Better to Sign out of HS or College? Part 1

With the advent of the August 15th signing deadline, an increasing amount of attention each summer is devoted to which players choose to sign professional contracts and which high school players decide to go to college. With hundreds of thousands of dollars- and sometimes millions- hanging in the balance, the decision of whether to sign or go to college is a monumental one for players and their families. Not only do players have to choose between realizing the dream of playing professional baseball or going to college- two good options to be sure- there is also a pressure to get the best deal possible. The stark reality is that for many players the bonus they receive after signing is the most money they will ever get from playing the game of baseball, so it’s important to get the best deal possible.

In this study, I tried to answer whether players are better off financially by signing out of high school or going to college. In trying to answer this question, I was forced to make several assumptions, and, in some cases, engage in some flat-out guesswork. Therefore, the findings that follow need to be taken with the methodological shortcomings in mind. In this post and the ones to follow, I’ll provide an outline of my methodology along with the results. I’ll let you be the judge of whether or not there is simply too much guesswork to draw a meaningful conclusion. If nothing else, the study should provide a solid groundwork for the types of issues that need to be dealt with in the future.

I looked at all of the players drafted out of high school in the first 45 rounds of the 2003-2007 drafts who chose not to sign (a total of 1,341 players), and compared the round they were taken out of HS to the round they were first taken out of college (e.g., Matt LaPorta is recorded as being drafted in the 14th round of the 2006 draft even though the Brewers took him in the first round of the 2007 draft after he returned to college for his senior season). LaPorta was a notable exception. For most players, recording the first year they were drafted did not drastically alter the analysis.

Some of you might have noticed that including the 2007 draft in the sample creates a small problem. Players drafted out of high school in 2007 have not yet graduated, thus players who were not picked after their junior season (the 2010 draft) are recorded as going undrafted, although several of these players will likely be drafted following their senior season (the 2011 draft). I’m not particularly worried about this, as players drafted as college seniors- especially those not drafted as juniors- typically receive very small bonuses, so including 2007 draftees in the analysis should not have a notable effect on the overall results.

To estimate the bonus a player coming out of HS was likely offered, I calculated the average bonus given out to high school players for each round in the last two drafts. Unfortunately, the samples were small enough that the data was not representative of what a typical player was offered in each round. For example, players in the 6th round averaged a bonus of $508,000 compared to $458,000 for players drafted in the 4th round. Furthermore, there was very little data beyond the first ten rounds.

To smooth the data and create an estimate for bonuses outside the first ten rounds, I put two power-law trendlines through the data. One through all 16 rounds of bonus data I collected and one through only the first ten rounds. Due to the fact that there was likely a selection bias in the bonus data I collected- players who signed may have been offered more money than the average player in that round- the trendline through the entire data set likely overestimated bonuses in the later rounds, while the trendline through only the first ten rounds likely underestimated bonus totals in the later rounds. To overcome the problem I simply used the observed bonus averages for first rounds (where there were few unsigned players and large enough samples to provide a realistic estimate), and then an average of the two trendlines beyond the tenth round.

It’s worth noting that I don’t believe that potential bias made the data unusable, there are plenty of players like Scott Frazier (5th Round Phillies), Kevin Gausman (6th Round Dodgers), and Austin Wilson (12th Round Cardinals) who all turned down a lot of money to go to college in the past draft.

With larger samples and no selection bias to worry about, calculating bonuses for players drafted out of college was much easier. For the first ten rounds, when the samples were large, I used the average bonuses from 2009 and 2010. From the 11th round on, I used the average of the trendlines derived from the total data set and only the first ten rounds (as outlined above).

Below is the model I created to predict average bonus offered by round (click on the image to see a readable version).

With estimates of the average bonus offered to both HS and college draftees by round, I was able to estimate both what players likely turned down out of high school and what they were offered out of college. Because so few players went unsigned in the early rounds, I grouped players drafted in the 2nd and 3rd rounds, 4th and 5th, 6th through 8th, and 9th and 10th together to create larger sample sizes. Beyond the tenth round I analyzed groups of five rounds together (e.g., 21-25).

The results- which you can see below- were surprising. Except for players drafted in the 4th and 5th rounds (which was likely the product of a small sample size), every group of draftees received a higher mean bonus out of college. For some groups of players, the difference was significant. Players drafted in the 11th through 20th rounds received an average bonus of close to $250,000 more after going to college than what they were likely offered out of HS, an increase of close to 250 percent!

Click below for a full listing of the results.

Interestingly, despite receiving more money out of college, in every single group, players were drafted, on average, in a later round out of college than they were in HS. These two seemingly conflicting findings can be explained by the fact that the distribution of bonuses forms a power-law distribution. Players drafted in the first round receive millions of dollars, while college players drafted in rounds 8-10 often receive less than $100,000. The result of this very uneven distribution is that getting even one or two players into the first round more than compensates for many players going in the later rounds or even undrafted. Thus, while a player who decides not to sign out of high school receives, on a average, a higher bonus out of college, chances are that the player will actually go in a later round.

Below is a more visual way to interpret the data. The blue line is an estimate of the bonus a high school player would receive in a given round, and the red line is an estimate of what a player drafted in that round would receive after going to college.

By only looking at bonuses, the data suggests that going to college may be in a player’s best interest. However, as we’ll see over the next couple of days, there are other aspects that need to be considered.




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19 Responses to “Better to Sign out of HS or College? Part 1”

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  1. Kevin says:

    Your estimated bonus thing doesn’t work, IMO. Players getting big bonuses out of college likely went to college in part because their bonus demands or signability caused them to slide in the draft out of HS. So a HS guy who wants 3 million dollars, if teams don’t take him in the first round he’s going to slide until a team takes a flyer on him late. So now you’re comparing an estimated bonus offer of, say, $133,916 (13th round by your estimate) to an actual bonus that’s much higher, even though they could have gotten that money (possibly more, say if he threw $3M out but then said maybe he’ll sign for $1.5M) out of HS.

    Am I interpreting things wrong?

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    • Yirmiyahu says:

      Yeah. The problem is that the methodology assumes that draft position correlates to talent or signing bonus. It doesn’t.

      The correct analysis would be to compare what a player turned down after HS to what he ultimately signed for out of college.

      Also: I assume that draftees who refused to sign out of HS, and then went undrafted out of college, were assigned a $0 bonus, for purposes of this study? If not, that’s a huge methodological flaw.

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      • I’m really trying to estimate the median bonus for players from each round. As I’ll discuss in the final installment, there are certainly players who slip because of signability, as you mention, so the model is not as applicable to those few.

        Yes, players who were not drafted were entered as having received a bonus of $0.

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  2. Joeiq says:

    I hope one or your aspects is getting to the big leagues sooner, getting to arbitration sooner, etc.

    But I guess there is also the money you get paid as a minor leaguer. I have no idea what that is though.

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    • Nate says:

      Minor league salary is minimal, your bonus is infinitely more important to the decision.

      Back to the article, comparing bonuses between HS and college is not relevant. What is relevant is the relative value of the bonus and the monetary value of the college scholarship.

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  3. nicholj says:

    Great analysis – particularly prescient is your observation that the few players with greatly improve their draft stock during college offsets the many who do not. Was any thought given to inflation as part reason for the increase? Since bonuses paid rises year-to-year, how much of the increased of salary following college is merely the result of annual bonus inflation.

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  4. Millsy says:

    You might want to check out an academic paper by Winfree and Molitor that looks at this issue. The general finding is that if a player is going to be drafted before the 10th to 12th round, then they should take the contract out of high school. For those drafted later than this, the expected value is higher for heading off to college and getting redrafted.

    The study includes expected lifetime earnings for the player and how that increases with the college education as well. Here is a link (may be gated, but if you’re going to do this analysis, I suggest reading it):

    http://jse.sagepub.com/content/8/4/378.abstract

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    • Blue says:

      That’s basically the result I would expect.

      You see a shade of it even in the table above for the kids drafted in the 4th or 5th round.

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  5. dangnewt says:

    Looking forward to the rest of the posts. Personally, had I been in that position of being intelligent enough to go to college and talented enough to be worth a 6-figure bonus from MLB out of high school; my own breakpoint would have been to take the bonus if it was enough to pay for college (these days $200,000). You get better coaching in the pros and your coach is compensated on how many major-leaguers he produces not how many wins or revenue he generates for the school. For pitchers especially, I would worry about my college coach’s interests being aligned with mine.

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    • CircleChange11 says:

      A standard feature of a pro contract is for the professional team to pay for your college education following the end of your baseball career. Few take advantage of this option, but it’s there.

      So, take the pro contract and get a “4 to 5-year college scholarship” as a perk. Furthermore, it’s a multi-year scholarship, unlike the “1-year scholarship” the college is offering, which can be removed at the coach’s discretion regardless of academic performance.

      Why would you say that you get better coaching in the pros? There’s more players per coach, less contact with the coach, and the coach has far less influence/control over the player.

      In college, you’ll work with the coach during the fall, winter , and in the spring (and perhaps even over the summer).

      I would worry about my college coach’s interests being aligned with mine.

      I was thinking just the opposite. The professional coach/manager is probably far more concerned with his own promotion. My feeling is that college coaches are more “long term” in their thinking (same job, same school) than are professional coaches.

      I’ve had 6 friends play professionally. They left college early to go pro. They all said they wished they had stayed in college. If you want to be part of a brotherhood and close-knoit group, go play college baseball. Everyone is pretty much on the same page and pulling for each other to reach team goals.

      If you’re the “F— this team, I’m getting mine.” type of player. Go pro. It’s made for you. The guy that just patted you on the butt and said “Get the big hit, we know you can do it” is hoping you strike out so he can start next game. The same guy in college is hoping you really do get a hit, because he knows he’s not going pro, so a team accomplishment is his legacy.

      If you’re the type of player that would rather tell a coach to screw off than to listen to his bland, generic advice … then go pro. The player is more important than the coach at that level, and the coach’s only real job is to report to the manager whether you got in your swings/work or not. A college coach is going to expect that you listen, and has some influence over your playing time.

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      • UZR is a Joke says:

        Not only are the scholarships a year deal, there are also very few scholarships available. Each NCAA DI team is only allowed 11.7 scholarships. You have to be a rare talent to even get a full ride baseball scholarship, then maintain production/avoid injury to keep it year to year.

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      • cs3 says:

        ================================
        “Why would you say that you get better coaching in the pros? There’s more players per coach, less contact with the coach, and the coach has far less influence/control over the player.

        In college, you’ll work with the coach during the fall, winter , and in the spring (and perhaps even over the summer). ”
        ================================

        CC –
        usually i agree with your posts bc they are generally well thought out. But in this case i just cant see how anyone would believe the statement you proposed.
        Do you really think college baseball players spend more time playing baseball, than professionals? dont you think most pros play basically year round?
        And as far as the quality of coaching is concerned, I dont believe that college coaches teach more baseball skill than pro coaches. No doubt they offer more in terms of “life’ coaching, but as far as identifying and polishing talent, i dont think its even really close.

        Perhaps your opinion was mostly based on the fact that all your friends had poor experiences (maybe unsuccessful?) in pro ball?

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  6. Phantom Stranger says:

    You also have to factor in the difference between being a pitching prospect and position player. Good pitchers are just abused at the college level, most of the coaches do not care if they shred their ace’s arm. Those concerns obviously do not exist for position players. So the risk of injury to a college pitcher is much greater and potentially much more serious to long-term career prospects. So the tipping point is likely different for those types of players.

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  7. hunter says:

    CC – You can’t possibly be that naive about team sports. I know several pro players and I can guarantee you that none of them thought the way you are talking. There’s something called life that gets in the way of your black-and-white split. It’s all about cost benefit analysis on an individual basis. if you are eighteen and offered 100G to pursue your dream or can go play at even a high level college, what kid do u know who says “well shit I hate my coaches and teammates so I’m going pro!!!”

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  8. brad g says:

    There are two types of inflation that should both be considered. First is actual, real money inflation which right now is almost 0, so no big deal. The second is bonus inflation. By deferring a bonus 3-4 years, you are betting that baseball inflation will be greater than real money inflation (almost certainly true). So an equally talented person 3 years from now is in a better $ position than they are right now.

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    • Matt says:

      If they defer and are still equally talented in 3-4 years, baseball inflation has gone up, but hasn’t their potential decreased with age (and they haven’t improved)?

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  9. http://WWW.HENRYSBASEBALLCLUB.COM 781 891 0621 EVERY PLAYER IS DIFERENT I HAVE YET TO SEE 2 PLAYERS THE SAME!! BEST TO SIGN EARLY AS U MAY GET INJURED IN THE COLLEGE AND ALL THAT MONEY GOES POOF LIKE A MAGIC TRICK!! HARVARD UNIVERSITY HAS BEEN THERE FOR 300+ YEARS BUT UR YOUTH DOES NOT COME BACK!! MAKE THE CHOISE THAT FITS U. JUST SO U KNOW THE SAN FRACISCO GIANTS FOUND A 16 YEAR OLD DOMINICAN AND WROTE HIS FAMILY A CHRCK FOR 2.1 MILLION. IN INTERNATIONAL BASEBALL THEY CAN SIGN ANY ONE THAT THEY CHOSE. THERE ARE NO RULES ONE U LEAVE THE BORDERS OF THE USA!!!!!!!!!!!

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