Coaching Contracts

[rocky top buzz]

I would suspect that most of the people reading this post have a job like mine. You are employed to work for a certain pay and expectations of performance are in place. If you don't perform to those expectations you are fired, that's it. Your employer doesn't continue paying you for years to come. If you do have an employment contract it is probably heavily 1-sided towards your employer, including a no-compete clause.

Why are coaches contracts so far out of whack with the rest of humanity? Before you say "Jimmy Sexton." Yes, but think about it. These contracts ultimately have to be ratified by institutions of higher learning, often by stuffy old people who don't care much for sports. I see 2 problems, the amount and the duration

Amount - In 1990 when Bobby Ross won the National Championship for GT he was paid $300k. The average salary at that time was $31,000 so this was about 10x above average. Today we have Jeremy Pruitt earning $3.8mil (not a national championship coach) and the average salary is $61k. This means he is earning 62x the average salary in the US. Why has this number become so inflated? I remember when Bama hired Saban at $4mil a year it was a big joke to everyone. It was even better when they lost to ULL. But I think with his success everyone thought they too could buy success, with Michigan being the prime example of how that doesn't work.

Duration - There are only 2 people who can be terrible at their job and yet not lose their income: the weatherman and college football coaches. I do not understand why teams have agreed to such ironclad contracts that are so one sided AGAINST their university? The only example I can think of that a school got out of a contract is Florida with McElwein where they fired him for cause. The reality was he didn't win enough games, but Florida found a way to fire him on a technicality without paying his buyout.

Here is the main takeaway. Looking at the final top 25 polls for the last 5 years and including this current week. Only 13 different schools have been in the top 5 slots and only 6 have been there more than 1 time. Out of 120+ teams, this is very top heavy. And of that top 5, it never included any of the following teams: Tennessee, Florida, Michigan, Texas, Nebraska, and Penn State. Compare it to the NFL where with 32 teams, 28 have been to the playoffs in the last 5 years. I understand it is different but literally every team in the NFL could win it every year. In college there are 5 teams with a legitimate shot every year. How is that good for the other 120 schools?

With the exception of the last Penn State, all these other teams have had coaching carousels trying to get it right. All except Florida have had to deal with hefty buyouts and paying big dollars to new coaches. I would suggest if one of these teams makes another move, it would be time to take a different path. Hire a coach who is willing to come work on a prove it contract. I think some of these coaches come to work already fat and happy knowing they got millions coming whether they win or lose. Surely there is a way to break this cycle because it is breaking college football.

 

[superdave1984]

Nobody will sign that kind of contract. Ever.
I agree in principle to much of what you said, however, the precedent has been set and it ain't going away. UGA just spent (and is currently spending) 200 million to get and stay at the top of the football heap. Almost all of that amount is donor money. I find it difficult to fathom that UT doesn't have donors willing and able to do the same. But we aren't.

 

[05_never_again]

I would suspect that most of the people reading this post have a job like mine. You are employed to work for a certain pay and expectations of performance are in place. If you don't perform to those expectations you are fired, that's it. Your employer doesn't continue paying you for years to come. If you do have an employment contract it is probably heavily 1-sided towards your employer, including a no-compete clause.

Why are coaches contracts so far out of whack with the rest of humanity? Before you say "Jimmy Sexton." Yes, but think about it. These contracts ultimately have to be ratified by institutions of higher learning, often by stuffy old people who don't care much for sports. I see 2 problems, the amount and the duration

Amount - In 1990 when Bobby Ross won the National Championship for GT he was paid $300k. The average salary at that time was $31,000 so this was about 10x above average. Today we have Jeremy Pruitt earning $3.8mil (not a national championship coach) and the average salary is $61k. This means he is earning 62x the average salary in the US. Why has this number become so inflated? I remember when Bama hired Saban at $4mil a year it was a big joke to everyone. It was even better when they lost to ULL. But I think with his success everyone thought they too could buy success, with Michigan being the prime example of how that doesn't work.

Duration - There are only 2 people who can be terrible at their job and yet not lose their income: the weatherman and college football coaches. I do not understand why teams have agreed to such ironclad contracts that are so one sided AGAINST their university? The only example I can think of that a school got out of a contract is Florida with McElwein where they fired him for cause. The reality was he didn't win enough games, but Florida found a way to fire him on a technicality without paying his buyout.

Here is the main takeaway. Looking at the final top 25 polls for the last 5 years and including this current week. Only 13 different schools have been in the top 5 slots and only 6 have been there more than 1 time. Out of 120+ teams, this is very top heavy. And of that top 5, it never included any of the following teams: Tennessee, Florida, Michigan, Texas, Nebraska, and Penn State. Compare it to the NFL where with 32 teams, 28 have been to the playoffs in the last 5 years. I understand it is different but literally every team in the NFL could win it every year. In college there are 5 teams with a legitimate shot every year. How is that good for the other 120 schools?

With the exception of the last Penn State, all these other teams have had coaching carousels trying to get it right. All except Florida have had to deal with hefty buyouts and paying big dollars to new coaches. I would suggest if one of these teams makes another move, it would be time to take a different path. Hire a coach who is willing to come work on a prove it contract. I think some of these coaches come to work already fat and happy knowing they got millions coming whether they win or lose. Surely there is a way to break this cycle because it is breaking college football.

Absolutely love this topic.

The easy answer is that given the economic benefits to a university of having a good football team, the coaches have the leverage in negotiations to push for those kinds of buyouts in order to secure their services. Supply and demand. There's incredibly high demand for a great coach and not many of them. That means the price to secure their services is very high.

IMO, the economics of the salaries these guys make is actually easy to justify. I'd argue that, for example, Saban might be underpaid. Yes, underpaid. Not only is their athletic department bringing in tens of millions of dollars per year above what a "replacement level" head coach would bring in, but their football program is also one gigantic advertisement for their university at large. Today, about half their student enrollment is from out of state, and enrollment has exploded since Saban got there (that's also because of a general college tuition/student loan bubble, but that's another story). In exchange for the hundreds of millions of additional dollars that have gotten brought in, they give Saban $10m/year. It's actually kind of cheap.

On the other hand, and if I'm missing the point please enlighten me, the buyouts seem hard to justify. Take Gus's at Auburn for example. If Auburn has a good football team, it makes all the sense in the world to pay him the salary he makes, which is $7m/year. However, the economics of paying him roughly 80% of the amount left on his contract if you fire him seems really difficult to justify. Just purely from an incentive perspective, I'm not sure what sense it makes to pay somebody $1 to work but 80 cents to not work. Seems like a lot of people in that situation just wouldn't work.

I agree that no big name coach is going to work on a "prove it" contract and get paid mostly through incentives, but the buyouts have gotten ridiculous.

 

[rocky top buzz]

Nobody will sign that kind of contract. Ever.
I agree in principle to much of what you said, however, the precedent has been set and it ain't going away. UGA just spent (and is currently spending) 200 million to get and stay at the top of the football heap. Almost all of that amount is donor money. I find it difficult to fathom that UT doesn't have donors willing and able to do the same. But we aren't.

I agree it would be hard when even G5 coaches have lock solid contracts. Would love to see maybe a lesser P5 program try it, almost a money ball-esque approach.

 

[rocky top buzz]

Absolutely love this topic.

The easy answer is that given the economic benefits to a university of having a good football team, the coaches have the leverage in negotiations to push for those kinds of buyouts in order to secure their services. Supply and demand. There's incredibly high demand for a great coach and not many of them. That means the price to secure their services is very high.

IMO, the economics of the salaries these guys make is actually easy to justify. I'd argue that, for example, Saban might be underpaid. Yes, underpaid. Not only is their athletic department bringing in tens of millions of dollars per year above what a "replacement level" head coach would bring in, but their football program is also one gigantic advertisement for their university at large. Today, about half their student enrollment is from out of state, and enrollment has exploded since Saban got there (that's also because of a general college tuition/student loan bubble, but that's another story). In exchange for the hundreds of millions of additional dollars that have gotten brought in, they give Saban $10m/year. It's actually kind of cheap.

On the other hand, and if I'm missing the point please enlighten me, the buyouts seem hard to justify. Take Gus's at Auburn for example. If Auburn has a good football team, it makes all the sense in the world to pay him the salary he makes, which is $7m/year. However, the economics of paying him roughly 80% of the amount left on his contract if you fire him seems really difficult to justify. Just purely from an incentive perspective, I'm not sure what sense it makes to pay somebody $1 to work but 80 cents to not work. Seems like a lot of people in that situation just wouldn't work.

I agree that no big name coach is going to work on a "prove it" contract and get paid mostly through incentives, but the buyouts have gotten ridiculous.

You are right the economics make sense when guys are winning. But that's my point, almost 120 schools are not winning. And that gets to your 2nd point about the buyout. If I knew I could pay a coach $20mil and he would win a natty it makes sense. But if I know if he fails it will cost $15mil in buyouts, plus the time already paid, does it make sense? not at all.

 

[Firebirdparts]

Sabanization of college football. The administrators don’t know how to stop it. That is, if I pay 10x more, I can get a better coach. If we all pay 10x more, then you get nothing.

It is actually that bad. Every school is paying 10X. Same basic results for more money.

 

[LouderVol]

look at our fan base. constant calls to hire "real" coaches, spend the big bucks, win now, yadda yadda yadda. its all part of it.

Saban and now Dabo being so strong have essentially cut off what are probably otherwise good coaches from getting there. There hasn't been a time period where there have been so few active coaches with National Titles. There are what, 5 of them? Saban with like 15 of them, Dabo with 2 or 3. Jimbo and Les with 1 a piece, Mac Brown at UNC. there is essentially a monopoly people are trying to buy into.

Think about it, the mighty SEC only has two coaches with a title, and the second didn't even win it in the SEC.
The ACC has two, with one not being at that school.
The Big 12 has one, and he didn't win it in the Big 12, and he is not at a powerhouse school.

Thats 2 P5 conferences left out. and its only 5 because 2 came out of retirement.
Urban keeps circling a big time job as one. (USC or Notre Dame)
Bob Stoops hung up his cleats.
Gene Chizik is so bad he cant get a job even with a ring.
Bowden, Fulmer, and plenty of others are long since retired.

 

[Gatornator]

Nobody will sign that kind of contract. Ever.
I agree in principle to much of what you said, however, the precedent has been set and it ain't going away. UGA just spent (and is currently spending) 200 million to get and stay at the top of the football heap. Almost all of that amount is donor money. I find it difficult to fathom that UT doesn't have donors willing and able to do the same. But we aren't.

So you are saying that Pruitt would have turned down 4 million a year, if his buyout was just 1-2 mill? Really? Who else was going to pay him 4 million a year? The tooth fairy? What was Pruitt bringing to the table other than being another Saban disciple from a long line of failed Saban assistants?

Really I agree with the OP. At this point Tennesee has nothing to lose, unless they are hiring somebody proven ala Urban like coach, a buyout should be less than half the annual salary.

 

[05_never_again]

You are right the economics make sense when guys are winning. But that's my point, almost 120 schools are not winning. And that gets to your 2nd point about the buyout. If I knew I could pay a coach $20mil and he would win a natty it makes sense. But if I know if he fails it will cost $15mil in buyouts, plus the time already paid, does it make sense? not at all.

Depends on what "winning" means. Different schools have different expectations. I think pretty much all Iowa fans are happy with Kirk Ferentz, but fans of a high expectation program would look at his record and say he "wins" nowhere near enough.

The buyouts are the real thing that doesn't make sense. It makes total sense for A&M to have to pay Jimbo $7.5m/year to secure his services. In fact, if he wins titles there, he probably becomes underpaid at that point. Does it make sense to have the entire contract guaranteed, even if they fire him? I don't think so.

 

[rocky top buzz]

Depends on what "winning" means. Different schools have different expectations. I think pretty much all Iowa fans are happy with Kirk Ferentz, but fans of a high expectation program would look at his record and say he "wins" nowhere near enough.

The buyouts are the real thing that doesn't make sense. It makes total sense for A&M to have to pay Jimbo $7.5m/year to secure his services. In fact, if he wins titles there, he probably becomes underpaid at that point. Does it make sense to have the entire contract guaranteed, even if they fire him? I don't think so.

To me, winning means going to bowls and competing for conference titles. That means you are selling tickets, merchandise, and keeping your name in the discussion for the year where you put things together to make a run at the playoffs. I think Iowa meets that and it says a lot giving the recruiting disadvnatages they have against their BIG competitors.

Your latter part is my point. A fully guarnateed contract when you can do everything wrong and still get paid? Doesn't make sense for anyone except the coach and agent.

 

[05_never_again]

To me, winning means going to bowls and competing for conference titles. That means you are selling tickets, merchandise, and keeping your name in the discussion for the year where you put things together to make a run at the playoffs. I think Iowa meets that and it says a lot giving the recruiting disadvnatages they have against their BIG competitors.

It depends. Tickets and merch get sold if you keep your fanbase energized by meeting or exceeding whatever their expectations are and generally keeping the program on a good trajectory. Iowa consistently goes to bowls, but doesn't consistently compete for conference titles. At Georgia, that wouldn't sell enough tickets and merch and would get a coach fired. It does at Iowa. At a place like Vandy, "winning" is simply going to a bowl most years. It's different at different places.