PittsburghCane
Redshirt Freshman
- Joined
- Apr 20, 2017
- Messages
- 2,302
Found a great read that gives the reality behind contracts and buyouts and makes me see that (gasp) most people are pulling numbers from thin air and that this $25 mil number really is a fabrication.
Pasting good points verbatim then article link at the bottom for the more invested.
Base Salary vs. Supplemental Compensation:
“While a coach’s total compensation package can easily range between seven and eight figures, the actual total base salary for even the highest paid coach is rarely more than mid-six figures. Generally, a large proportion of a coach’s total compensation will be in exchange for duties that satisfy the university’s media, sponsorship, and apparel contracts, including a grant of the coach’s name, likeness and image (collectively, referred to as “supplemental compensation”). Though paid by the university, the Talent Fee is typically funded from revenue generated by its rights deals and sponsorships.”
Common Head Coach Compensation Structure
“The distinction between base salary and supplemental compensation may or may not be material in terms of the university’s financial commitment to the coach, depending on the negotiated contractual terms. Generally, only base salary is considered in determining standard employee benefits to which the coach is entitled, such as retirement plan contributions, vacation pay, and university provided life and disability insurance coverage. The most critical significance of the distinction between base salary and supplemental compensation concerns the determination of the parties’ obligations to each other in the event of early termination of their contract; these “buyout” obligations (discussed further below) may consider future base salary only, or may also include supplemental compensation in the calculation of the buy-out.”
”Coaches and their representation will do everything in their power to ensure that if they are terminated without cause, they receive the maximum amount of the compensation initially promised to them. While many schools will only guarantee a portion of the coach’s total compensation (perhaps limited to base salary) on their initial contract, once the coach proves that he can win and create some leverage for themselves, there may be an opportunity to guarantee the remaining compensation in future years.”
“Many initial term contracts offer a 50-75% guarantee for the coach and a 25%-50% guarantee for the university. Schools often view this provision as a penalty or fine that they can force a coach or their new employer to pay in the event that they leave early, and will often try to make the amount owed to them as close as possible to the total compensation they have guaranteed to the coach.”
“There are also pragmatic approaches to lowering the buy-out a coach must pay if they are to leave an institution. One win-win technique is to oblige the coach to play a home-and-home series (or multiple) between their new institution and their previous one. If a coach makes the jump from a mid-major to a high-major program, having a school with big name brand recognition visit the home court of a smaller school can result in a windfall for that university that far outweighs the financial benefit of having a large-buyout put on the coach.”
Pasting good points verbatim then article link at the bottom for the more invested.
Base Salary vs. Supplemental Compensation:
“While a coach’s total compensation package can easily range between seven and eight figures, the actual total base salary for even the highest paid coach is rarely more than mid-six figures. Generally, a large proportion of a coach’s total compensation will be in exchange for duties that satisfy the university’s media, sponsorship, and apparel contracts, including a grant of the coach’s name, likeness and image (collectively, referred to as “supplemental compensation”). Though paid by the university, the Talent Fee is typically funded from revenue generated by its rights deals and sponsorships.”
Common Head Coach Compensation Structure
“The distinction between base salary and supplemental compensation may or may not be material in terms of the university’s financial commitment to the coach, depending on the negotiated contractual terms. Generally, only base salary is considered in determining standard employee benefits to which the coach is entitled, such as retirement plan contributions, vacation pay, and university provided life and disability insurance coverage. The most critical significance of the distinction between base salary and supplemental compensation concerns the determination of the parties’ obligations to each other in the event of early termination of their contract; these “buyout” obligations (discussed further below) may consider future base salary only, or may also include supplemental compensation in the calculation of the buy-out.”
”Coaches and their representation will do everything in their power to ensure that if they are terminated without cause, they receive the maximum amount of the compensation initially promised to them. While many schools will only guarantee a portion of the coach’s total compensation (perhaps limited to base salary) on their initial contract, once the coach proves that he can win and create some leverage for themselves, there may be an opportunity to guarantee the remaining compensation in future years.”
“Many initial term contracts offer a 50-75% guarantee for the coach and a 25%-50% guarantee for the university. Schools often view this provision as a penalty or fine that they can force a coach or their new employer to pay in the event that they leave early, and will often try to make the amount owed to them as close as possible to the total compensation they have guaranteed to the coach.”
“There are also pragmatic approaches to lowering the buy-out a coach must pay if they are to leave an institution. One win-win technique is to oblige the coach to play a home-and-home series (or multiple) between their new institution and their previous one. If a coach makes the jump from a mid-major to a high-major program, having a school with big name brand recognition visit the home court of a smaller school can result in a windfall for that university that far outweighs the financial benefit of having a large-buyout put on the coach.”
Making Sense of College Coaching Contracts
The coaching business is not for the faint of heart. There is no other industry in the world where almost 20% of top-level leadership gets terminated on a yearly basis. While both universities and coaches should be optimistic about the ability to build a winning program, universities must enter...
athleticdirectoru.com
