| Abstract | In this thesis, I investigate the decision facing high-school baseball players: whether to accept a professional offer or attend college. At just 18 years old these prospects must make decisions that have massive financial implications. On one hand, signing a professional offer guarantees a significant signing bonus and the opportunity to pursue a major-league career. Athletes taking this direct-to-professional route often spend considerably more time progressing through the minor leagues than their college-attending counterparts. On the other hand, attending college provides 3 years of advanced training paired with both the educational and experiential values of college. However, college players are exposed to the risk of career-changing injury that could have severe financial consequences. This paper explores the relationship between the value of a professional offer and the value of a college education. It analyzes historical data ranging from 2001-2011 to determine the average signing bonuses offered in each round and compares those offers to the implied value of a college education in each given year. Further, it analyzes prospect behavior to determine the importance of the financial implications in the decision-making process. This study found that players drafted prior to the eighth round of the MLB draft will likely derive more value from accepting a professional offer. Consequently, players drafted in the eighth round or later should strongly consider choosing to attend college where they can develop their skills and increase their value prior to re-entering the draft in subsequent years. Additionally, this study found that an increasing proportion of players choose to forego their professional offer in later rounds indicating that financial implications are a significant component in the decision-making process. |
