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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
Original Post

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

goose I assume the 6 yrs living expenses and college bills would be offset by 500k that represents half the bonus post tax dollars and the whatever income they pick up in the MILB, it is something in or around the 100k per year number. I am assuming they take online courses for the bulk of the general credits while in the milb and then do a full year or 2 after leaving baseball.

bonus at 18 yrs old - 2m post tax 1m

5 years of MILB and night school - 100k per year cost, one year of full time to finish degree, 100k.

Assets left from bonus - 500k plus accrued interest from investments and a degree.

it ain't bad and it is huge head start in life but still not life changing....it could be a life changing head start if you use it properly. Bottom line is that real money doesn't come until you hit arbitration.

You cant go to school and pro play baseball at the same time, although some may think you can.  

And no decent advisor will take all of whatever you have left and invest it, too much risk. So you really wont make much off of what they invest for you, only reinvest what you make from some investments. If you dont give it to an advisor, you will blow it. My son at 30 has to go discuss with his guy why he needs to have a transfer. Its all about objectives and the idea is to preserve what he has.  

If you have college debt and get drafted and get some decent money, you have to pay it off. Period.  If you get a sizeable bonus, sign.  Stop trying to figure out the numbers because it doesnt work. One can plan on reaching arbitration if you cant get past AA.

JMO from our own experience. 

 

 

 

TPM posted:

You cant go to school and pro play baseball at the same time, although some may think you can.  

And no decent advisor will take all of whatever you have left and invest it, too much risk. So you really wont make much off of what they invest for you, only reinvest what you make from some investments. If you dont give it to an advisor, you will blow it. My son at 30 has to go discuss with his guy why he needs to have a transfer. Its all about objectives and the idea is to preserve what he has.  

If you have college debt and get drafted and get some decent money, you have to pay it off. Period.  If you get a sizeable bonus, sign.  Stop trying to figure out the numbers because it doesnt work. One can plan on reaching arbitration if you cant get past AA.

JMO from our own experience. 

 

 

 

TMP you might be spot on in your experience however,

I do handle money for a living  and have been self employed for 25 years, budgets and high level non detail oriented thoughts and setting of objectives are my strengths, the details not so much - we may be on very similar page and just not aware of it.

"no decent advisor" is way to concrete of a statement. plus I never said 100% of the balance needed to be invested aggressively. money not spent, set a side in a long term financial plan even if it is part an emergency fund is part of investing.

I learned many years ago there is much money to made in places where other people fail to look. by following the pack you will tend just run up someone elses back side when the traffic stops.

I know several guys who have  gone to college online while in the minors, some of them are now money managers because they understand risk, another is in the MLB because he had enough talent, luck and hard work to make it. You are selling players short to think they can't study and make it to the MLB, that is just factually inaccurate.

RJM posted:

I wonder how many players turned pro and figured they could graduate in two fall semesters Then after being told to play in the AZL for two years or being told to be in a certain location for rehab were no further along academically.

Many, but probably about the same rate as non-athletes who stop school to work a year.

My son had no interest in attending college and went pro out of hs . He used his MLB scholar ship , got his Assoc. degree and worked towards Bachelor  degree while playing minor league ball . He left baseball and got the last few credits he need to graduate .                          I don't know who from his signing team helped him navigate the system , but they were very helpful even when he changed organizations .                                                      

 

 

I think many of the comments do not apply directly to many of the individuals involved.  When one starts talking about passing on a high academic school for MiLB and then describes what roadblocks present themselves to pursue that same level of academia after their career, they are referring to a select group of individuals.  If you bring the academic level down a notch or two, the discussion tends to even out somewhat.  Also, the discussion about $2 million bonus ending up at $500k seems a little drastic.  I would think one could still easily stash away $400k from a $1 million bonus after six years which would include a $1k (tax free) monthly stipend during the 72 months (that is wild money as everyone knows MiLB players can get by on their MiLB salaries and summer jobs).

If you want to be an engineer or a doctor, then the discussion of post-career schooling becomes exceptionally important.  If you want to enter the workforce with a good job, then there are many more opportunities at reasonable prices assuming you have some level of drive to achieve.  If I could waive a magic wand, I'd have my kid drafted, have him play several MLB seasons, maybe get the big contract, and then maybe then enter medical sales when they develop the artificial UCL, plug and play.  Lots of lunches and golf to go along with the MLB stories.

Points to the College Scholarship Plan (CSP) from an MLB publication detailing the program in 2016 that was given to us by MLB. (so, from the horses mouth).

  • Max number of semesters allowed is 8, max quarters/trimesters is 12
  • Covers accredited college/university or JC in pursuit if undergraduate degree
  • Does NOT cover trade, vocation or grad schools
  • Plan provides payments in two categories of expenses: Tuition Allowance & Living Allowance
  • Student can attend part time and still receive benefits
  • ALL CSP payments are taxable as "wages" for federal tax purposes.  This means that all payments are subject to income & employment tax withholding at the time of payment.  Player or school receives net amount after withholding
  • Participant must commence studies within two years after the date participant ceases to be reserved by a MLB club or MiLB club, voluntarily retires or is reserved on an inactive list, whichever comes first.

If a player chooses payments in the Incentive Bonus Plan, those payments are funded from the players CSP, so any payments are deducted from the CSP balance (and taxable at time of payment).  Basically, the incentive bonus plan is a way to make early withdrawals from CSP without attending school, so apply your TVM calculation and it makes sense to take the early draw and put in savings if you have the self discipline.

Everything you want to know and the most current info:  www.mlb.com/scholarship

NUKE83 - very informative link.

Did have a question about the Incentive Bonus Plan.  Reading it - it looks like, for some strange reason, the accrued bonuses get netted against the CSP plan, if the CSP plan gets tapped.  Not a huge amount of money ($2,500 if you do well before reaching MLB level), but does not read like an added benefit and certainly doesn't look like an avenue to tap CSP funds prior to attending college.

 

The example (from link) below is very confusing and would seem to indicate that the CSP money could be tapped before leaving MiLB service (while you are still playing?) in that the bonuses earned come after CSP funds are disbursed.

EXAMPLE: if a participant receives a $3,500 CSP payment and then subsequently earns (a) a $1,000 IBP bonus for being retained on the Active List of a Class AA Club, (b) a $1,500 IBP bonus for being retained on the Active List of a Class AAA Club, and (c) a $5,000 IBP bonus for being retained on the Active List of a Major League club, the $1,000 and $1,500 bonuses shall be reduced to zero and the $5,000 bonus shall be reduced to $4,000 ($5,000 minus $1,000).

Last edited by 2017LHPscrewball
2017LHPscrewball posted:

NUKE83 - very informative link.

Did have a question about the Incentive Bonus Plan.  Reading it - it looks like, for some strange reason, the accrued bonuses get netted against the CSP plan, if the CSP plan gets tapped.  Not a huge amount of money ($2,500 if you do well before reaching MLB level), but does not read like an added benefit and certainly doesn't look like an avenue to tap CSP funds prior to attending college.

 

The example (from link) below is very confusing and would seem to indicate that the CSP money could be tapped before leaving MiLB service (while you are still playing?) in that the bonuses earned come after CSP funds are disbursed.

EXAMPLE: if a participant receives a $3,500 CSP payment and then subsequently earns (a) a $1,000 IBP bonus for being retained on the Active List of a Class AA Club, (b) a $1,500 IBP bonus for being retained on the Active List of a Class AAA Club, and (c) a $5,000 IBP bonus for being retained on the Active List of a Major League club, the $1,000 and $1,500 bonuses shall be reduced to zero and the $5,000 bonus shall be reduced to $4,000 ($5,000 minus $1,000).

So I believe the CSP/IBP work in two directions.  First, the direction that you reference which indicates a player has already received benefit from CSP and then subsequently qualifies for IBP money.  That's the example you reference above.  In that example, I read it that it effectively zeros out the $3,500 payment drawn for CSP, so the first $2,500 in IBP (the $1k and the $1.5k payments aren't made to the player) and the $1000 balance already paid in CSP is subtracted from the $5k IBP which would give the player a $4k payment in IBP of the total $7,500 IBP earned.  It appears that they front load the payback of CSP earned in this case (since the CSP is a reimbursement and not forward paid).  So assume the total CSP is $100,000 for the player.  Rather than them saying that the player used $3,500 in CSP (balance of $96,500 remains), then $7,500 in IBP (balance of $89,000 remains), they basically pay out a total of $7,500 (total of IBP), but hold back the CSP portion so essentially the balance in CSP is at $92,500 and the player receives check for $4,000 IBP (so $7,500 total with the $3,500 already paid to him via CSP).  In the next example, theyamortize any IBP payments across all future tuition payments from CSP.

The other direction is that which is most frequently seen which is a player plays out his baseball career, perhaps takes advantage of IBP during that time, then qualifies and draws on the CSP. That example clearly states that all withdrawals for IBP are funded from the tuition portion of CSP.  One of the reps from the Commissioners Office confirmed with us that the CSP funds any IBP withdrawals.

If a participant becomes eligible to receive benefits under the College Scholarship Plan and has previously been paid benefits under the Incentive Bonus Plan, such Incentive Bonus Plan payments shall be deducted from any amounts due under the Tuition Allowance portion of the College Scholarship Plan. Any remaining balance, up to the cost of the player's actual expenses for that term, will be paid directly to the player or university.

EXAMPLE: if a participant's contract provides for a Tuition Allowance of $3,000 for each of eight Covered Semesters and, after attending college for four semesters, the participant receives an IBP payment of $5,000, the participant's Tuition Allowance for each of the four remaining Covered Semesters shall reduced by $1,250 ($5,000 divided by 4), to $1,750.

In a nutshell, they've taken something pretty simple and convoluted the hell out of it.

 

TPM posted:
Picked Off posted:

I think I remember hearing that less then 10% ever use the back to school college money after turning pro. ??

 

I know of only one college player who never finished college.  Not sure who falls into that 10%.

I was referring to HS drafts that had an agreement from drafting team to pay for college once pro days were over. Not drafts out of college.

It's been quite some time since I've posted however this is a timely topic (based our experience regarding the MLB Scholarship program) so I'll share my son's story...Jerseyson made the decision to sign directly out of high school for what he considered "serious" money, maybe not life changing by the standards that have been mentioned before.  With that said, he knew that if he didn't make it to the MLB that the money he signed for would not be enough to retire on however, he also looked at the signing bonus to be enough to give him a major head start after pro ball was done (compared to his non baseball playing piers that went to college right out of high school).

Here are a few deciding factors that he considered when making his decision...

  • He was ready to start pro ball...period.  The reality was he would have been going to college to play baseball first, get a degree second.  He was quite mature about the process and I thought he did a good job looking at the pro's can con's before passing on his scholarship (about 70%).  Trust me, I challenged him on all of this.
  • He had a few injuries in HS and I think it played on his mind that if he was hurt in college then it might limit his opportunity to play pro ball.  In hind site, his concern was founded...he lasted 6 years in the minors however there were probably only two season's during that time he wasn't ailing.  He decided to "retire" after fracturing a bone in his back (the second time) when his contract was up.
  • He knew he was drafted with a large enough signing bonus (over slot guy) that he would be someone that his signing team would nurture and develop vs. throwing him to the wolves.  Looking back on his first 3 years I feel they gave him every opportunity to develop and they protected him.  After year three he continued to struggle with injuries (and lack of consistant performance) so wasn't considered a "prospect" anymore but I can't say I blame them.
  • MLB Scholarship program...while going to college right out of HS wasn't the most important thing on his list, he did buy into the fact that he would need a degree down the road so it was a key piece that he/we negotiated.  He was able to secure enough scholarship money to cover the cost of a 4-year out of state school that also factored in inflation.  I got the feeling that because many players never used the scholarship money the signing team didn't think twice about meeting his request.  

 

Roll the tape forward 8 years from his HS graduation...my son has been out of pro baseball for two years (he’s been coaching HS baseball during the transition and loves it)...he just completed his degree in business this month.  Yes, it took him a bit longer than most, however all of his college cost were covered 100% by his MLB Scholarship (including money to cover his rent and then mortgage).  Was the scholarship money taxed, yes...however he has no college debt and at 27 he's ready to start his second career (with a nice nest egg left over from his signing bonus).

All of this is just to illustrate that going to college and playing pro ball at the same time can be done...he's not special.  He was just was realistic about things and prepared himself for life after baseball.  It's not a "one size fits all" decision...but it can be done.   Any yes, I'm pretty proud of the kid. :-)

Last edited by jerseydad
jerseydad posted:

 

All of this is just to illustrate that going to college and playing pro ball at the same time can be done...he's not special.  He was just was realistic about things and prepared himself for life after baseball.  It's not a "one size fits all" decision...but it can be done.   Any yes, I'm pretty proud of the kid. :-)

And that's how to use the plan. Superb!

JERSEYDAD - Thanks for coming back and posting a real life example of how this can work out.  I realize your son probably was very mature and had the necessary drive and that many might not.  But, for those that do, it is good to see where it can work out after chasing the dream.  I'd love to hear back in 3-4 years to see where he lands and what, if any, impact his baseball career has on his new business career.

2017LHPscrewball posted:

JERSEYDAD - Thanks for coming back and posting a real life example of how this can work out.  I realize your son probably was very mature and had the necessary drive and that many might not.  But, for those that do, it is good to see where it can work out after chasing the dream.  I'd love to hear back in 3-4 years to see where he lands and what, if any, impact his baseball career has on his new business career.

I think that we all have to remember that jeseydads son signed for a lot of money out f HS.  Approximately the same number my son may have signed for but he didnt and he got a huge scholarship. As jerseydad has said he walked away with a nest egg and a dgree and no debt.  Not everyone can accomplish that.

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