Tagged With "earnings"
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Draft or College?
I was asked how to determine whether a drafted player should go pro or take the collegiate route. Here's my response... Set aside the qualitative factors, and let's focus on the quantitative... Unless he's a top 20 out of College X, he will receive less money out of college vs. HS. You'll need to quantify the average yearly earnings from an X degree from College X. With that information, here are the variables: Size of net signing bonus (taking into account agency fees, taxes, etc.): X...
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Re: Draft or College?
Is signability really an issue with the very top talents? I mean commitment or not, who is going to turn down 2 millions if it gets offered to them? I would assume that signability is more an issue for mid second round or lower Kind of Talent with a strong commitment. If you are the 60th best Talent in the draft, commited to stanford and someone offers you 500K then signability will be an issue but if you are a top20 Overall type of Talent out of HS your stock is not going to get much higher...
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Re: Draft or College?
A very wise man named Jerry Ford once gave advice. If its about the money, go to college, if you dont care about what your bonus will be, then sign.
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Re: Draft or College?
I would think Brady Aiken and Jason Groome are both good examples of top talent players having signability issues (at amounts exceeding $2 million) based on their initial expectations. In Groome's case, I assume he was passed on by several teams for strategic reasons and once someone picked him, the assigned slot value was below his "minimum". I understand the Aiken situation is different, but his decision to not sign clearly demonstrates the path folks might take if they think they are...
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Re: Draft or College?
You have not configured "Uncle Sam" and the agents and the future of Wall Street. Bob
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Re: Draft or College?
Before I retired from being a financial planner, this was the kind of analysis I did and advised my 2010 son on when he was drafted out of HS. I came up with numbers and conclusions very similar. One factor I had that's not here is the amount/value of the paid educational benefit that's typically in an Milb contract and looking at scenarios where the player never exercises the benefit (which is all ready accounted for here) and when the player does exercise the benefit taking 4 years of...
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Re: Draft or College?
Oh, and. . . son went to school since he didn't quite get the target number we came to. The offer was close, but am proud that son stuck to his guns over the temptation to get some money like he's never seen before.
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Re: Draft or College?
Also not in the equation is the experience of college. You can only be a college student once in your lifetime and the experience should not be discounted. Also playing for a winning program and going through conference tournaments, Regionals and for the few lucky ones, a CWS experience is hard to put a price tag on.
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Re: Draft or College?
If you are interested in a career in Baseball as a coach, scout or front office person after your playing days are done, going pro seems to me a no-brainer. An exception might be playing in college for a legendary coach and being able to learn first hand from him.
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Re: Draft or College?
It's just such a personal decision, it's impossible to quantify because each person will weigh each variable differently. Its a decision which chooses one path and burns the other path - sure, you can go to college at any age (I did as an older student), but going to play baseball in college is not possible. And college baseball is likely the last time a kid will play for a team he will care about for the rest of his life. Most of my son's peers who were drafted out of HS didn't make MLB (7...
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Re: Draft or College?
I would take top 2 rounds Money, you can still go to college with that Money if you fail plus you have played pro ball which is a cool Thing. if you are a 9th rounder it would probably be smart to go to college because the Odds are stacked against you but I can still understand People chase their dream.
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Re: Draft or College?
Taxes are a distinct variable based on investment strategies and situation. And to refer to it as a variable is an understatement. Future of WS: it's consistent regardless of the strategy, i.e., it doesn't vary by strategy as it is an outside factor that hits any strategy in the same manner.
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Re: Draft or College?
$2MM or the chance to experience regionals+. That's part of the qualitative variables that are NOT a part of this quantitative analysis. Modeling out allows you to quantify the cost of taking the chance to attend regionals vs. taking the money. A gross bonus of $2MM is over $15MM after 35 years. So you have to ask is it worthwhile to give up $15MM at the age of 55 for the chance to go to a regional? Modeling future returns prevents blind decision making.
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Re: Draft or College?
1) It's not strictly an economic decision, but you better have those quantitative answers at hand so that you can make a well-rounded decision. 2) No doubt. And you may even become the CEO of a presidential campaign.
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Re: Draft or College?
Most college ball players dont experience Regionals. Not every program makes it there in a four year window. So I would not put Regionals into that equation. Also, not all players drafted in the first two rounds make it to the MLB. The only thing that is constant is the need to keep earning income. The bonus money in the first one and a half rounds of the draft is hard to replace, so I would not consider the draft out of high school unless we were sure of being selected in that window. Hard...
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Re: Draft or College?
Let's look at this from another angle. First, assume a player is not a "can't miss" 1st or 2nd round selection. (Those players have a chance to rocket through the system, and are handled a bit differently by organizations, when compared to most later picks.) Compare the rest of the HS picks career trajectories to the highly drafted college junior. Draft year (year 1): HS (18 yrs) player drafted and heads to complex ball; college player plays local ball in his summer before college. Year 2:...
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Re: Draft or College?
I know someone who was drafted in the 3rd round. Turned it down and had offers from every top program in the country. Played 3 years and was drafted in the 2nd round. He said that he was glad he did that for the experience and the maturity. He said that if he would have been starting in the minors as an 18 year old he would have had a different mentality. It also helped playing for team USA and all that experience. He now is on a MLB roster for the past 3 years. Last year the whole season.
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Re: Draft or College?
I think the concept of having $15MM socked away 35 years down the line is not the best approach in making this decision. For one thing, that $15MM will be worth a whole lot less than $15MM today. Besides, any kid who gets a $2MM bonus is probably not going to simply set it aside and not touch a dime. Not saying it gets blown, but a little nicer car (maybe a 2015 F150 instead of a 2005 Civic) and some nicer accommodations (maybe only 1 roommate instead of 3) early on and maybe some larger...
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Re: Draft or College?
The trouble with the stats showing the percentage of draftees making it to mlb, is the result is binary for each individual. This isn't like applying to a dozen schools in the hopes that you'll get in to one; you either make it or not and cannot bail to another employer until that initial contract is over. For some, its a great decison to sign out of HS, for others it would be a poor and life altering moment. Over the years, my thinking on this has become much less purely analytical and more...
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Re: Draft or College?
I suppose this is when someone points out the exceptions. Such as: Scooter Gennett. Only 5'10", not a projectable body, not enough arm strength to stick at SS (which he played in high school), drafted in the 16th Round. Decided to go pro, and has played 4 years of MLB so far. Yep, yep I know, for every Scooter Gennett type there are a few hundred players who don't make it. That is why they call it "chasing your dreams". It isn't "chasing a sure thing"
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Re: Draft or College?
I agree completely. And I would simply point out that good financial planning takes these kinds of things into account. It isn't just about the numbers.
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Re: Draft or College?
I think there are many kids that realize that college is not for them and get drafted in late rounds and forego college. I wouldnt suggest it, but college isnt for everyone. Many never graduate from college,not because they are ballplayer but because of many other reasons. For that reason I have to agree with Goosegg. The decision has many diferent variable and should be approached individually. Lots of factors that must be included in that very difficult decision.
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Re: Draft or College?
It also depends on how strong you are academically. Education is extremely important but not everyone is made for college. so if you are a 5th rounder that only gets 250K but you don't like School and you are not the smartest guy out there it still might be a good decision for you to go pro.
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Re: Draft or College?
Good discussion, keep the thread going..... my biggest issue is when College X is a very top top program. 2018 is committed to Vandy.... not your run of the mill program .... Where most players get drafted after 3 years... Some for the same money than they would have gotten if they had gone out of high school and some less, some even more. Playing in college and taking the risk of getting hurt? Playing in college and maturing and getting better then starting out in the minors at a higher...
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Re: Draft or College?
Yeah that would make the decision tougher. Vanderbilt is a special place, for sure. My 2021 is a long ways off before we'll know if he even plays Baseball beyond age 18, right now we're just getting him ready for High School ball, however he was joking around yesterday that if he had a choice between Minor League ball and playing for the U of Hawaii (his dream place right now) he said "I'd probably have to tell the pros to wait 3-4 years because I'm going to Hawaii!" I don't think he fully...
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Re: Draft or College?
I think this scenario is not fully appreciated. When the OP talks about "yearly earnings", there can be a very wide gap in that figure which, if taken at face value, could result in a huge range of values. Some kid who truly wants to go into coaching is going to come up with a number that is drastically different from some kid who is angling for a job at Goldman Sachs (to further leverage his parents/grandparents working relationships lets assume). Some kid who simply wants to coach will...
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Re: Draft or College?
Some readers of this topic may be missing an important element: For the most part, a HS player (especially position players) will NOT improve their draft status when going to college. In other words, they will go backwards in the draft relative to their draft position out of HS. This is true for many Juniors coming out, and even more so for Seniors coming out. There are exceptions, but for the majority this is the case.
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Re: Draft or College?
it depends on the life you want to gamble on if you don't make it. if you are just dumb, won't grad college, probably won't be a high level earner...the shot may be worth it. if you have true potential in the work place or an entrepreneurial spirit going direct to pros might be a terrible financial choice based on the long shot.
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Re: Draft or College?
One of the big issues on draft status is "signability". If the player is viewed as being not very "signable", then the player will be drafted (if at all) far back from where he would have been had he clearly been "signable." Then, when he goes on to college, he'll likely improve his position in the draft and often by quite a bit. But in terms of his draft position if he is fully signable out of HS, yes . . . almost always the player will go backwards in their draft position going to college...
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Re: Draft or College?
signability ..... if there's enough money I think most are signable. I still have a lot to learn about this draft stuff but for 2018 being RHP and his current projection, it would take a lot to pull him away from Vanderbilt. Not saying it could not be done. So what make you signable or not signable
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Re: Draft or College?
Signability is in the eye of the beholder. Using a generic 2017 as an example. Let's assume the family has a number in mind - $500k, but perhaps a little less if chosen by a select group of teams (maybe 2-3 dream teams). If he is clearly not a top 200 draft prospect in real, absolute terms, then he is probably not signable because no team is probably going to want to spend $500k - AND - they are not going to draft him later in hopes of offering up $300k (assume he is heading to a Top 20...
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Re: Draft or College?
Good question and one that's really difficult to put a finger on for anyone, including the drafting organizations. Factors include: the perceived commitment to a college program, amount of scholarship that is being offered, where a player is ranked for draft, how high a number the player might be asking for to not go to college, the players interest in a particular BB organization, etc. I'm sure there's more if I give it a little more thought. If your 2018 has a high interest in Vanderbilt...
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Re: Draft or College?
in the last years signability clearly seemed to be less of an issue almost all top 3 round players have signed in the last years. a top 30 talent almost always is drafted
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Re: Draft or College?
With the new draft rules, this seems to be because the organizations are making sure those they're looking at for those first three rounds are sure to sign (having a very high signability factor).
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Re: Draft or College?
Or perhaps more of an issue - assuming only players who are perceived to be signable get drafted in the early rounds.
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Re: Draft or College?
Interesting topic. College vs draft is a personal decision, the way the draft has changed, yes most players drafted in the first 3 rounds probably were so because they really wanted to become professionals and more than likely got what they wanted. The most money will always go to HS players and more than likely their commitment was to a power 5 program. In fact that decision was made to sign at these type of programs so that they could posture themselves for a better chance to receive a...
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Re: Draft or College?
Backdoorslider, TPM and others have made some great points. My son was in a similar spot with theirs. He had committed to LSU and was getting a lot of pro interest leading up to the 2015 draft. We had in home visits with multiple teams. Son and I talked about what it would take to buy him out of LSU. I knew deep down inside the number was a stretch, but I agreed with him. Selfishly, I didn't want my son going pro out of HS. I felt it was better to go to school and mature in his case, but I...
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Re: Draft or College?
Very good post younggun. Going through rehab in proball has been compared to ground hog day. It's not a fun experience, but being at school with your teammates, coaches fall football, getting your degree while rehabbing is far better than the other. My friends son just made the 40 man roster. He was a fifth year senior at Ohio State, drafting bonus was 10K. He is closer to 30 than 20. Not a prospect per say out of HS. So anything is possible. When all is said and done he has a degree. There...
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Re: Draft or College?
In the 2014 draft there was player A ... a lefty that was committed to Vandy and he took the 1.2 million ... now he's at advanced A ball. In the same class there is player B he's a RHP that passed on the draft and went to Vandy.... some say this player could be the 1 player drafted in the 2017 draft. This speaks to what TPM was saying. I feel once the 2018 draft is getting closer and the entire draft class is assessed, players will know more clearly what direction to take. While 2018 has two...
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Re: Draft or College?
It takes most players drafted out of HS 4 or 5 years to reach MLB, there are exceptions. A drafted player very high out of college can be in MLB within a year. This all depends on what the team has invested in a player. And of course the rules are different for pitchers vs position players.
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Re: Draft or College?
These two post are where me and my wife's heads are at in regards to our son. Sure we'd like that pay day, who wouldn't, but what's another three years. The only way I see my son going the MLB route is if he is a high round player signing for seven figures. That way I know they are going to have a vested interested in his development. But right now my son isn't a high round draft. And when you look at the resources the power five school he signed with are going to bring to the table to...