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Andrew Luck Turns Down Millions – A Wise Financial Move?

{ Posted on Jan 10 2011 by Marcus Alston }

Andrew Luck recently announced that he has decided to return to college for his senior year next season instead of entering the 2011 NFL draft.  Many experts believe the Stanford University Quarterback would be the top NFL pick of the draft.  By not entering the draft, at least for now, he gives up a contract worth in the area of $90 million, probably with $50-$60 million guaranteed. Andrew Luck shocked all the prognosticators by turning down millions now for his senior year in college.  Part of me finds this refreshing. I am all for getting a college degree and Stanford University is one of the best educational institutions in the country.  Additionally, athletes are often ill prepared for the professional ranks and do not have a solid education upon which to fall back on.  They often end up wasting millions of dollars often like lottery winners do. Andrew Luck has a solid advisory team behind him and comes from a financially well off family led by his father, Oliver Luck, who is an athletic director at West Virginia University.  The Senior Luck graduated and played at West Virginia University and graduated magnum cum laude.  He was also a finalist for the Rhodes Scholar.  Luck played professional football for the Houston Oilers from 1983 to 1986.  After his football career was over, Luck earned his law degree from the University of Texas in 1987.  Among other things, Luck has run for Congress, been the general manager of the Frankfurt Galaxy of the World League of American Football, a top executive in the NFL, and the CEO of the Houston Sports Authority.  Luck is in the Academic All American Hall of Fame. Oliver Luck’s son Andrew has reportedly consulted with Peyton and Eli Manning who both were number 1 draft picks and graduated from college before joining the NFL.

Advice for Oliver Luck.  I would have to advise Andrew Luck to take the $60 million, unless college is such a great experience that he has stay.  He may have friends and or a girlfriend he wants to spend as much time with as possible.  He may love academics and playing college football so much that he is not ready to give it up until he has to.  I can actually understand this.  In Andrew’s case, he is fine financially based on his father’s career and he will be insured for millions if he gets injured.  On the flip side he could damage his stock in the draft much like Jake Locker did this year.  He could also end up injured and still be the number 1 pick like Sam Bradford.  Bradford won the Heisman trophy his sophomore year, returned for his junior year even though his was projected as the number 1 pick after his sophomore year.  Bradford was injured in the 1st game of his junior year and missed the remainder of the season.  He was still the number 1 pick, although questions swirled about his durability and shoulder.  Bradford signed a 6-year, $78 million deal ($50 million guaranteed), which has a maximum value of $86 million.  It is the largest contract ever for an NFL rookie.

Taking a likely $50-$60 million guaranteed would be a wise financial decision that should last Luck a lifetime-especially if he makes and stays within budget.  Going into this year, Andrew Luck was rated by many behind Locker.  Luck had such an incredible year– he clearly distinguished himself.  Meanwhile, Locker created even more doubts about himself by staying in school and who knows where he will be drafted now.  Jake appears to have lost millions.   Draft order matters since the higher you are drafted, the more guaranteed money you can negotiate. It is commendable that he wants to finish his degree, but not entering the NFL draft this season may be end up being a big mistake for Andrew Luck. By not entering, he has taken on a lot of risk that could affect his professional football career.  Despite the fact that Andrew Luck’s coach Jim Harbaugh is taking the money and going to the San Francisco 49ers, Luck continues to say he is staying for his senior.  QB Brian Brohm, then a junior at the University of Louisville, was in a similar situation in 2007.   His coach Bobby Petrino left Louisville to coach the Atlanta Falcons (and later flamed out by quitting during the season that Michael Vick was suspended for dog fighting) and Brohm  returned for his senior year after being considered arguably the best quarterback in college.  He had a poor senior year, showed a lot of weakness like Jake Locker, and ended up being drafted in the second round.  He’s now a journeyman back with the Buffalo Bills.

Another reason for Andrew Luck to enter the draft this year is that there is the potential for a rookie salary cap after this 2011 NFL Draft which is similar to the NBA salary cap.  He will make much less under this rookie contract if there is a rookie salary cap.

Conclusion.  Either way, Luck will be fine financially.  He may or may not be a great quarterback in the NFL, but he has a great support system including a father who can help guide him.  This should increase his chances of having a successful career in football and or outside of football much like his father.  “My family raised us that having a degree is important; it’s a must,” he was quoted as saying by the New York Times. “It’s definitely important for me.” For other athletes with fewer options, jumping to the NFL for the chance at financial riches for himself and his family would be a no-brainer.   For Andrew, he has options, and it’s hard to argue with either one.  And Andrew, don’t forget to read my tips for athletes that I gave to Allen Iverson.  Also, please save money, manage your credit card spending, control your debt, and practice managing your finances while in college in preparation for the real world.

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