So USC star QB Matt Barkley has decided to return to college at USC rather than declare for the NFL draft. I get the desire for a guy to stay in school and be BMOC but this decision is one of the largest financial mistakes I have seen. The new NFL contract drastically changed the dynamics of being THE #1 pick overall. This year’s #1 pick Cam Newton signed a 4 year, $22 Million contract all guaranteed. Barkley was projected to be the #5 pick in the next draft. This year that paid $19.5 Million for 4 years all guaranteed. So if Barkley improves his status to #1 by playing another year it looks like he will gain $3 Million on average.
But look at what happens if he drops to say the #15 pick (sort of like Matt Leinart did a few years back). This year’s #15 pick received a contract worth $9.3 Million all guaranteed for 4 years. That’s a $10 million potential loss!
There are 4 possible outcomes from Barkley staying in school:
- He gets better and moves up to #1
- He gets worse and drops in the draft
- He stays the same which likely also drops him in the draft as NFL teams expect improvement
- He gets hurt
So he has a 75% chance to lose $10 million and a 25% chance to make $3 million. You can do the math but this looks like a hugely -EV decision. Is staying in college worth $6.75 Million for 4 years? Imagine how bad a decision this is if Barkley pulls the full Aaron Rodgers and drops to #25 in the draft (another $2 million loss) or even drops out of the first round.
What are they teaching in college?
– Randy Collack, Chief Operating Officer