that I will add is that players that are drafted can, and do, negotiate away the scholarship option.  At least, that's what one of son's teammates parents swears he did.

The scholarship program also does not apply if your son signs as an undrafted free agent.  

On a related note, some schools have a scholarship program that will pay tuition, room and board to help former athletes complete their degrees.  After 4 years of baseball, son was one class short of completing his ME degree.  His school's program paid EVERYTHING, tuition, room, and board, for him to come back and complete that final semester/class.   (He took a "full time" schedule, even though he only needed the one class.)

 

 

Very, very good and timely topic.

Hope you dont mind my adding.  The scholarship program MUST  begin if the player has not been in affiliated ball for 2 years. Always has been that way. There is also a time limit on completion which I think is no longer than 5 years. So if one for goes college one cannot actually begin until they are done playing.  Many do attend online programs as they are playing. Expensive.

In sons case a team wanting to draft him would not give him what his out of state program was giving as a scholarship.  Granted, if he were a higher prospect, maybe they would have. That played a big part in going to play at Clemson.

The MLB scholarship plan is negotiable. As a drafted junior out of college he negotiated remaining semester tuition at the current amount upon returning.   No room and board. Also keep in mind for college drafted players who went out of state, one has to return to that program or they will lose credits upon transfer. My son was out so long they didnt even have the classes he needed for his major, but they made substitutions and that would have never worked somewhere else.

As noted, reimbursement is a tedious process. DK, like MTHs son, was lucky he was returning to a school where they wanted athletes to graduate so they paid for his remaining credits (online in summer) and when he began fall classes he received monthly stipend to help with room and board. The head of that program who helps in reimbursement  couldnt believe how difficult it was dealing with his drafting team. 

And most of all, being 30 sitting in class with  those much younger just isnt all that fun. Som wss lucky he got to go to the ballfield after classes or he would have gone mad with boredom.

I suggest the same as Goosegg, DO YOUR HOMEWORK. Ask to see the plan before any decision is made, of course it all depends on who, what and where you are drafted. Most advice doesnt refer to very top picks who will not have to worry about their signing bonus disappearing.  

And scouts are supposed to give you a copy of the plan if requested.  

 

Last edited by TPM

Son's college team has drafted players come back in the fall semesters to work on completing their degrees while still playing pro ball.  They are good roll models.

I met a young man who opted to not go to college (and not going to the CWS one year) and instead take "life changing money".  Recently retired from baseball with a new wife and baby, his choices for college were Harvard, Penn, or William & Mary.  He had a pretty good "hook" to get in lol, but he must have been (and still) incredibly smart.   

keewart posted:

Son's college team has drafted players come back in the fall semesters to work on completing their degrees while still playing pro ball.  They are good roll models.

I met a young man who opted to not go to college (and not going to the CWS one year) and instead take "life changing money".  Recently retired from baseball with a new wife and baby, his choices for college were Harvard, Penn, or William & Mary.  He had a pretty good "hook" to get in lol, but he must have been (and still) incredibly smart.   

I know one who skipped college, got what some on here would consider life changing money, runs a small travel program....college isn't for everyone but then again life wins aren't either. it seems to me if you aren't getting more then 2m signing bonus go to school.

Last edited by old_school
old_school posted:
keewart posted:

Son's college team has drafted players come back in the fall semesters to work on completing their degrees while still playing pro ball.  They are good roll models.

I met a young man who opted to not go to college (and not going to the CWS one year) and instead take "life changing money".  Recently retired from baseball with a new wife and baby, his choices for college were Harvard, Penn, or William & Mary.  He had a pretty good "hook" to get in lol, but he must have been (and still) incredibly smart.   

I know one who skipped college, got what some on here would consider life changing money, runs a small travel program....college isn't for everyone but then again life wins aren't either. it seems to me if you aren't getting more then 2m signing bonus go to school.

Do you mind me asking what is life changing money?

TPM posted:
old_school posted:
keewart posted:

Son's college team has drafted players come back in the fall semesters to work on completing their degrees while still playing pro ball.  They are good roll models.

I met a young man who opted to not go to college (and not going to the CWS one year) and instead take "life changing money".  Recently retired from baseball with a new wife and baby, his choices for college were Harvard, Penn, or William & Mary.  He had a pretty good "hook" to get in lol, but he must have been (and still) incredibly smart.   

I know one who skipped college, got what some on here would consider life changing money, runs a small travel program....college isn't for everyone but then again life wins aren't either. it seems to me if you aren't getting more then 2m signing bonus go to school.

Do you mind me asking what is life changing money?

somewhere around 2m would be the minimum IMO, I guess it depends on what your life goals are.

2m after taxes are close to 1m, give yourself 6 years of minors and college before you pull the plug on  baseball career. That would leave a 24 or 25 yr old with a college degree somewhere around 500k in the asset category...that would be potentially life changing assuming they are smart with the money, and that is a very very long way from a sure thing.

if you want to argue 1m is life changing fair enough but I wouldn't agree with you. at the end of 6 years you would be closer to a college degree with no savings, certainly not the end of the world but not life changing and you would have lost/sold the college experience.

I heard that. Also heard that he had to give up part of his bonus money, is that true.

Either way, he will get an education!

BTW, the phrase,  "he can always go back to school", really doesnt apply sometimes.  Its pretty tough to get motivated after being away from the classroom, a wife and kids to take care of if you didnt make enough to save.

 

TPM posted:

I heard that. Also heard that he had to give up part of his bonus money, is that true.

Either way, he will get an education!

BTW, the phrase,  "he can always go back to school", really doesnt apply sometimes.  Its pretty tough to get motivated after being away from the classroom, a wife and kids to take care of if you didnt make enough to save.

 

Very true, it is hard to go back.  Plus, some kids are college material that have the brains and drive to succeed, and some kids really aren't well suited for college.  I think the last statistic was only 65% of High School Seniors immediately enroll into college.  College just isn't for everyone.

TPM posted:

I heard that. Also heard that he had to give up part of his bonus money, is that true.

Either way, he will get an education!

BTW, the phrase,  "he can always go back to school", really doesnt apply sometimes.  Its pretty tough to get motivated after being away from the classroom, a wife and kids to take care of if you didnt make enough to save.

 

I would think that his original contract would have run its course, doesn't the first contract obligate the player for 7 seasons? Drafted and signed in 2010, 2016 should have been last year he was under contract. If so he should not be required to pay back any bonus money? 

Goosegg - Excellent post.  I remember brain-storming this topic with you eight years ago (prior to our sons headed to college), and thinking to myself that this is way too complicated for a simple man like me.  My impression is MLB designed it to be exactly that...overly complicated and a marketing coup.  This program was never a consideration for my son, although he did have a couple teammates get drafted their junior years.  Each one of those drafted former teammates came back (almost) immediately to finish their degrees. 

The program itself requires an incredible understanding of its financial mechanics, terms and conditions, and negotiation with the teams.  I think you've done a great job of bringing this issue to the surface for our readers.  A tip of the cap to you.  Well done.

mmm1531 posted:
TPM posted:

I heard that. Also heard that he had to give up part of his bonus money, is that true.

Either way, he will get an education!

BTW, the phrase,  "he can always go back to school", really doesnt apply sometimes.  Its pretty tough to get motivated after being away from the classroom, a wife and kids to take care of if you didnt make enough to save.

 

I would think that his original contract would have run its course, doesn't the first contract obligate the player for 7 seasons? Drafted and signed in 2010, 2016 should have been last year he was under contract. If so he should not be required to pay back any bonus money? 

Yes, 6 seasons is over!

Probably should have gone to play football as this probably is where his passion lies. Probably after being sent to the Yankees it was over for him and wanted out.

 

Last edited by TPM

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