Estimating How Much Matt Barkley's Decision to Stay at USC Cost Him
March 11, 2013
Matt Barkley's decision to stay at USC has cost him a large sum of money.
Prior to announcing his decision to stay at USC for his senior season, Barkley was projected to be a top 10 selection in the 2012 NFL draft. On July 20, 2012, NFLDRAFTSCOUT.com confirmed that Barkley was aware of his high draft stock.
Matt Barkley reshuffled NFL draft boards nationwide last year when the USC quarterback decided to return for his senior season. We'll never know where he would have been selected in 2012, but Barkley - sounding pretty sure of himself - said Tuesday he "had confidence" he would have been the No. 2 overall draft pick, essentially bumping out Robert Griffin III as the second quarterback taken in April. "I had confidence that I was going to go high," Barkley said on The Dan Patrick Show. "It wasn't really a question of that, as to why I came back."
USC entered the 2012 college football season with the No. 1 ranking in preseason polls. The Trojans proceeded to go 7-6—eventually wrapping up the season with a loss to 6-7 Georgia Tech.
Needless to say, the preseason No. 1 Trojans—along with Matt Barkley's draft stock—plummeted. Consequently, the decision to stay at USC and not enter the NFL draft will most likely cost Barkley a significant sum of money.
By choosing to stay at USC, it will cost Barkley (i) his foregone earnings in 2012, (ii) the difference in the estimated 2012 and 2013 contract values due to his draft stock falling, (iii) endorsement earnings, and (iv) any accumulated interest from a savings account he could have opened.
Foregone Earnings
Many analyst had Barkley as a top 10 pick in the 2012 NFL draft, though it was a foregone conclusion that Andrew Luck would go No. 1. Due to the high probability of Barkley being selected between picks No. 2 and No. 10, here are the values of the four-year contracts associated with each pick:
No. 2: $21,119,098
No. 3: $20,489,796
No. 4: $19,770,598
No. 5: $18,512,010
No. 6: $16,264,502
No. 7: $14,465,000
No. 8: $12,668,512
No. 9: $12,578,602
No. 10: $12,084,000
The Rams, Panthers, and Bills would not have taken Barkley with their picks in the top 10, but another team may have traded for their pick to select him.
The highest amount of money Barkley may have foregone in 2012 is one-fourth of the $21,119,098 contract that Robert Griffin III signed.
High = (1/4) x 21,119,098
The lowest amount would be one-fourth of Stephon Gilmore's $12,084,000 contract.
Low = (1/4) x 12,084,000
Thus, the highest and lowest cost—assuming Barkley went in the top 10 picks of the draft—in regard to his foregone earnings in 2012 are:
High: $5,279,775
Low: $3,021,000
Difference in Contracts
In addition to his foregone earnings in 2012, Barkley is also projected to receive a much smaller contract offer in 2013 due to his falling draft stock. Many current projections have Matt Barkley being selected by the Jaguars at No. 33, the Cardinals at No. 38, the Jets at No. 39, or the Bills at No. 41.
If Barkley truly is garnering interest from these teams, it's possible that a team trades up to grab him. Because a range of nine draft picks—No. 2 to No. 10—was used to determine possible landing spots for Barkley in the 2012 NFL draft, a range of nine draft picks—from the Jaguars at No. 33 to the Bills at No. 41—was used to project his landing spot in 2013.
Here are those picks with the approximate values—based on 2012—of the four-year contracts associated with each pick:
No. 33: $5,386,000
No. 34: $5,341,648
No. 35: $5,296,698
No. 36: $6,247,675
No. 37: $5,170,840
No. 38: $5,089,934
No. 39: $4,990,000
No. 40: $4,937,104
No. 41: $4,865,000
The highest potential cost to Barkley is the difference in the most valuable contract in the 2012 picks and the least valuable contract in the 2013 picks.
High = $21,119,098 - $4,865,000
Conversely, the lowest potential cost to Barkley is the difference in the least valuable contract in the 2012 picks and the most valuable contract in the 2013 picks.
Low = $12,084,000 - $6,247,675
As calculated above, here's the highest and lowest potential cost in regard to the difference in the full contract amount:
High: $16,254,098
Low: $5,836,325
Endorsements
In addition to a year of foregone earnings and a more lucrative contract, Scott M. Reid's article in the Orange County Register quotes sports business analyst Michael McCarthy asserting that Matt Barkley lost at least $1 million annually in endorsements.
Barkley's slide likely cost him at least another $1 million annually in endorsements, McCarthy said.
"From a business standpoint," McCarthy said of Barkley's decision to return to USC, "it was an absolute disaster."
McCarthy was also interviewed on ESPN Radio about Barkley's financial woes.
I talk to people on Madison Avenue every day, and right now he's being viewed, I'd say, by approximately zero corporations. He doesn't have the buzz. The best advertising is winning. He's not winning. He didn't win the Heisman. They didn't make it to a BCS [game] or anything like that. So I mean right now, he's kind of nowhere on Madison Avenue. And that shocks me because a year ago I would have thought he would be a real big deal.
In the same interview, McCarthy compared Matt Barkley's possible endorsements earnings in 2012 to the endorsement earnings of Robert Griffin III.
He would have been RG3. You take a look at RG3—he's got an Adidas deal, a Gatorade deal, he's got a Subway deal—he would have had all the buzz in the endorsements that RG3 ended up with. In fact you could argue that he could have had more since his profile was higher than RG3 before RG3 won the Heisman.
In June of 2012, ESPN.com's Kristi Dosh speculated on Robert Griffin III's endorsement deals.
It’s odd to say, but Griffin’s deals -- an estimated $3 million from adidas and mid-six figures from Subway, plus more from EA Sports, apparel maker EvoShield, Gatorade and Castrol -- might be owed partly to caution rather than to a conviction that he’ll be a superstar. Companies often lock up players just to keep them from competitors. “You can’t take that chance,” said advertising executive Bob Dorfman, who produces the Sports Marketers’ Scouting Report.
Dosh's estimation was later supported by Forbes' Patrick Rishe in his article on Griffin III:
In terms of endorsements, quarterbacks not surprisingly are the best paid NFL players. According to Sports Illustrated’s 2012 Fortunate 50, the top 3 endorsers in football are Peyton Manning ($13 M), Tom Brady ($10 M), and Eli Manning ($7 M). And based on Bloomberg Business 2012 Power 100 sports marketability index, Drew Brees and Aaron Rodgers topped that list. Their endorsement earnings are estimated between $7-10 M.
That said, it’s likely that RG3 is closer to the $4-6 M range at this point in his young career.
Due to the lack of concrete evidence on Robert Griffin III's endorsement deals, the highest and lowest potential cost in regard to endorsements were calculated based on expert opinion.
In regard to the highest potential cost, McCarthy said, "he would have had all the buzz in the endorsements that RG3 ended up with." Yet, it cannot be easily assumed that Matt Barkley would have had the incredible success in his rookie year that Robert Griffin III had.
Therefore, since Kristi Dosh's article estimated "$3 million from Adidas" and a few other deals before the season began, that estimate can be taken in conjunction with Rishe's "$4-6 million" estimate. Thus, a reasonable figure for the highest amount of endorsement money Barkley missed out on would be an annual endorsement earnings of $4 million.
High = $4,000,000 x 5 years
The lowest potential cost to Barkley was calculated based solely on Michael McCarthy's statement that "Barkley's slide likely cost him at least another $1 million annually in endorsements[.]"
Low = $1,000,000 x 5 years
As calculated above, here are the highest and lowest potential cost to Barkley in regard to endorsement earnings, according to experts:
High: $20,000,000
Low: $5,000,000
Savings Account
A potential cost in staying an extra year in college that is not often considered is the interest accumulated from a savings account. Due to the signing bonuses received at the beginning of NFL contracts, players have a large lump sum that could be deposited into a savings account until they need the money.
Among the contracts associated with picks No. 2 to No. 10, the most valuable deal—Robert Griffin III's contract with the Redskins—was used to calculate the highest potential cost associated with accumulated interest.
Signing Bonus: $13,799,344
Year One Salary: $390,000
Year Two Salary: $1,349,959
Year Three Salary: $2,309,918
Year Four Salary: $3,269,877
The following calculations assume Barkley deposited 50 percent of his gross income, and the savings account was compounded monthly at 1 percent interest. (Players do not actually receive their paychecks monthly, but for the purpose of this illustration it is assumed they do.)
Year One
Initial deposit: $6,899,672
Monthly deposit: $16,250
Accumulated interest at year-end: $70,373.32
Year Two
Monthly deposit: $56,248.29
Accumulated interest at year-end: $75,647.10
Year Three
Monthly deposit: $96,246.58
Accumulated interest at year-end: $85,795.71
Year Four
Monthly deposit: $136,244.88
Accumulated interest at year-end: $100,868.14
The total accumulated interest from all four years represents the highest amount of money in regard to interest from a savings account that it could have cost Barkley to not enter the 2012 NFL draft.
High = $70,373.32 + $75,647.10 + $85,795.71 + $100,868.14
The lowest amount is simply zero, which would be the result of him never saving any money.
Low = $0
So in regard to the cost of accumulated interest foregone, here are the highest potential cost and lowest potential cost, as calculated above:
High: $332,684
Low: $0
Total Potential Cost
Here's a summary of the potential costs of Barkley's decision, as calculated above:
• Foregone Earnings
High: $5,279,775
Low: $3,021,000
• Difference in Contracts
High: $16,254,098
Low: $5,836,325
• Endorsements
High: $20,000,000
Low: $5,000,000
• Savings Account
High: $332,684
Low: $0
Adding all of the "high" costs together and all of the "low" costs together yields a range to the total potential cost of Barkley's decision.
High = $5,279,775 + $16,254,098 + $20,000,000 + $332,684
Low = $3,021,000 + $5,836,325 + $5,000,000 + $0
• Total Potential Cost
High: $41,866,557
Low: $13,857,325
In sum, Matt Barkley's decision to stay at USC could eventually cost him anywhere between $13 million and $42 million over the next few years.
All contract information was provided by spotrac.com.
