In spring 2005, Matt Leinart was on top of the world. He was quarterback of the USC football team, the undefeated national champions. He had won the Heisman trophy. He was the consensus #1 pick in the NFL draft. And he was hanging out with Nick Lachey and Will Ferrell.
This year, Leinart is hanging out with Paris Hilton. But his team’s undefeated streak came to an end in a terrifically contested national championship game. Although the teams were evenly matched, Leinart was outplayed by his counterpart, Vince Young, who put on a masterful performance. Leinart was no longer even the best person on his team. Reggie Bush, the flash-fast running back, instead became the consensus #1 draft pick. On draft day, Leinart slipped to number 10, being chosen by the lowly Arizona Cardinals.
Leinart could have entered the NFL draft in 2005 — in fact, he could have still graduated. (The only course Leinart took this year was ballroom dancing.) In all likelihood, he would have been chosen number one by the San Francisco 49ers. The difference between being chosen first last year and tenth this year is roughly $12 million.
So my question is this: Leinart gave up $12 million for an extra year of college and a chance to make history by winning another national title. The title didn’t work out. So was his choice the wrong one?
I’m interested in your thoughts. By almost any monetary metric, Leinart’s choice was an abject failure. He lost $12 million in salary. He likely lost some percentage of his endorsement value. He lost the glamour of being the number one pick. It’s hard to come up with any system of valuation that would endorse his choice, even if his team had won the championship this year.
But there are some things that cannot be easily assigned a monetary value. How much was it worth to stay with his teammates another year? How much was it worth to strive for history? How much was it worth to be the BMOC, hanging out and taking ballroom dancing? I have to think that there are those who might still endorse his choice today, despite the championship loss. After all, there’s no going back to college once you leave — except, perhaps, in the movies.
As a contrast, I came across this perspective on the value of human life. As the article notes, “Sentimentality will sometimes cause us to overvalue the worth of an individual human life. But the numbers don’t lie.”
Posted by Matt Bodie on May 19, 2006 at 12:16 AM
Comments
Yeah, I’d like to see where those numbers come from, too. Most of my friends working for firms here in Chicago range between 1800-2200 billable required for the year. I’ll let you figure out which end of that spectrum are the more laid back firms… but I don’t know anyone who has a _minimum_ above 2200 (although a couple of people say the “off the record” minimum is 2400.)
3600 billable hours a year? I don’t think that’s humanly possible. That means, if you took *no* vacation, you’d have to bill almost 70 hours per week. *Bill*. Which means, you’d really have to put in a lot more. Unless you’re billing for administrative functions, in which case, you’re committing fraud. Not to mention, I’d wager that as people get up there in the hours, their quality of work falls dramatically, too. I’d like to see that study done.
Posted by: Dave! | May 22, 2006 3:42:58 PM
Lindsay,
I am not quite sure where you are getting those numbers. A firm that pays $145,000 but only expects 1900 hours a year? If you find one of those, please let me know. And to think that any firm would actually require 3600 billables is pretty insane. That means, assuming you bill 80% of the hours worked, that you would be in the office about 12 hours a day, every day. But your comparison still holds some weight. Is the law student who takes a 90k, low-stress job in a secondary market any worse off than the one who takes a 145k, high-stress job in a mega-firm? There may not be a definitive answer.
Posted by: Bob | May 21, 2006 9:06:05 AM
Matt is going to be just fine, don’t worry about the young man. This is all contingent upon him staying away from Paris Hilton.
Posted by: pchuck | May 19, 2006 11:14:26 AM
As a USC alum, I may not be the most neutral on this question, but I have to say — I thought a lot of Leinart’s decision and its similarity to the employment decisions many law school students make.
Let’s say a law student gets an offer from Firm A – the offer comes with an appellate clerkship bonus of $100,000, plus a salary of $165,000, plus a nearly guaranteed end-year bonus of another $75,000. This means the first year salary for this law student is $340,000 – enough to pay off student loans, put a nice down payment on a house, and get that killer plasma screen tv s/he has been coveting. The catch is that the student will be billing 300 hours a month, 3600 for the year, and the student is expected not to take any vacation for the first few years. Plus, the work will likely be document review for at least the first year on the job.
Law student gets another offer from Firm B – the offer comes with a clerkship bonus of $30,000, plus a salary of $145,000, plus a nearly guaranteed end-year bonus of $20,000. The first year salary at Firm B is thus $195,000. This is still a tremendous salary – enough to pay off a lot of loans and buy the tv and probably put a smaller-but-not-too-small down payment on a house. At Firm B, law student will be expected to bill 1900 hours for the year, or around 160 hours per month. Vacation is not only permitted, but encouraged. And the student will not be forced to do much document review, but will get a chance to draft pleadings, etc.
If you were advising law student, wouldn’t you advise law student to take the offer from Firm B? It’s certainly the choice I would make if I were the law student. The key factors in my decisionmaking process would be: vacation time and lower billable hours, the chance to do interesting work instead of just document review.
To me, these things are quite similar to Leinart’s opportunity to live in college for another year (vacation time and lower billable hours) and disinterest in quarterbacking the woeful 49ers (document review).
So, in the end, I think Leinart made a great choice. Yes, $12 million is a lot (just as $145,000 is a lot to a law student), but when you are still making millions of dollars, some things are just more important.
Posted by: Lindsay | May 19, 2006 9:40:12 AM
Well, what would his expected salary increase have been if he went on to win the national championship? What was his estimated probability of doing so? Perhaps the decision was economically rational after all. (Although your incommensurability argument is more to my taste.)
Posted by: Paul Gowder | May 19, 2006 9:26:42 AM
For a more stark eample, I knew a guy in college who was drafted by the Red Sox out of high school — not in a high round, but still…. He chose to go to — and finish — college at Stanford. By the time he started single-A ball next spring, he was 23. He did well at A and AA — until he blew out his shoulder in AA and missed a year. He got better, but by then he was about 26 in AA, so he wasn’t viewed as a prospect any longer.
Who knows if he would’ve made it out of high school, but he was a lefty who hit a lot of line drives, could play 3B and LF, and was one of the best hitters on some pretty good Stanford teams, so I think he had a decent shot. Going to Stanford may have been the worst move he ever made, but I guess we’ll never know; he doesn’t get a do-over.
Posted by: Scott Moss | May 19, 2006 8:26:19 AM
I can think of several ways in which his choice might have been the financially wiser one: a) The extra year in college could help him have a more successful pro career. b) He wanted to avoid being drafted by the 49ers, a troubled organization. c) Being drafted by a better team in the middle of the draft means playing for better teams sooner, earning him better endorsement deals. d) Continued press coverage could lead to better endorsement deals. Instead of a struggling rookie year, he has another year with success on a national stage.
Posted by: ac | May 19, 2006 1:08:42 AM
He still gets a contract worth double digit millions. And he got to have one helluva senior year in college. You can’t buy back youth–as much as aging hipsters may try. What’s the difference, in terms of lifestyle, between a contract worth $12 million and one worth $24 million? Other than fees for financial planners and accountants? How much money does one really need to be comfortable and financially secure for the rest of their lives?
I also think he picked up some serious endorsement cache. Nothing says, “rebel cool” like walking away from $12M to have a good time. That’s why most economists will never be cool. Rich, maybe. Cool, not likely… there’s nothing rational about cool. 🙂
Posted by: Dave! | May 19, 2006 12:23:47 AM