Submitted by Christie Zunker, PhD, Trisha Karr, PhD, Roberta Trattner Sherman, PhD, FAED, Ron A. Thompson, PhD, FAED, Li Cao, MS, Ross D. Crosby, PhD and James E. Mitchell, MD.
ABSTRACT
This study examined the relationship between clothing fit and perceived fitness level. Participants included 2,386 adults who completed an online survey after a running event. The survey included four questions related to photographs of athletic models wearing loose-fitting and tight-fitting clothing: (1) Which event do you think the model took part in? (2) What do you think is the main reason he/she took part in the event? (3) How well do you think this person performed? and (4) How confident are you that your running time beat this person’s time? Results showed participants were more likely to believe athletes wearing tight-fitting clothing ran further and faster than athletes wearing loose-fitting clothing; and were less confident in their abilities to run faster than athletes wearing tight-fitting clothing than those who wore loose-fitting clothing.
These findings suggest clothing fit influences perception of athletic ability among runners. Athletes making upward comparisons may become increasingly dissatisfied with their appearance and at risk for avoidance of certain sports, decreased amounts of time spent in moderate to vigorous physical activity, and experience feelings of inferiority that negatively influence sport performance.
INTRODUCTION
Sociocultural comparisons and perceived pressure to be thin can foster body dissatisfaction (15); however, some individuals report a preference for athletic-ideal body shapes over a thin-ideal (13). Comparing oneself to a fit peer can affect body satisfaction and the amount of time one engages in physical activity. For example, a study by Wasilenko and colleagues (2007) with female undergraduates found that women stopped exercising sooner and felt less satisfied with their bodies when they exercised near a woman they perceived as physically fit wearing shorts and a tight tank top as compared to exercising near an unfit woman wearing baggy pants and a baggy sweatshirt (23). Thus, social comparisons with peers may promote unhealthy behaviors or avoidance of certain activities. Additionally, individuals who experience weight-related stigmas may be less willing to participate in physical activity and avoid exercise due to low perceived competence and lack of motivation (16, 22).
Individuals who adopt an external observational view, or a self-objectified perspective of their bodies, may invest a considerable amount of psychological, physical, and financial resources into their appearance (1). Objectification theory proposes that these individuals internalize the observers’ view of their bodies (i.e., self-objectification) and become preoccupied with how their body appears to others without regard to how their body actually feels (10). Interviews with elite athletes indicate that they view an athlete’s body “as an object to be managed” (17p. 206). Self-objectifying thoughts and appearance concerns may be triggered in individuals with low self-esteem and exacerbated in certain environments (e.g., gyms with mirrors, women wearing revealing outfits;18). For example, a study by Fredrickson and colleagues (1998) in which participants (70% Caucasian) were instructed to try on either a swimsuit or a sweater in a dressing room with a full-length mirror and then complete a mathematics test showed that women in the swimsuit condition performed worse on the test than women in the sweater condition. The authors postulated that bodily shame diminished their mathematical performance since their mental energy was focused on their appearance (11). Another study by Hebl and colleagues (2004) with a similar protocol with men and women of Caucasian, African American, Hispanic, and Asian American descent, found that all participants had lower mathematics performance and appeared vulnerable to self-objectification during the swimsuit condition compared to the sweater condition (12). A study by Fredrickson and Harrison (2005) with 202 adolescent girls found that those with higher measures of self-objectification had poorer performance throwing a softball when asked to throw as hard as she could (9). These findings suggest that experiencing bodily shame may negatively influence one’s ability to engage in physical activities or other activities that require mental resources.
Clothing appears to be an important, but often ignored, part of how women manage their physical appearance (21). Wearing a swimsuit or other tight, body contouring uniform for a particular sport may be necessary for performance, but there are often gender discrepancies with women usually wearing much less clothing (19). Revealing sports uniforms may be perceived as stressors and exert pressure on some athletes functionality or performance advantage. Indeed, some individuals report feeling uncomfortable wearing revealing attire and may choose not to participate in a particular sport due to required uniforms.
Sports uniforms may contribute to unhealthy eating behaviors and eating disorders, especially among women. For example, female athletes often experience increased body image concerns, unhealthy body comparisons, and body dissatisfaction; however, satisfaction with uniform fit can improve body perceptions (6). In addition, female runners who report high identification with exercise and high value on having an athletic physique may be vulnerable to obligatory exercise (14).
Performance of sport participants depends upon a number of factors, including their psychological state, which may be influenced by their athletic clothing or uniform. Research by Feltman and Elliot (2011), Dreiskaemper and colleagues (2013), and Feather and colleagues (1997) suggests that the color and fit of an athlete’s uniform influences their psychological functioning. For example, during a simulated competition, participants reported feeling more dominant and threatening when wearing red as opposed to wearing blue (8). Participants also perceived their opponents as more dominant and threatening when the opponents were wearing red. Similarly, a study with male fighters taking part in an experimental combat situation found that those wearing a red jersey had significantly higher heart rates before, during, and after the fight compared to wearing a blue jersey (4). In addition, a study of female basketball players showed athletic clothing that provided a satisfactory fit on one’s body improved athletes’ body perceptions (6).
Findings from the literature (Feather and colleagues, 1997; Feltman and Elliott, 2011) indicate that clothing choices influence our perceptions and behaviors, which may affect us in a number of ways. At the present time, no studies to our knowledge have examined this phenomenon among endurance athletes. Thus, the purpose of the current study was to explore the role of clothing fit among a group of runners. We hypothesized that individuals would perceive both male and female athletes wearing tight fitting clothing to be more physically fit (i.e., ideal body type for their sport) than athletes wearing loose fitting clothing.
METHODS Study participants
Participants included individuals aged 18 and older who took part in a running event at an annual marathon in the Midwestern United States. Participants were recruited through flyers, an advertisement as part of a packet distributed to runners, and through an email list serve managed by the race director. Institutional review board approval was received. Informed consent was obtained from all participants.
Anyone who took part in the race was eligible to take the survey. Participants included 2,386 adults who completed the online survey. Of the total sample, 588 completed the full marathon (24.6%), 1,101 completed the half marathon (46.1%), and 697 completed a shorter distance such as a 5K or 10K (29.2%). The mean age for participants was 37.2 years (SD = 10.8; range: 18-91), and the mean self-reported body mass index (BMI) was 24.4 (range: 15.3-47.8). Within the sample, 96.2% were Caucasian, 93.2% were employed, and 67.5% were married. As compensation for participation in the study, participants were entered into a drawing to win one of four gift cards valued at $50 to $200 for a local sporting goods store.
The online survey was available for three weeks (i.e., from the day of the event until three weeks following the event). A total of 3,117 individuals logged into the survey during this time. A flowchart provides a detailed description of how the final study participant sample was determined (see Figure 1). The final sample included 2,386 participants (76.5% of those who originally expressed interest in the study), after removing those who originally logged onto the website, but had missing data or did not meet eligibility criteria (e.g., did not report gender, under 18).
Measures
As part of an online survey, participants viewed four photographs of models wearing black athletic clothing. The photos were cropped to display the model from neck to ankle. The first photo (Model A) was of a woman wearing a loose-fitting, short-sleeved top and loose-fitting shorts. The second photo (Model B) was of the same woman wearing the same shirt, but in a smaller size and tighter-fitting shorts. Similarly, the third photo (Model C) was of a man wearing a loose-fitting outfit and the fourth photo (Model D) was the same man wearing a tighter outfit. A manipulation check to assess the validity of the photos as an assessment of perceived physical fitness level was performed by showing the four photos to ten individuals with expertise in physical fitness and eating disorders. Each individual independently viewed the photos and provided an open-ended response. As expected, each person who viewed the photos reported that Model A was perceived as less fit than Model B and Model C was perceived as less fit than Model D.
All participants viewed and answered questions related to each photo. Both males and females evaluated photos across genders. The first and second author developed 4 questions related to the photos: (1) Which event do you think she/he took part in? (there were 9 race options as answers to choose from: marathon, half marathon, 2-person relay, 4-person relay, 5k on Friday plus half marathon Saturday, 5k on Friday plus full marathon Saturday, 10k, 5k, and prefer not to answer); (2) What do you think is the main reason she/he took part in this event? (there were 5 answers to choose from: just for fun, to meet a personal goal, to qualify for another event, other reasons, and prefer not to answer); (3) How well do you think she/he performed? (there was a range of 5 answers: extremely well, finished in the top 25%; very well, finished in the top 50%; not so well, finished in the bottom 50%; poor, finished in the bottom 25%, and prefer not to answer);. (4) How confident are you that your running time beat this person’s time? (there was a rating scale of 6 choices: I feel certain that I ran faster, I am pretty certain that I ran faster, I think we ran about the same pace, I am pretty certain that I ran slower, I am certain I ran slower, and prefer not to answer).
Statistical Analysis
All analyses were conducted using SAS 9.2 GENMOD Procedure. Generalized linear models were built to compare the pair-wise contrasts about perceptions of models wearing athletic clothing by gender.
RESULTS
The first research question asked was “Which event do you think she/he took part in?” We hypothesized that more participants would report Model B (compared to Model A) and Model D (compared to Model C) ran the full marathon. The results show that male participants were 1.5 times more likely to believe that Model B ran the full marathon compared to Model A (OR = 1.465; p = .004). Female participants were 1.4 times more likely to believe that Model B ran the full marathon compared to Model A (OR = 1.409; p = .002).
Table 1. Odds ratios from contrast estimates of gender, perceptions of clothing fit, and athletic performance
The differences for Model D and C, the male models, were more dramatic. Male participants were 2.8 times more likely to believe that Model D ran the full marathon compared to Model C (OR = 2.817; p < .0001). Among men, the results showed that 40% believed Model D and only 17% thought Model C ran the full marathon. Female participants were 3.2 times more likely to believe that Model D ran the full marathon compared to Model C (OR = 3.19; p < .0001). For women, the results showed that 46% believed Model D and only 16% thought Model B ran the full marathon.
The second research question asked was, “What do you think is the main reason she/he took part in this event?” We hypothesized that more participants would report Model B and D participated in the event to qualify for another running event. Male participants were 2.7 times more likely to believe Model B was trying to qualify for another event compared to Model A (OR = 2.710; p = .001). Female participants were 4.0 times more likely to believe Model B was trying to qualify for another event compared to Model A (OR = 3.958; p < .0001).
Similar to the previous research question, the differences for the male model were more dramatic. Male participants were 6.3 times more likely to believe Model D was trying to qualify for another event compared to Model C (OR = 6.346; p < .0001). While female participants were 10.0 times more likely to believe Model D was trying to qualify for another event compared to Model C (OR = 9.972; p < .0001). See Table 1.
The third research question asked was, “How well do you think she/he performed?” We hypothesized that more participants would report Model B and D finished in the top 25% of the runners. For males, the odds of Model B finishing in the top 25% were 4.8 times greater than Model A (OR = 4.791; p < .0001). For females, the odds of Model B finishing in the top 25% were 3.7 times greater than Model A (OR = 3.701; p < .0001). For males, the odds of Model D finishing in the top 25% were 5.3 times greater than Model C (OR = 5.338; p < .0001). For females, the odds of Model D finishing in the top 25% were 5.9 times greater than Model C (OR = 5.892; p < .0001). See Table 1.
The fourth research question asked was, “How confident are you that your running time beat this person’s time?” For this question we were interested in how the participant compared him or herself to the same gender athlete (i.e., female participants compared themselves to Model B, male participants compared to Model D). We hypothesized that more women would report that they were less confident about their running time compared to Model B (i.e., believe that they ran slower than Model B). Indeed, female participants were 1.5 times less confident in beating the running time for Model B (OR = 0.687; p = .0008). We hypothesized that more men would report that they were less confident about their running time compared to Model D (i.e., believe that they ran slower than Model D). The results indicate that male participants were 2.6 times less confident in beating the running time for Model D (OR = 0.385; p < .0001). See Table 1.
DISCUSSION
As hypothesized, we found both male and female participants believed that the models wearing the tighter-fitting clothing were more likely to have run the full marathon and were more likely to be trying to qualify for another event compared to the models wearing the loose-fitting clothing. Particularly interesting was the finding that female participants were 10 times more likely to think the male model in the tight-clothing was trying to qualify for another event as compared to the male model in the looser clothing. Our results also indicate that male and female participants believed the models in the tighter-fitting clothing were more likely to run faster than them. Additionally, the participants were less confident of their running time when asked to compare themselves to the model of the same gender wearing the tighter clothing. In general, athletes who wore tight-fitting clothing were perceived as more physically capable and competitively successful than those who wore loose-fitting clothing.
The present findings support previous research involving social comparison theory in that participants were less confident in their running abilities, or negatively influenced by viewing photos of fit peers (23). These results suggest that participants make upward comparisons (3), by comparing themselves with individuals who were viewed as faster runners (i.e., Models B and D), which in turn, was associated with reduced confidence in their abilities to perform.
Athletic identity, performance enhancement, and style preferences, such as fit, comfort, and aesthetics, are important factors to consider when determining sport clothing needs of consumers (5). For example, a female runner may be more likely to purchase a pair of shorts that offer adequate coverage and sweat-wicking properties than shorts with minimal coverage and lack quick drying material. Consumer spending may also be influenced by how they identify with well-recognized athletes (2). Furthermore, in line with self-objectification theory, an external perspective of body appearance may be influenced by a number of specific functions for clothing selection, such as clothing for comfort, camouflage purposes, and individuality (21). Findings from the present study add to this literature by demonstrating that clothing may also influence perceptions of athletic performance, including physical capability and competitiveness among runners.
CONCLUSIONS
This study has several limitations that should receive consideration. This was a cross-sectional study with an inherent selection bias because the persons who decided to complete the survey may be different from those who chose not to participate. Therefore these findings may not generalize to all runners who took part in this running event or other similar events. For example, the majority of participants who completed the current survey were Caucasian, but participants of other races may have different perceptions of athletic bodies and clothing fit (7).
In spite of these limitations, the current study provides important information about the potential contributing factor of clothing fit on perceived fitness levels of endurance athletes. One notable strength of this study is the number of participants from a variety of fitness levels, including individuals aged from 18 to 91 years with a wide range of experiences from the casual 5k run/walk to the more serious seasoned marathoner. The popularity of running events is increasing along with the number of persons entering these events each year, which suggests a growing need to continue research in this area.
APPLICATIONS IN SPORT
From a clinical perspective, we are concerned that tight-fitting attire will facilitate upward body comparisons. Such comparisons could result in athletes becoming body conscious and dissatisfied with their appearance, possibly resulting in unhealthy weight loss attempts, or avoidance of certain sports. However, the results of this study suggest another possible negative consequence related to tight fitting sport attire, but not for the person wearing it. If an individual views such attire as intended exclusively for those who are more physically fit, then the individual may experience feelings of inferiority or inadequacy and not feel fit enough to wear such attire while exercising or competing. Thus, she might feel too uncomfortable to wear sport attire that she associates with physical fitness and success in sport, not to mention attractiveness. Unfortunately that perception also appears to decrease confidence regarding one’s own sport performance, which would be an important treatment issue for sport psychologists, who focus on factors affecting sport performance. In essence, she may not feel that she can compete in regards to meeting societal pressures for a certain image that signifies athleticism. If the discomfort with attire and the lack of confidence is significant, the individual may withdraw from her sport/physical activity. Many individuals with low self-perceptions of their physical ability require extra encouragement and support to engage in sports (20).
Future studies should consider measuring clothing fit and perceived fitness level among different target groups, such as individuals who have never participated in a running event to elite athletes participating in intense competitions (e.g., Olympics; Ironman) and other geographical locations. It may be interesting to compare the current results with less physically active individuals as well as elite athletes. In addition, it may be helpful to gather more information on participants’ perceptions of themselves, self-worth, and their own confidence level of performance prior to and following exposure to photos.
ACKNOWLEDGMENTS
The authors gratefully acknowledge the survey assistance provided by Annie Erickson and cooperation of the Fargo Marathon Committee.
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Submitted by Martin J. Greenberg and Thom Park, Ph.D.
INTRODUCTION
A “coach” is dictionary defined as one who trains intensively by instruction, demonstration, and practice. That dictionary definition may have defined the coach of old, but does not recognize the current job environment and employment conditions of the modern-day college coach. The college coach of today is required not only to be an instructor, but also act as a fund raiser, recruiter, academic adviser, public figure, budget director, television, radio and internet personality, alumni glad-handler, and any other role that the university’s athletic director or president may direct him to do. Sports sociologists would opine that college coaches suffer from a condition known in the social science discipline as ‘role strain;’ that is, they have far too many roles to fill at very high levels of performance.
Coaching is a high-profile and high-risk position where every move and moment is surrounded by stress, and every decision, whether on or off the field, is subject to second-guessing and scrutiny and may often be the subject of a vicious public debate. Job security is as fleeting as the last seconds of a basketball victory in an environment where employment contracts are broken as easily as made.
Twenty-five years ago the average tenure of a Division 1A Head Football Coach was about 2.8 years. Nothing has changed. The first day on the job must often be spent planning for the last day, as the back end of the contract, i.e. termination provisions, may be more important than the compensation package. Job continuance is often conditioned on winning because wins are the equivalent of the bottom line — putting fans in the stands, selling enhanced seating, bolstering alumni contributions, generating lucrative TV and cable contracts, qualifying for Bowl competition, and persuading recruits to accept scholarships.
It is no wonder why big time college coaches are compensated the way they are — the job environment dictates the high compensation level.
CEOs IN HEADPHONES
Today’s major college coaches are CEOs in Headphones. Components of their compensation in some ways equate to the CEOs of private or publicly held companies. Compensation packages can include a signing bonus, base pay and supplemental payments, loans, supplemental insurance, deferred compensation, annuities, memberships, company car, tuition, and golden parachute provisions, to name a few. It has been reported that during the period 2007 through 2011, CEO pay rose 23%, while in the same period college coaches’ pay increased 44%.
Coaches’ salary inflation is part of the athletics arms race and has run rampant. In a recent study, college coaching salaries rose more than 750% during the 24-year period between 1985 and 2010, while during the same period, pay for full professors increased 32%, and the pay for college presidents increased 90%.
In a survey conducted by the Knight Commission in 2009, 85% of university presidents believed that college football coaches’ compensation is excessive and identified escalating coaching salaries as the single largest contributing factor to the unsustainable growth of athletic spending.
In most instances the college coach is the highest paid state employee of a public institution, and the compensation package can be five to ten times the amount paid university presidents and athletic directors. What follows is a comparison of reported, but unverified, compensation packages of presidents, head football coaches, and athletic directors at several major state schools:
COACH’S COMPENSATION
It was reported by USA Today that the average 2012 annual compensation for major college football head coaches is $1.64 million, up nearly 12% over the 2011 season, and more than 70% since 2006. Alabama’s Nick Saban and Texas’ Mack Brown are the highest paid football coaches.
The conference with the highest average compensation for its head football coaches is the Big 12, whose ten coaches are earning slightly less than $3 million a year. What follows, according to USA Today, are football coaches who earned at least $2.5 million for the 2012 football season:
Similarly, the reported compensation packages, according to USA Today, of coaches for
major basketball programs are also healthy:
NCAA College Basketball Coaches’ Salary Database
Among the 120 Bowl Division schools, 25 had made coaching changes for the 2012 season. Many of those universities who have made changes have had to dramatically increase their compensation packages in order to obtain their newly appointed coach.
OVERCOMPENSATED
So is a major college football coach overcompensated? There is no business like show business except $portsBiz. One in a million deserves more than a million. Compensation packages are market driven, and today the market is overly aggressive. The coaches’ market may not even be based on Moneyball Metrics, i.e. wins, tournament appearances and wins, revenue, attendance, rankings, or donations. A successful collegiate football program has many economic as well as non-economic benefits to the University, including driving alumni contributions and student enrollment, creating revenue streams that support non-revenue sports, and the psychic income of being “Big Time.” In many instances these escalating compensation packages are paid for through multi-million dollar paydays from conference broadcast and multi-media contracts, rabid fans willing to pay the price for enhanced seating, marketing deals with companies willing to sponsor the athletic initiative, apparel companies desirous of having their logo on athletes’ uniforms, and semi-autonomous booster clubs.
No comparative faculty member vs. athletic coach compensation analysis has ever taken into consideration the many other variables in the job life of the coach versus the job life of a faculty member. Some of these considerations and mitigating factors are job tenures, hours worked, stress endured, measured job pressure, frequency of termination versus tenured jobs, fractured unvested pension plans, lateral moves to advance, and the list goes on. By any measure, such compensation analyses versus the public perception of the coaches’ compensation are gravely misunderstood. College coaches earn absolutely every penny they make.
Universities are tasked with education, academic research, and public service to their communities. Coaches’ compensation packages that so dramatically dwarf the compensation packages of administrators and our best professors seems out of proportion. Even presidents and trustees of major universities can fall prey to the glamour of a winning season or a BCS bowl bid. In the context of amateurism, college athletes are not paid and big money can be targeted for a big name coach. The compensation packages of today’s college coaches are indicative of the high premium American society puts on the athletic enterprise. A successful college coach is a limited commodity, and the compensation packages are simply a function of supply and demand.
PACKAGE
For years we have negotiated the components of coaches’ compensation in reference to “The Package.” The Package included: I. Institutional Pay + Fringe Benefits
1. Salary
2. Life and health insurance
3. Vacation with pay
4. TIAA I CREF
6. Tuition waivers
6. Complimentary tickets
7. Annuity — longevity bonus
8. Contractual Bonuses
II. Outside income
1. Shoe, apparel, and equipment endorsements
2. Television, radio, and Internet shows
3. Speaking engagements
4. Personal or public appearances
5. Summer camps
III. Perquisites
1. Housing allowances
2. Membership in clubs
3. Business opportunities
4. Automobile usage
5. Dependent travel
6. Moving allowances
7. Additional insurance
8. Interest-free loans
The coach in most instances was permitted to separately contract for outside income sources. Today this is mostly university controlled and the coach receives institutional pay, plus fringe benefits, plus a talent fee or personal service fee that encompasses what previously was outside income but now is under institutional control, plus the perquisites as part of a total compensation package.
FINANCIAL ENGINEERING
The modern day coach financial structuring looks more like a CEO of a publicly traded or private company, with many new financial instruments and packages coming to the negotiation table including:
1. Signing bonuses
2. Retention, continuation, longevity bonuses
3. Up step life insurance provisions
4. Deferred compensation
5. Buyout of previous employer
6. Post-coaching employment
7. Interest free or forgivable loans
8. Retirement plans
9. Annuity
10. Expense account
11. Relocation payment
12. Disability payment
13. Entrepreneurial sharing
1. SIGNING BONUSES
BROWN – University of Texas-Austin: Special One Time Payment. Within 30 days of his execution of this agreement, Brown will receive a Special One Time Payment of $100,000.
JOHNSON – Georgia Tech: Signing Bonus. The Association agrees to pay Coach a onetime bonus of Two Hundred Thousand dollars ($200,000.00) within thirty (30) days of the signing of this employment contract.
MILLER – University of Arizona: Signing payment. As a consideration for the execution of this Contract, University will pay Coach one Million and 00/100 Dollars ($1,000,000) upon execution hereof.
MUSCHAMP – University of Florida: Signing Incentive. The Association shall pay to the Coach a Seven Hundred Fifty Thousand dollars ($750,000.00) signing incentive to be paid, subject to applicable taxes and withholding, upon execution and delivery of this Agreement by both parties.
O’LEARY – University of Central Florida: The coach shall be entitled to a signing bonus of $150,000 effective July 1, 2006, payable on next regularly scheduled Association pay period.
DYKES – University of California-Berkeley: Coach shall receive a one-time signing bonus of $594,000 on or before February 15, 2013.
2. RETENTION, CONTINUATION, LONGEVITY BONUSES
BARNES – University of Texas/Austin: If Barnes is head coach on March 31, 2010, a special payment of $1,000,000 will be made to Barnes. If Barnes is head coach on March 31, 2013, a second special payment of $1,000,000 will be made to Barnes.
CALIPARI – University of Kentucky: Retention Incentive. In addition to the above stated competitive and academic-based incentives, a retention incentive to encourage Coach to remain with the University shall be provided. University agrees to pay Coach a retention incentive if Coach remains in the employment of the University on each of the following dates:
March 31, 2014 (Bonus = $750,000), March 31, 2015 (Bonus = $1,000,000) and March 31, 2016 (Bonus + $1,250,000). Said bonuses to be paid within ten (10) days of the achievement of the applicable bonus.
DANTONIO – Michigan State University: 3.10. Contingent Annual Bonus. The University shall pay to Coach an annual bonus of Two Hundred Thousand Dollars ($200,000), provided that the Coach has served continuously as the Program Head Coach for the twelve consecutive months immediately preceding July 1st of the year in which the bonus will be paid. Such bonus will vest on the first business day following the conclusion of the twelve-month period and will be paid to Coach on or before the end of the month in which the bonus vests.
3.11 Contingent Bonus: In the event the Coach continuously serves as the Program Head Coach through January 15, 2014, the University shall pay the Coach, on or before March 9, 2014, the amount of Two Million Dollars ($2,000,000).
HOKE – University of Michigan: Stay Bonus. The Head Coach shall earn a bonus of $500,000 for each full Contract Year he remains employed as head football coach by the University. The first three years of the stay bonus will not be vested and payable to the Head Coach unless he remains continuously employed as the head football coach by the University through the conclusion of Contract Year Three (December 31, 2013), at which time the first three years of the stay bonus shall vest and be payable to the Head Coach within thirty (30) days. The second three Contract Years of the stay bonus will not be vested and payable to the Head Coach unless he remains continuously employed as the head football coach by the University through the conclusion of Contract Year Six (December 31, 2016), at which time the second three Contract Years of the bonus shall vest and be payable to the Head Coach. The University shall pay any vested stay bonus within thirty (30) days of vesting date.
JONES – University of Cincinnati (Terminated): Retention Bonus. Coach shall earn a retention bonus in the amounts set forth below provided he is still employed as Head football Coach on the date indicated:
January 15, 2012 – $100,000
January 15, 2013 – $0
January 15, 2014 – $0
January 15, 2015 – $300,000
January 15, 2016 – $300,000
January 16, 2017 – $300,000
MEYER – Ohio State University: 3.11. Ohio State shall pay Coach the following sums if he is employed as Head Football Coach on the following dates:
a) Four Hundred Fifty Thousand Dollars ($450,000) — January 31, 2014, payable within thirty (30) days following such date;
b) Seven Hundred Fifty Thousand Dollars ($750,000) — January 31, 2016, payable
within thirty (30) days following such date;
c) One Million Two Hundred Thousand Dollars ($1,200,000) — January 31, 2018,
payable within thirty (30) days following such date.
MILLER – University of Arizona: Retention Fund. At the end of each Contract Year, University will credit Three Hundred Thousand and 00/100 ($300,000) Dollars to a Retention Fund.
SABAN – University of Alabama: Contract Year Completion Benefit. If Employee is then employed as Head Football Coach of the University as of the dates set out below, Employee (or a corporate entity designated by the Employee) shall receive on that date the Contract Year Completion Benefit set out next to said dates:
January 15, 2012 $1,600,000 (upon completion of 5th year)
January 15, 2015 $1,700,000 (upon completion of 8th year)
January 15, 2018 $1,700,000 (upon completion of 11th year)
SELF – University of Kansas — Retention Payment Agreement:
Retention Payment. If Head Coach serves continuously as head basketball coach through March 31, 2013, or sooner as provided for herein, in addition to all other payments as found in the Employment Agreement dated April 1, 2008, Athletics shall pay to Head Coach on March 31, 2013, an after-tax sum of $2,114,575 (Initial Payment). That is, taking in account all state and federal tax liabilities Head Coach will owe with respect to the Initial Payment, Head Coach shall receive the net amount of $2,114,575. Athletics shall credit a separate account in favor of Head Coach with such annual amounts so that if Head Coach serves continuously as head men’s basketball coach through March 31, 2013, or sooner as provided for herein, Head Coach shall receive, $2,114,575 on March 31, 2013 (being the sum of $371,525 + $371,525 + $371, 525 + $500,000 + $500,000). Beginning on April 1, 2013, for each full year thereafter that Head Coach serves continuously as head men’s basketball coach through March 31, 2018, Head Coach shall be entitled to receive the after-tax sum of $500,000 per annum through March 31, 2018. Athletics shall credit a separate account in favor of Head Coach with such annual amounts so that if Head Coach serves continuously as head men’s basketball coach through March 31, 2018, Head Coach shall be entitled to receive $2,500,000 (second payment) on March 31, 2018 (being $500,000 multiplied by five years). That is taking into account all State and Federal tax
liabilities Head Coach will owe with respect to the second payment, Head Coach shall receive the net amount of $2,500,000 for the period April 1, 2013, through March 31, 2018. Vesting. Except as specifically described elsewhere in this Agreement, so long as Head Coach is serving as head basketball coach, these payments to Head Coach will vest on an annual basis so that the after-tax sum of $371,525 shall vest for the benefit of Head Coach on March 31, 2009, 2010 and 2011, and the after-tax sum of $500,000 shall vest for the benefit of Head Coach on March 31, 2012, and each year thereafter through March 31, 2018, during the term of this Agreement and Head Coach’s employment. This amount, although vesting on an annual basis, will not be paid to Head Coach, except as otherwise provided for herein until March 31, 2013 (Initial Payment due) and March 31, 2018 (Second Payment due).
STOOPS – University of Oklahoma: Annual Stay Benefit. On October 1, 2009 and on July 1 of each contract year thereafter (“Annual Date”) the University shall pay Coach within 30 days of that date the annual sum of Seven Hundred Thousand Dollars ($700,000) (“Annual Sum”) subject to the following provisions. Coach will be entitled to each Annual Sum if Coach remains employed at the University as Head Football Coach through each Annual Date outlined above subject to the following provisions. If Coach is no longer employed with the University on or prior to each Annual Date, then Coach shall be entitled to a pro rata portion of the Annual Sum (the “Pro Rata Portion”) based on Coach’s completed months of service with the University for that specific contract year. However if Coach voluntarily terminates employment on or prior to any Annual Date and assumes another coaching position, then Coach shall forfeit all of his right to the Annual Sum whether accrued or unaccrued. Notwithstanding the foregoing, if Coach voluntarily terminates due to David L. Boren no longer serving as the University’s President, then Coach may voluntarily terminate employment as Head Football Coach and assume another coaching position without forfeiting his Pro Rata Portion of the Annual Sum.
Additional Stay Benefit. If Coach remains employed at the University through January 1, 2011, University will contribute sufficient amounts so that an aggregate sum of Eight Hundred Thousand Dollars ($800,000) (“Stay Benefit”) will be accumulated as of such date in the existing or new tax-qualified or authorized employee retirement programs or plans (the “Plans”) established by the University for the benefit of Coach under IRS Section 401(a), 403(b), 415(m) and 457(b) pursuant to paragraph IV.D of the previous Contract between the parties which had an effective date of January 1, 2007. Coach will be entitled to the Stay Benefit if Coach remains employed at the University as Head football Coach through January 1, 2011, subject to the following provisions. If Coach is no longer employed with the University on or prior to January 1, 2011, then Coach shall be entitled to a pro rata portion of the Stay Benefit (the “Pro Rata Portion”) based on Coach’s completed months of service with the University from January 1, 2009 through January 1, 2011 divided by 24 (number of months in the period from January 1, 2009 to January 1, 2011). However, if Coach voluntarily terminates employment on or prior to January 1, 2011 and assumes another coaching position, then Coach shall forfeit all of his right to the Stay Benefit whether accrued or unaccrued. Notwithstanding the foregoing, if Coach voluntarily terminates due to David L. Boren no longer serving as the University’s president, then Coach may voluntarily terminate employment as Head Football Coach and assume another coaching position without forfeiting his Pro Rata Portion of the Stay Benefit.
CHRISTIAN – Ohio University: At the conclusion of each season, Head Coach shall receive a longevity bonus of $100,000.
3. UP STEP LIFE INSURANCE PROVISIONS
DANTONIO – Michigan State University: 3.4.6. Insurance benefits consisting of (a) a Two Million Dollar ($2,000,000) term life insurance policy and (b) a disability policy to provide, in the event of the Coach’s disability, a monthly benefit amount of $6,000 for sixty (60) months, including a cost of living annual benefit adjustment and a lump sum distribution at the end of sixty (60) months.
PITINO – University of Louisville: Employer shall, subject to approval for coverage by an appropriate insurance carrier (which approval Employer shall use its best efforts to obtain), be the owner of a term life insurance policy on the life of Employee, having a face amount of $24,600,000. Employer shall pay all premiums needed to keep said policy in force through June 30, 2017. in the event of Employee’s death during the Term of this Contract and amounts are payable pursuant to such policy, a life insurance death benefit in the amount set forth in the following schedule shall be paid to such beneficiary(ies) as Employee or his assignee shall designate to Employer in writing:
insurance policy shall lapse effective July 1, 2017, regardless of whether the policy is surrendered by Employer at that time. Provided, however, in the event that, prior to July 1, 2017, Employee becomes so disabled as not to be capable of performing his duties hereunder for a period of six months or more and Employer has been unable to purchase a policy of long-term disability insurance as provided in Section 6.2 hereof, then Employer shall assign to Employee, and Employee shall have the right to designate the beneficiary(ies) for the death benefit payable on such amount of said policy as is determined pursuant to Section 6.2 hereof. Employee (or his assignee) shall have the right to designate the beneficiary(ies) for the death benefit payable on behalf of Employee as outlined in this Section 3.1.14 above, and Employer shall have the right to designate the beneficiary(ies) for any death benefit proceeds payable from the policy in excess of the amount owed to Employee’s beneficiary(ies). If for any reason Employee (or his assignee) does not designate a beneficiary, such policy shall designate The Richard A. Pitino Revocable Trust u/a September 12, 2000, as beneficiary. Employee shall have the right to assign absolutely his rights, if any, under said life insurance policy until July 1, 2017. Notwithstanding the foregoing, if this Contract is terminated prior to June 30, 2017 (other than on account of Employee’s death or disability) either (i) by Employer for Just Cause, or (ii) by Employee other than by reason of Employer’s continued breach of this Contract (as described in Section 6.5), then the life insurance policy described in this Section 3.1.14 shall terminate.
SPURRIER – University of South Carolina: During the term of this Employment Agreement, the University shall pay the premiums necessary to provide Coach with life insurance benefits totaling Two Million Dollars ($2,000,000). Coach shall have the sole and exclusive right to designate any beneficiary. During the term of this Employment Agreement, the University shall pay the premiums necessary to provide Coach with disability insurance income totaling Two Hundred Fifty Thousand Dollars ($250,000) annually until Coach reaches the age of 65.
CREAN – Indiana University: Supplemental Term Life Insurance. The University shall purchase a supplemental life insurance policy for Employee payable to a designated beneficiary up to a face value of twenty million dollars ($20,000,000) based on an annual premium of up to a maximum of fifteen thousand dollars ($15,000). For income tax purposes, the annual premium shall be grossed up to take in account all applicable Federal income, State income, Social Security, and Medicare withholding taxes. If University determines that this term life insurance cannot be reasonably purchased from a commercial company, the University will pay employee fifteen thousand dollars ($15,000) as a lump-sum at the beginning of each calendar year for Term of the Agreement. This amount shall be net of applicable Federal income, State income, Social Security, and Medicare withholding taxes.
KINGSBURY – Texas Tech University: The University will provide to Coach a term life insurance policy in the amount of $5,000,000 at no cost to Coach during the term of the Agreement.
4. DEFERRED COMPENSATION
HOKE – University of Michigan: Deferred Compensation. In addition to the standard fringe benefits provided pursuant to Section 3.03(a) hereof, effective January 12, 2011, and during the remainder of the Term of this Agreement, the University shall establish and maintain a “Deferred Compensation Account” on its financial record to record the deferred compensation benefit earned by and payable to the Head Coach pursuant to this section. This provision is established as an ineligible nonqualified deferred compensation arrangement for the Head Coach’s benefit in accordance with Section 457(f) of the Internal Revenue Code of 1986, as amended (the “Code”).
(i) Provided that the Head Coach is employed as head football coach of the University football team during the “Employment Period” indicated below, the University shall credit (add to) the Deferred Compensation Account equal monthly payments of one-twelfth of the year “Credit Amount” as follows (which amounts shall vest pursuant to the vesting and forfeiture provisions of subsections (iii) and (iv) below and be credited at the end of each month on a pro-rata basis:
(ii) Subject to the vesting and forfeiture provisions in subsections (iii) and (iv) below, the University shall debit (subtract from) the Deferred Compensation Account and pay the Head Coach (or his beneficiary) the following amounts within thirty (30) days after the “applicable payment dates”:
MARSHALL – Wichita State University: If Mr. Marshall completes the 2011-2012 season, he will receive a one-time payment of Five Hundred Fifty Thousand and no/1.00 Dollars ($550,000.00); provided however, that should Mr. Marshall not complete the 2011-2012 season because of circumstances for any reason, Mr. Marshall will receive a one-time payment of Four Hundred Twenty-Five Thousand and No/1.00 Dollars ($425,000.00).
Beginning on April 16, 2012, a new annuity will be initiated for the remaining term of the contract at One Hundred Twenty-Five Thousand and No/1.00 Dollars ($125,000.00) per year, said amount to vest as of the completion of each successive basketball season. The total vested amount of the annuity will be paid at the conclusion of every fourth season (“Payout Year’) that Mr. Marshall is employed by the ICAA, i.e., paid at the completion of the 2015-16 season, completion of the 2019-20season, etc; provided, however, if Mr. Marshall were to leave the employment of the ICAA for any reason at any time other than a Payout Year, he shall receive the total vested amount at that time.
PINKEL – University of Missouri: Deferred Compensation. The University agrees to annual deposit to a Fund, which Fund shall be owned, maintained and controlled by the University, within fifteen days of January 1 of each year under the term of this contact, the sum of Two Hundred Thousand Dollars ($200,000.00).
PITINO – University of Louisville: Employer will maintain a deferred compensation account in Employee’s name to evidence amounts credited pursuant to Section 3.2.1. Amounts credited to Employee’s account pursuant to Section 3.2.1, adjusted by the amount of any earnings losses, are referred to herein as the “Account.” The Account shall be deemed to be invested by Employer so that the Account will be increased or decreased at least monthly by the earnings or losses on such deemed investment until the Account balance has been fully paid to Employee or Employee’s beneficiaries or is otherwise forfeited pursuant to the Contract. Employee may suggest the deemed investment of the Account from investment options which will be provided for Employee’s review not less frequently than annually by Employer. However, Employer is not required to honor in any way such suggestions by Employee, and Employer shall have sole discretion with respect to any deemed investment decision related to the Account, until such time as the Account is paid to Employee or Employee’s beneficiaries or is otherwise forfeited pursuant to this Contract. Employer shall provide to Employee at least annually (as of December 31 of each year starting with the period ending December 31, 2010) a schedule of the Account reporting the opening balance of the Account and all amounts, including earnings or losses, credited or debited to the Account during the reporting period and any distributions with regard to the Account during the reporting period.
The Account will be credited in the amount of: (i) Nine Hundred Thousand Dollars ($900,000) on July 1, 2010, (ii) Nine Hundred Thousand Dollars ($900,000) on July 1, 2011, and (iii) Nine Hundred Thousand Dollars ($900,000) on July 1, 2012.
CREAN – Indiana University: Deferred Compensation. Commencing on July 1, 2012,during the remainder of the term, the Employee will be eligible to earn deferred compensation at an annual rate of Five Hundred Sixty-Six Thousand Two Hundred Fifty Dollars ($566,250.00) “Deferred Compensation”). Deferred Compensation will be earned by the Employee on a prorated basis during the calendar year, with payment of such compensation deferred until thirty (30) days after the end of the calendar year. During any period of deferral, any Deferred Compensation will remain part of the University’s general assets, will not be deposited in a separate account, and will not bear interest. If the Employee remains employed with the University through December 31 of a calendar year during which Deferred Compensation accrues, the Employee shall vest in the Deferred Compensation on December 31 and shall be paid the Deferred Compensation, without interest, within thirty (30) days thereafter. In the event of termination of the Employee’s employment with the University for any reason prior to December 31, the Employee shall vest in the Deferred Compensation earned through the date of termination and shall be paid the Deferred Compensation, without interest, within thirty (30) days after the date of termination. By way of example, if the Employee remains employed with the University through December 31, 2012, the Employee will be entitled to $72,914.00 in Deferred Compensation, payable on or by January 30, 2013. For purposes of this Section 5.03, the term “termination” shall be interpreted to comply with the requirements of Internal Revenue Code 409A. In the event the Employee desires to modify the terms of this Section 5.03 for tax or other financial reasons, the parties agree to negotiate such modification in good faith and to use their respective best efforts to arrive at mutually acceptable terms. The Employee has been advised to engage legal and/or financial representatives regarding the tax implications of the Deferred Compensation. The Employee shall be solely responsible for any federal, state and local income taxes incurred by him as a result of the University’s payment of the Deferred Compensation.
5. BUYOUT OF PREVIOUS EMPLOYER
CHIZIK – Auburn University (Terminated): Repayment of Buyout from Previous Employment. Coach acknowledges that Auburn loaned him Seven Hundred Fifty Thousand Dollars ($750,000.00) to satisfy the buyout provision of his contract with his previous employer. During the course of this contract, this debt will be forgiven in the amount of One Hundred Fifty Thousand Dollars ($150,000.00) for each contract year completed under this Agreement such that the debt will be forgiven entirely. If Auburn terminates Coach for cause prior to December 31, 2013, or if Coach terminates his employment with the University for any reason other than disability or death prior to December 31, 2013, Coach will be responsible for paying University the balance remaining on this loan, with the amount owed for a partial year being determined on a pro rata basis (i.e., $12,500 per month). The remaining balance will be paid as follows: 50% within thirty (30) days of termination for cause by Auburn or termination by Coach; and 50% within one (1) year of termination for cause by Auburn or termination by Coach. Coach acknowledges that University also has the discretion to reduce the payments owed to Coach in Paragraph 18 in whole or in part as part of the repayment of this loan. If Auburn terminates Coach without cause prior to December 31, 2013, the balance remaining on loan will be forgiven by Auburn.
DOOLEY – University of Tennessee (Terminated): The University also agrees to pay (i) a total of $500,000, in two equal payments of $250,000 each, to Louisiana Tech University on Dooley’s behalf no later than June 1, 2010 and June 1, 2011; and (ii) a total of $286,782 to be paid to the Internal Revenue Service on Coach Dooley’s behalf as withheld taxes, $143,391 to be submitted to the Internal Revenue Service within thirty (30) days of the date on which each payment is submitted to Louisiana Tech University. The University will report total taxable value of the commitment in this Article II.C in the amount of $786,782. The sum set forth in this Article II.C. represents the total payment the University will make on behalf of Coach Dooley regardless of the amount of taxes actually due.
HOKE – University of Michigan: Buyout Payment. The Head Coach acknowledges that the University has agreed to pay on behalf of the Head Coach the sum of $1,000,000 to San Diego State University (“SDSU”) in order to satisfy the buyout terms of the Head Coach’s employment contract with SDSU. The University considers this payment as taxable wages for tax withholding and reporting purposes. Consistent with that determination, the University has made timely deposits with appropriate taxing authorities of all amounts required to be withheld as taxes with respect to the Head Coach as a result of making the SDSU settlement payment. The University has agreed to neutralize to zero (0) dollars the actual tax impact of the buy-out payment in order that the Head Coach not be unduly burdened or distracted in connection with the performance of his duties hereunder. It is the express intention of the parties that neither party benefit financially to the extent there is a difference between (i) the amount of withheld taxes and (ii) the amount of tax liability incurred by the Head Coach. With respect to this liability which is attributable to the University having made the buyout payment, the Head Coach must claim all deductions allowable under applicable tax laws, including this buyout payment. Therefore, as soon as practicable in 2012, the parties will review the Head Coach’s pertinent tax information, including his signed federal and state income tax returns for 2011, and either the Head Coach or the University will pay the other party, as the case may be, such amount as is necessary to effectuate this mutually desired benefit. The Head Coach represents and warrants to the University that he is not bound by or subject to any contractual or other obligation to SDSU or any other party that would be violated by his execution or performance of this Agreement.
ROBINSON – Oregon State University: Payment Toward Satisfaction of Coach’s Current Contract. University will pay Brown University or its designee the sum of $145,000 toward satisfaction of Coach’s obligations under his current contract with Brown University.
CREAN – Indiana University: Upon receipt of a copy of the terms of the Employee’s present contract with Marquette University that requires the Employee to pay Marquette liquidated damages upon the termination of the Employee’s contract, the University will pay the Employee the stated amount of liquidated damages; however, such amount shall not exceed six hundred fifty thousand dollars ($650,000). In the event this amount is deemed to be income, the Employee will be responsible for any associated tax consequences.
BIELEMA – University of Arkansas: The University will pay (using legally permissible funds) Coach’s former employer a sum not to exceed a total of One Million and No/100 Dollars ($1,000,000.00) if required under the terms of Coach’s employment contract with his previous employer. The University considers this payment to be taxable wages for tax withholding and reporting purposes. Consistent with that determination, the University will make timely deposits with appropriate taxing authorities of all amounts required to be withheld as taxes with respect to Coach as a result of making any such payment. The University will neutralize to zero (o) dollars the actual tax impact of such payment to enable you to avoid any undue burdens or distractions in connection with the performance of your duties as Head Football Coach at the University. With regard to the University’s commitment to undertake this obligation, we expressly agree and intend that the University or you will not benefit financially to the extent there is a difference between (a) the amount of withheld taxes and (b) the amount of tax liability incurred by you. With respect to this liability, which is attributable to the University making any such payment, you agree to claim all deductions allowable under applicable tax laws, including any applicable deductions relating to the amount paid by the University to satisfy any portion of your employment agreement with your previous employer. Depending on the timing of any such payment by the University, you and/or your advisors agree to review your pertinent tax information, including any signed federal and state income tax returns necessary, and either the University or you will pay the other party, as the case may be, such amount as is necessary to effectuate this mutually desired benefit. Coach represents and warrants to the University that his acceptance of the position of Head Football Coach and his performance of the duties of this position will not violate any other contract or obligation to any other party.
TUBERVILLE – University of Cincinnati: The Employment Agreement shall contain a provision which states that upon receipt by the University of satisfactory evidence that Coach has incurred a binding contractual buy-out obligation payable to Texas Tech University by accepting employment as the University’s Head Football Coach, and upon receipt of a copy of the invoice received by Coach from Texas Tech University for the same, the University shall issue a payment to Coach of the buy-out amount not to exceed $931,000. Coach understands and acknowledges that the $931,000 constitutes income to him under applicable State and Federal tax codes and will be subject to withholding.
6. POST – COACHING EMPLOYMENT
DANTONIO – Michigan State University: In the event the Coach continuously serves as the Program Head Coach through March 15, 2014, the Department will offer Coach a two-year contract within the Athletics Department at an annual salary rate of $200,000 following the conclusion of his employment as Program Head Coach. In this position, the Coach will perform duties within the area of University Advancement as assigned by the University President and Athletics Director. The terms of the contract will be consistent with the standard terms for administrative appointments within the Department. Coach will not be eligible for this postcoaching employment if he ceases to be the Program Head Coach in order to take a position coaching a professional football team or an intercollegiate football program other than the Program.
TRESSEL – Ohio State University (Terminated): Upon notice from Coach that he intends to terminate his employment under this agreement, Coach may request from Ohio State the opportunity to have a non-tenure track faculty position at Ohio State. If Coach makes such a request, and if Ohio State does not have “cause” to terminate this agreement under Section 5.1, then Ohio State shall make a non-tenure track faculty position available to Coach. Salary, benefits and other terms of employment for such non-tenure track faculty position shall be mutually agreed upon between Coach, the Department of Athletics and the appropriate academic unit. Upon execution of such an agreement, this agreement shall terminate. The non-tenure track faculty position shall have a term not to exceed five (5) years, and shall be re-evaluated at the conclusion of such term.
7. INTEREST-FREE OR FORGIVABLE LOANS
JONES – University of Cincinnati (Terminated): Loan. Within thirty (30) days of the approval of this Agreement by the Trustees of the University of Cincinnati, the University shall provide Coach with a Seven Hundred Thousand Dollars ($700,000) interest-free loan (the “Loan”). The Loan shall be forgiven by One Hundred Forty Thousand Dollars ($140,000) on January 1, 2011 or after the completion of any University bowl game of the 2010 football season, whichever is later. Commencing on February 1, 2012, the Loan balance shall be forgiven in equal monthly amounts over the remaining months of the Term pursuant to the terms of a promissory between the University and Coach.
The terms of the Loan are set forth in the Promissory Note (“Note”). Coach shall execute the Note within seven days of the approval of this Amendment by the University’s Board of Trustees. Coach understands and agrees that he shall be responsible for the payment of all taxes incurred as a result of the Loan and the monthly forgiveness of the Loan.
8. RETIREMENT PLANS
MEYER – Ohio State: For the period beginning September 1, 2012 and ending on January 31, 2013, Ohio State shall pay Coach Twenty Thousand Eight Hundred Thirty-Three Dollars ($20,833) in substantially equal monthly installments and in accordance with normal Ohio State procedures. In addition, Ohio State shall contribute Seven Hundred Thousand Dollars ($700,000) to the DC Plan on January 31, 2013 (or in more frequent installments as determined by Ohio State in its sole and absolute discretion). Notwithstanding the foregoing: (a) to the extent that the Code limits or prohibits such contributions from being made to the DC Plan, Ohio State shall contribute such amounts to a defined contribution plan that is a nonqualified deferred compensation plan; and (b) if Coach is not employed as Head Football Coach on January 31, 2013, the aggregate contribution to the plans described in this Paragraph 3.2(3) shall be equal to Seven Hundred Thousand Dollars ($700,000), multiplied by a ratio, the numerator of which is the number of days Coach was employed as Head Football Coach for the period beginning on September 1, 2012 and ending on January 31, 2013, and the denominator of which is 153. Coach shall reimburse Ohio State for any fees and/or expenses up to Ten Thousand Dollars ($10,000) relating to the establishment of the defined contribution plans in this Paragraph 3.2.
For the period beginning February 1, 2013 and for each subsequent “contract year” (February 1 through January 31), Ohio State shall pay Coach Eight Hundred Thousand Dollars ($800,000) (plus any additional amounts payable pursuant to Section 3.2(6)) in substantially equal monthly installments and in accordance with normal Ohio State procedures. In addition, for the period beginning February 1, 2013 and for each subsequent contract year, Ohio State shall contribute One Million Dollar ($1,000,000) per contract year to the DC Plan on January 31 of the applicable contract year (or in more frequent installments as determined by Ohio State in its sole and absolute discretion). Notwithstanding the foregoing: (a) to the extent that the Code limits or prohibits such contributions from being made to the DC Plan, Ohio State shall contribute such amounts to a defined contribution plan that is a nonqualified deferred compensation plan; and (b) if Coach is not employed as Head Football Coach on the last day of the applicable contract year, the aggregate contribution to the plans described in this Paragraph 3.2.(4) for that contract year shall be equal to One Million Dollars ($1,000,000), multiplied by a ratio, the numerator of which is the number of days Coach was employed as Head Football Coach that contract year, and the denominator of which is 365.
Subject to any Code limits, Ohio State shall make an annual contribution of Fifty Thousand Dollars ($50,000) to The Ohio State University 403(b) Retirement Plan, as amended from time to time (the “403(b) Plan”), on January 31, 2013 and January 31 of each subsequent contract year (or in more frequent installments as determined by Ohio State in its sole and absolute discretion). Notwithstanding the foregoing, if Coach is not employed as Head Football Coach on the last day of the applicable contract year, the aggregate contribution to the 403(b) Plan for that contract year shall be equal to Fifty Thousand Dollars ($50,000), multiplied by a ratio, the numerator of which is the number of days Coach was employed as Head Football Coach that contract year, and the denominator of which is 365; provided, however, that for the contract year ending January 31, 2013, the radio numerator shall be the number of days Coach was employed as Head Football Coach for the period beginning on September 1, 2012 and ending on January 31, 2013, and the denominator of which is 153.
DANTONIO – Michigan State University: 401(a) Plan. The University shall make an annual contribution (the “Contribution”) for Coach’s benefit to a defined contribution retirement plan that meets the requirements of Internal Revenue Code (“Code”) Section 401(a)(the “Qualified Plan”). The twelve (12) month plan year (“Plan Year’) of the Qualified Plan and the Qualified Plan’s Section 415 limitation year shall begin on January 1 and end on December 31. The amount of the Contribution each Plan Year shall be the maximum employer contribution for the Coach’s benefit to the Qualified Plan that is permitted by Code Section 415(c) for that Plan Year. Each such annual Contribution shall be deposited into the trust or custodial account relating to the Qualified Plan not later than the last day of the Plan Year to which that Contribution relates. This annual Contribution shall be made for each Plan Year to which that ends during the term of this Agreement.
STOOPS – University of Oklahoma: Additional Stay Benefit. If Coach remains employed at the University through January 1, 2011, University will contribute sufficient amounts so that an aggregate sum of Eight Hundred Thousand Dollars ($800,000) (“Stay Benefit”) will be accumulated as of such date in the existing or new tax-qualified or authorized employee retirement programs or plans (the “Plans”) established by the University for the benefit of Coach under IRC Sections 401(a), 403(b), 415(m) and 457(b) pursuant to paragraph IV.D of the previous Contract between the parties which had an effective date of January 1, 2007. Coach will be entitled to the Stay Benefit if Coach remains employed at the University as Head Football
Coach through January 1, 2011 subject to the following provisions: If Coach is no longer with the University on or prior to January 1, 2011, then Coach shall be entitled to a pro rata portion of the Stay Benefit (the “Pro Rata Portion”) based on Coach’s completed months of service with the University from January 1, 2009 through January 1, 2011 divided by 24 (number of months in the period from January 1, 2009 to January 1, 2011). However, if Coach voluntarily terminates employment on or prior to January 1, 2011 and assumes another coaching position, then Coach shall forfeit all of his right to the Stay Benefit whether accrued or unaccrued. Notwithstanding the foregoing, if Coach voluntarily terminates due to David L. no longer serving as the University’s President, then Coach may voluntarily terminate employment as Head Football Coach and assume another coaching position without forfeiting his Pro Rata Portion of the Stay Benefit.
PAINTER – Purdue: Supplemental Retirement Contributions.
3.1 Supplemental Plans. Purdue will contribute the Supplemental Retirement
Contributions into, and in accordance with the provisions of, the supplemental Plans for the
benefit of the Coach.
3.2 Supplemental Retirement Contributions. The Supplemental Retirement
Contributions for Supplemental Plan year 2011/2012 will be $292,000.00. The Supplemental
Retirement Contributions for each subsequent Supplemental Plan Year during the term will be
$300,000.00, as such amount may be adjusted under Section 3.3 below.
3.3 Plan Expenses. To the extent permitted by law, all costs and expenses for the maintenance and operation of the Supplemental Plans shall be paid from the applicable Trusts. If any Supplemental Plan Year Purdue incurs (i) any cost or expense directly attributable to the maintenance or operation of the Supplemental Plans which are not permitted by applicable law to be paid from the Trusts, including but not limited to the costs or expense (a) of responding to any examination or inquiry by the IRS regarding the tax qualification of the Supplemental Plans or (b) that are normally paid by a plan sponsor rather than from plan assets, such as the costs of redrafting the Supplemental Plans to maintain their tax qualification, or (ii) any costs or expense which a trustee of one or more of the Trusts assesses upon Purdue because Trust assets are not at that time sufficient to cover the trustee’s expenses, Purdue, upon providing written notice to the Coach, may reduce the Supplemental Retirement Contributions for that Supplemental Plan Year by the amount of such costs or expenses reasonably incurred by Purdue, provided always that Purdue shall not have the right to the Supplemental Retirement Contributions on account of any costs that are attributable to or arise out of its failure to timely perform its duties and responsibilities as sponsor of the Supplemental Plans. Further, in no event will costs and expenses of maintaining and operating the Supplemental Plans directly attributable to participation by other eligible employees be borne directly or indirectly by the Coach.
9. ANNUITY
MARSHALL – Wichita State: If Mr. Marshall completes the 2011-2012 season, he will receive a one-time payment of Five Hundred Fifty Thousand and No/1.00 Dollars ($550,000.00); provided, however, that should Mr. Marshall not complete the 2011-2012 season because of circumstances for any reason, Mr. Marshall will receive a one-time payment of Four Hundred Twenty-Five Thousand and No/1.00 Dollars ($425,000.00).
Beginning on April 16, 2012, a new annuity will be initiated for the remaining term of the contract at One Hundred Twenty-Five Thousand and No/1.00 Dollars ($125,000.00) per year, said amount to vest as of the completion of each successive basketball season. The total vested amount of the annuity will be paid at the conclusion of every fourth season (“Payout Year”) that Mr. Marshall is employed by the ICAA, i.e., paid at the completion of the 2015-16 season, completion of the 2019-20 season etc.; provided, however, if Mr. Marshall were to leave the employment of the ICAA for any reason at any time other than a Payout Year, he shall receive the total vested amount at that time.
For example: If Mr. Marshall were to leave the employment of the ICAA after completion of the 2012-2013 season, he would receive a one-time payment of One Hundred Twenty-Five Thousand and No/1.00 Dollars ($125,000.00); If Mr. Marshall were to leave the employment of the ICAA after the completion of the 2013-2014 season, he would receive a onetime payment of Two Hundred Fifty Thousand and No/1.00 Dollars ($250,000.00); if Mr. Marshall were to leave the employment of the ICAA after completion of the 2014-2015 season, he would receive a one-time payment of Three Hundred Seventy-Five thousand and No/1.000 Dollars ($375,000.00); after completion of the 2015-2016 season, he would receive a one-time payment of Five hundred Thousand and No/1.00 dollars ($500,000.00). The payment cycle would then start over and continue for as long as Mr. Marshall is employed by ICAA.
10. EXPENSE ACCOUNT
MUSCHAMP – University of Florida: Coach shall be paid an expense account for personal expenses of Sixty-Eight Thousand Thirty-Eight and 64/100 ($68,038.64) for the First Contract Year. Thereafter, Coach shall be paid an annual expense account for personal expenses of Sixty-One Thousand Dollars ($61,000.00) for each Contract Year this Agreement is in effect (prorated for any Partial Contract Year using the proration process described in paragraph 4 for Partial Contract Years.
This personal expense payment shall be paid in installments at the same time as base salary net of applicable taxes and withholding.
TUBERVILLE – University of Cincinnati: University will provide Coach with an annual Business Entertainment Allowance and Coaches Working Meals budget of $10,000, the expenditure and reporting of which shall be subject to University rules.
PETERSEN – Boise State University: Coach shall have a “public relations” account of $7,000 per year to be used for reimbursement for meals and other acceptable and appropriate activities relating to the furtherance of the business of the University, and such funds shall be expended only in accordance with University and State Board of Education policies.
CRONIN – University of Cincinnati: Coach will have use of an expense account at a level determined by the Athletic Director annually, not to exceed Ten Thousand Dollars ($10,000) per year. All expenses must be accounted for with receipts and other information in accordance with Athletic Department policies.
BOWDEN – University of Akron: As additional supplemental compensation…the University shall: vi. reimburse Coach up to the amount of $12,000 annually, for non-traditional expenditures related to entertainment expenses associated with Coach’s development efforts, in accord with the then-current University policies. All expenses must be pre-approved by the Director, which approval shall not be unreasonably withheld, and Coach must provide an annual accounting of expenses to the Director and the Vice President for Public Affairs and Development.
SUMLIN – Texas A&M: Reimbursement for Spouse’s Official Activities. It is understood by the parties that from time to time Sumlin’s spouse may be called upon to travel to and/or attend various functions on behalf of the University, subject always to her reasonable availability. When engaged in such activities Sumlin’s spouse shall be entitled to payment for travel and other expenses incurred in such official activities. Spouse’s official activities may include, travel to all away football and bowl games, and special events at the invitation of the Director.
Reimbursement for Coach’s Official Activities. Sumlin shall be entitled to be reimbursed by University for customary expenditures incurred by Sumlin in the discharge of his duties under this Agreement afforded to employees of the University of commensurate rank and length of service, and of like term of appointment.
11. RELOCATION PAYMENT
TURGEON – University of Maryland: To facilitate the relocation and moving the Coach and his family from College Station, Texas, to Maryland, including costs related to the sale of the Coach’s current home, the purchase of a new home, and for temporary housing and moving expenses for the Coach and his family, the University agrees to pay the Coach Four Hundred and Fifty Thousand Dollars ($450,000), payable on or before June 1, 2011.
ALFORD – University of New Mexico (Terminated): Moving Expense Reimbursement. Moving expenses will be reimbursed as provided in University policy 4020, “Moving Expenses,” of the University Business Policy and Procedures Manual (UBPPM), up to a maximum of $15,000.00. If Coach Alford does not complete the first contract year from date of hire, he shall reimburse the University a prorated portion for moving and travel expenses paid by the University. In that event, the total amount paid shall be divided by twelve and the prorated amount to be reimbursed by Coach Alford shall be 1/12 times the number of months or partial months of the first contract year not completed. This provision shall apply whether Coach Alford resigns or is terminated by the University in accordance with this Agreement.
TUBERVILLE – University of Cincinnati: University will pay reasonable costs associated with Coach’s move to the Cincinnati area not to exceed $20,000 unless approved by UC in advance which approval shall not be unreasonably withheld, and provided Coach uses a University approved vendor and provides documentation of the costs.
University will pay reasonable costs for travel associated with Coach and his spouse’s efforts to locate a home in the Cincinnati area, not to exceed $5,000 unless approved by UC in advance which approval shall not be unreasonably withheld, subject to submission of appropriate documentation of such costs.
Coach will be provided a temporary housing allowance for a period of three (3) months in an amount not to exceed $6,000 per month unless approved by UC in advance which approval shall not be unreasonably withheld, payable in the pay period subsequent to submission of appropriate documentation of housing expenses.
MACINTYRE – University of Colorado: Moving Expenses.
i. The University will reimburse Macintyre allowable moving and lodging expenses up a maximum amount of Thirty Thousand Dollars ($30,000). Allowable moving expenses and lodging are as provided by University fiscal rules and University policy.
ii. For each Assistant Coach hired by Macintyre, the University will reimburse the Assistant Coach for allowable moving and lodging expenses up to a maximum amount of 10% of the Assistant Coach’s salary or Fifteen Thousand Dollars ($15,000), whichever is less. The Athletic Director’s prior written approval is required before any Assistant Coach is eligible for reimbursement under this subparagraph.
12. DISABILITY PAYMENT
SELF – University of Kansas: Termination in the Event of Head Coach’s Death or Disability. In the event of Head Coach’s death, his estate shall receive an after tax payment of $500,000 for every full year Head Coach has been employed as head men’s basketball coach after April 1, 2008. In the event of Head Coach’s disability, as defined below, Head Coach shall receive a payment of $500,000 for every full year Head Coach has been employed as head men’s basketball coach after April 1, 2008. A “full year” shall be defined as a year beginning on April 1 and ending on March 31. In the event of head Coach’s death or disability before the end of any such full year, this payment shall include an amount established by dividing by 365 a numerical figure obtained by multiplying the number of calendar days served during the partial year (that begins on April 1) by the amount of $500,000. This payment shall be made in the event Head Coach’s death or disability occurs at any time up to and including March 31, 2018 but in the event of head Coach’s death or disability between April 1, 2013 an March 31, 2018, this payment shall not include any amount for the days or years served prior to April 1, 2013. In addition, if Head Coach dies or becomes disabled before April 1, 2011, any amount paid to him under a prior Retention Agreement due to death or disability shall reduce the amount paid under this Agreement. Any payment under this provision shall be made thirty (30) days following the death or full disability of Head Coach. In the event Head Coach dies or is disabled after March 31, 2018, this provision is no longer effective.
Disability shall only be deemed to exist if Head Coach is:
a. unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months;
b. by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, is receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of Athletics; or
c. determined to be totally disabled by the United States Social Security Administration.
PITINO – University of Louisville: In the event Employee becomes, in the opinion of a physician reasonably acceptable to Employer and Employee, so disabled as not to be capable of performing his duties hereunder for a period of six months or more, and said disability occurs during the period of the date of this Contract and March 31, 2013, Employee shall be entitled to receive the balance of the compensation which would have been due him pursuant to Sections 3.1.1 and 3.1.2 herein for a period of time commencing at the time of disability and ending at the earlier of termination of said disability or March 31, 2013, but for a period of no less than twelve months. Employer has purchased a long-term disability insurance policy from Lloyds of London on behalf of Employee under the terms of the Employment Contract between Employer and dated June 25, 2007, and Employer maintains the right to increase the amount of said coverage in order to reimburse a portion of the cost of disability benefits that may be paid by Employer to Employee until March 31, 2013. Subject to Employer’s ability to obtain an appropriate extension to Employee’s long-term disability insurance policy, in the event Employee becomes, in the opinion of a physician reasonably acceptable to Employer and Employee, so disabled as not be capable of performing his duties hereunder for a period of six months or more, and said disability occurs during the period of March 31, 2013 and June 30, 2017, it is the of Employer to pay Employee compensation pursuant to Sections 3.1.1 and 3.1.2 herein until the earlier of the termination of said disability or June 30, 2017. However, except as provided herein, Employer cannot assume the risk of self-insuring said payments to Employee. Therefore, Employer will use its best efforts to purchase long-term disability insurance on Employee from April 1, 2013 until June 30, 2017, for an amount equal to 100% of the employee’s compensation as defined in Sections 3.1.1 and 3.1.2. If such insurance is purchased and a disability benefits is paid from the policy due to Employee’s disability, Employee will be entitled to receive a disability benefit from Employer equal to the balance of the compensation due him pursuant to Sections 3.1.1 and 3.1.2 herein for a period of time commencing at the time of disability and ending when the disability insurance benefit is no longer payable, but no later than June 30, 2017. If, after using its best efforts to purchase longterm insurance, said insurance cannot be purchased, and Employee becomes, in the opinion of a physician reasonably acceptable to Employer and Employee, so disabled as not to be capable of performing his duties hereunder for a period of six months or more, Employer will assign to Employee and Employee shall have the right to designate the beneficiary for the death benefit payable under the life insurance policy owned by Employer as described in Section 3.1.14. The foregoing shall apply only if Employer is able to procure the life insurance policy described in Section 3.1.14. Thus, if Employer is unable to procure life insurance and long-term disability insurance for Employee, then Employer shall not be required to make any payments or assign any benefits to Employee pursuant to this Section 6.2 on account of Employee’s disability. Employee agrees to take all medical exams and to provide all medical history that may be required as a condition to obtaining said additional long-term disability insurance.
SPURRIER – University of South Carolina: Disability Insurance. During the term of this Employment Agreement, the University shall pay the premiums necessary to provide Coach with disability insurance income totaling Two Hundred Fifty Thousand Dollars ($250,000) annually until Coach reaches the age of 65.
CRONIN – University of Cincinnati: For each year that Coach is employed under the Term for which Coach elects coverage under one of the long term disability plans offered by the University, the University shall obtain a supplemental disability insurance policy in the name of Coach which will enable Coach to receive a total disability benefit from all sources equaling Twenty-Five Thousand dollars ($25,000) per month, starting with the first day he is declared totally disabled under the applicable University disability policy through the Term. As a of this undertaking, Coach agrees to fully cooperate in completing all requirements of the insurer in order to obtain coverage at the most advantageous rates and terms, including without limitation waiver of physician-patient privilege and rights of privacy under federal and state laws.
13. ENTREPRENEURIAL SHARING
HURLEY – University of Rhode Island: The Coach will also receive, in addition to his Base Salary, the sum of $175,000.00 (One Hundred Seventy-Five Thousand and no/100 Dollars) in each Contract Year as a guaranteed portion of the gate receipts for all home games administered by the URI Athletic Department. This amount shall be increased $15,000.00 (Fifteen Thousand and no/100 Dollars) in each Contract Year following the first Contract Year of the Term of this Agreement. Said amount shall be payable quarterly during the Term (on October 1, January 1, April 1 and July 1 of each Contract Year.) The first payment shall be payable on October 1, 2012).
FLECK – Western Michigan University: Football Game Attendance Incentive. In December of each year, University shall calculate the publicly announced home football game season attendance average using announced game attendance form the preceding, just completed, football season. University shall pay Employee one bonus if Employee meets certain game attendance standards in accordance with the following table:
If the publicly announced home football game season attendance average:
is 18,000 or higher, but is less than 20,000, Employee bonus shall be: $6,000
is 20,000 or higher, but is less than 25,000, Employee bonus shall be: $8,000
is 25,000 or higher, Employee bonus shall be: $15,00086
MOLNAR – University of Massachusetts Amherst: Gross Game Guarantees. Molnar shall receive, for each season during which Molnar serves as head football coach, ten percent (10%) of gross away game guarantees (“Away Game Payments”), up to a cumulative maximum of One Hundred Thousand Dollars ($100,000), provided, however, that said guarantees are based solely upon games scheduled at the authorization of the Athletic Director. Such Away Game Payments shall accrue, pro rata, with respect to each away game for which Molnar serves as head football coach relative to the total number of away games during that season, and shall be distributed on or before the last day of each Contract Year.
Ticket Incentive: For each season during which Molnar serves as head football coach, Molnar shall receive additional compensation as determined below (the “Ticket Incentive Payment”):
i. Twenty Thousand Dollars ($20,000) if the NCAA certified attendance at home football games averages Fifteen Thousand (15,000) during the regular season or
ii. Twenty-Five Thousand Dollars ($25,000) if the NCAA certified attendance at home football games averages Twenty Thousand (20,000) during the regular season or
iii. Thirty Thousand Dollars ($30,000) if the NCAA certified attendance at home football games averages Twenty-Five Thousand (25,000) during the regular season or
iv. Thirty-Five Thousand Dollars ($35,000) if the NCAA certified attendance at home football games averages Thirty Thousand (30,000) during the regular season
The Ticket Incentive Payment, if any for a Contract Year, shall accrue, pro rata, with respect to each home game for which Molnar serves as head football coach relative to the total number of home games during that season, and shall be distributed on or before the last day of the Contract Year.
DAVIS – Central Michigan University: For each home basketball game that is sold out during the Term, Coach will receive an additional lump sum payment of two thousand five hundred dollars ($2,500). Attendance will be calculated based on athletics department official ticket counts.
KINGSBURY – Texas Tech University: Attendance Achievement. If the average paid attendance at home football games equals or exceeds an average of 95% of Paid Seating Capacity during a Contract Year – $50,000. For purposes of this provision, Paid Seating Capacity for football is 60,454. Paid Seating Capacity is subject to change based upon future construction to Jones AT&T Stadium, and will automatically be adjusted for purposes of this provision upon completion of any such construction.
VII. PERFORMANCE BONUSES — PERQUISITES
In addition to the financial engineering, coaches also are handsomely paid for reaching certain plateaus with respect to performance of their jobs, as well as provided perquisites of a Chief Executive Officer. For instance, Tubby Smith, former University of Minnesota basketball coach, had a whole Exhibit (effective July 1, 2012) of incentive payments based upon a performance bonus plan.
In lieu of any other performance based bonus plan the University may adopt for sports coaches or other University employees, the University shall pay Coach the following incentive Bonuses, consistent with the requirements of all other terms of this Agreement:
I. NCAA Tournament. For each year the Team shall play in the NCAA Championship Tournament during the Term of Employment, the University shall pay Coach as follows:
a. Winning the National Championship, One Million Five Hundred Thousand and
No/100 Dollars ($1,500,000);
b. Playing in the National Championship Game, One Million and No/100 Dollars
($1,000,000);
c. Playing in the Final Four, Six Hundred Thousand and No/100 Dollars ($600,000);
d. Playing in the Elite Eight, Three Hundred Thousand and No/100 Dollars
($300,000);
e. Playing the Sweet Sixteen, Two Hundred Thousand and No/100 Dollars
($200,000);
f. Playing in the Second Round, One Hundred Fifty Thousand and No/100 Dollars
($150,000);
g. An invitation to play in the NCAA Championship Tournament, One Hundred
Thousand and No/100 Dollars ($100,000).
Coach shall receive the highest single bonus amount achieved under this schedule I.
Bonus amounts on this schedule I are not cumulative
II. Big Ten Finish. The University shall pay Coach a bonus based upon the Team’s Big Ten finish that concludes during each year of the Term of Employment, as follows:
Finish Amount of Bonus
a. Big Ten Regular Season Champion $250,000
b. Not lower than Big Ten Regular Season 2nd
place or tied for 2nd Place $150,000
c. Not lower than Big Ten Regular Season 3rd
Place or tied for 3rd Place $100,000
d. Not lower than Big Ten Regular Season 4th
Place or tied for 4th Place $ 50,000
e. Big Ten Tournament Champion $250,000
Bonus amounts on this schedule II are not cumulative except for the Big Ten Tournament Championship
III. Academic Performance. The University shall pay Coach a bonus based on the Annual Academic Progress Rate (“APR”) for the Team as established each year by the NCAA,beginning at the end of FY 2008, as follows:
a. APR greater than or equal to 930 $ 25,000
b. APR greater than or equal to 940 $ 50,000
c. APR greater than or equal to 950 $100,000
d. APR greater than or equal to 970 $150,000
Coach shall receive the highest single bonus amount achieved under bonus Schedule
III. Bonus amounts on this schedule III are not cumulative
IV. Graduation Rate. Each year, beginning at the end of the 2007-2008 academic year, the University shall pay Coach a bonus of One Hundred Thousand and No/100 Dollars ($100,000) if the four-year average of the Team’s six-year graduate rate, as determined by the University consistent with NCAA rules, is equal to or higher than 50%. The four year average shall be based on the rates of the just-completed academic year and the three previous academic years.
V. Coach of the Year Honors
a. Big Ten Coach of the Year $100,000
b. National Coach of the Year $100,000
Coach is eligible to receive either or both amounts under this schedule V.
VI. Annual Team Cumulative Grade Point Average (“GPA”).
a. Cumulative Team GPA of 2.9 or above $100,000
b. Cumulative Team GPA of 3.25 or above $150,000
Coach shall receive the highest single bonus amount achieved under this bonus schedule VI. Bonus amounts on this schedule VI are not cumulative.
VII. Contract Extension. The University agrees to extend the Employment Agreement and its Amendment for one year in the following circumstances:
a. Winning the Big Ten Regular Season Championship; or
b. Winning the Big Ten Tournament Championship; or
c. Playing in the NCAA Tournament Sweet Sixteen or better.
In each year, the contract extension shall be for a maximum of one additional year. Additional one year extensions may be earned in other years. The extension shall be from May 1 following the end of the existing Term of Employment through April 30 the following calendar year, and all other terms and conditions of the existing Employment Agreement shall apply to the extension period.
In addition to performance-based pay, coaches also demand and receive perquisites commensurate with the position. What follows is an example of the perquisites provided Matt Painter, Head Basketball Coach at the University of Purdue:
4.0 Additional Perquisites.
4.1 Purdue will sponsor the Coach’s membership in the Club, and will pay any initiation fees, monthly dues and assessments on the Coach’s behalf, in return for the public relations value to Purdue of the Coach’s presence at the Club’s various facilities and social contacts with its members and guests, at times of the Coach’s choosing, or as reasonably requested by Purdue from time to time.
4.2 Purdue will provide the Coach with a car allowance of $1,500.00 per month.
4.3 The Coach may conduct sports camps and retain the income therefrom in accordance with Purdue’s sports camps policies, as the same may be amended from time to time.
4.4 Purdue will provide the coach with one athletics department staff pass to the Birck Boilermaker Golf Complex.
4.5 Contingent on the present agreement between Purdue and NIKE, Inc. remaining in force without material amendment, the Coach may order (or, in the Coach’s discretion, the Coach’s assistant coaches and support staff may order), at no charge, up to a total of $25,000.00 (at Nike prices) per Fiscal Year of Nike merchandise from “Nike by Mail.”
4.6 Purdue shall provide to the Coach, free of charge, (i) eight season tickets to men’s basketball games for the Coach’s personal use, plus an additional twenty-five single game tickets for each men’s home basketball game for business use, (ii) season tickets for the Coach and each of his dependents for football games, (iii) two season tickets for women’s basketball games, (iv) two season tickets for volleyball games, (v) twenty tickets to each game in the Big Ten postseason tournament in which the Team is a participant, and (vi) twenty tickets to each game in the NCAA post-season tournament in which the Team is participant.
4.7 The Coach’s spouse and children may travel with the Team to away basketball games at Purdue’s expense under normal Purdue travel reimbursement policies as they may be changed from time to time.
VIII. MARQUEE SALARY CLAUSE
Nick Saban’s contract contains what is the equivalent of a marquee salary clause in a professional player’s contract wherein his compensation is always equivalent to the highest paid football coaches either in the SEC or the NCAA:
Market Rate Review. Commencing February 12, 2015 (and each February 1 thereafter through the end of the contract, as amended), the parties will meet for so long as necessary to determine the marketplace trends regarding head football coach compensation at Southeastern Conference (SEC) and National Collegiate Association, Division I, bowl subdivision (NCAA) institutions. Should the Employee’s “total guaranteed annual compensation” be less than that of the average of the “total guaranteed annual compensation” of the three highest paid SEC head football coaches; or less than that of the average of the “total guaranteed annual compensation” of the five highest paid NCAA head football coaches; then the University agrees to increase Employee’s “total guaranteed annual compensation” to the higher of the two averages, at said times. No more than one adjustment shall occur annually. For purposes of this paragraph, “total annual compensation” shall be defined as that terminology is generally understood and defined within the industry and may include base salary and talent fee and similar such payments as received by Employee and included in the calculation of Employee’s “total guaranteed annual compensation,” but shall not include bonuses or incentives earned, expense allowances, deferred compensation, longevity bonus payments, in-kind compensation, or other compensation of any nature not generally understood to be a part of a head collegiate football coach’s “total guaranteed annual compensation.” It is the intent of the parties, for purposes of this paragraph, to compare Employee’s “total guaranteed annual compensation” to similar amounts received by head football coaches at SEC and NCAA institutions. Therefore, the parties agree that, should
any comparator’s “total guaranteed annual compensation” include amounts, known by whatever name, that are similar in nature to amounts received by Employee, said amounts shall be included in the comparator’s “total guaranteed annual compensation” for purposes of determining the averages, and Employee’s total guaranteed annual compensation” for purposes of this comparison. Likewise, when amounts are to be excluded from Employee’s “total guaranteed annual compensation” for purposes of said comparison, similar amounts shall be excluded from any comparator’s “total guaranteed annual compensation,” regardless of the name by which said compensation is known. Both parties agree to confer and negotiate in good faith at said times towards an adjustment in the Base Salary and Talent Fee, if then deemed warranted based on the marketplace analysis, and to share information and appropriate documentation with the other party to substantiate its evidence of marketplace valuation. Valuations that are used for purposes of this Market Rate Review must be verifiable by public record other documentation mutually acceptable to the parties and relied on in the industry. The good-faith failure or refusal of either party to agree to an adjustment or average proposed by the other party shall not constitute a breach of this contract.”
These clauses will become more prevalent as the athletics arms race continues and universities try to retain and maintain their power coaches.
IX. CORPORATE COACHES
The New York Times refers to many college coaches as Corporate Coaches. Such reference is indicative of the fact that some coaches contract separately with the University for the payment of their salary, and University fringe benefits, while setting up separate entities usually in the form of a limited liability company or corporation to contract for other professional services such as media services, camps, speaking and endorsements. The New York Times stated that:
Coaches can use these corporations for sophisticated tax planning that is not available to state employees who are not affiliated with similar organizations. But because a portion of their income is earned as state employees, they remain eligible for state employee benefits such as pensions, retirement savings matches, medical insurance, vacation pay and tuition waivers. Funneling expenses through such a corporation converts nondeductible personal expenses to fully deductible business expenses. Loan-outs also can be used to defer income and establish additional retirement savings. In many cases, the corporation can deduct benefits, which are tax-free until the funds are distributed upon retirement. There is also great latitude in designing fringe and retirement benefits since either they or their spouses are the majority shareholder in the corporation. These corporations often are included in the coaches’ contracts with the university. L.S.U.’s contract with Miles stipulates that he can require the university to contract with another corporation for services that are part of his fee for media appearances. The name of the corporation is not cited in his contract but Miles and his wife, Kathy, have five registered corporations in Louisiana. In this, as in many other aspects of their contracts, Saban and Miles are following an increasingly standard practice. Kansas State’s Bill Snyder has a contract that states the university’s athletic corporation must more than $700,000 annually to a corporation he is affiliated with, SSM Inc., to license his image.
The Employment Agreement by and between Kansas Athletics, Inc., and Bill Self provides that in addition to the salary and incentive payments that are paid directly to the Coach, Kansas Athletics shall also pay to BCLT, LLC an Illinois limited liability company created by Self, fees for professional services rendered by Self.
Self’s limited liability company, BCLT, LLC, and Kansas Athletics, Inc., also entered into a separate agreement entitled Professional Service Agreement in which BCLT, LLC arranges for compensation through the Agreement for Self for all educational, public relations and promotional activities (multi-media activities) arranged by BCLT, LLC for Head Coach.
The Head Football Coach Employment Contract between the University of Central Florida Athletic Association, Inc. and George J. O’Leary also includes George O’Leary, Inc. The contract provides for the Coach’s base salary to be paid directly to Coach. The contract also provides that payments for radio and television services, speaking, equipment and apparel endorsements shall be paid to George O’Leary Enterprises, Inc. The corporation agrees to provide Coach to make appearances during the football season or otherwise for such radio and television shows, and for granting the Central Florida Athletic Association the nonexclusive right to utilize the coach’s services in procuring speaking engagements or endorsements of equipment or apparel.
X. CONCLUSION
College football and basketball coaches are highly compensated employees, in many instances more highly compensated than the athletic director and the president of the University, and in most instances the highest paid employee of the University. They earn every penny that they are paid. The negotiation of a coach’s contract today is a sophisticated financial arrangement. The coach’s career is often fleeting, unpredictable, and sometimes short. Therefore, it is incumbent upon lawyers or coaches’ representatives to protect coaches against the risk of firing, death, and disability. Not only must the representative look at the hay-day of earnings, which can be very short-lived, but also earnings post coaching career in the form of deferred compensation and post retirement structures.
Indeed, college coaches have become CEOs in headphones and deserve the very best in representation. In the opinion of these authors, the very best in representation can be characterized as follows:
1. A representative that knows the environment of college coaching, financial comparisons, fair market value, and current financial arrangements between universities and college coaches. NCAA football and basketball are unique vocational domains and must be understood by experienced, veteran advisors.
2. A representative that understands it’s not how much you earn, it’s how much you keep, i.e. a keen understanding of tax planning. The Internal Revenue Services is the coach’s partner.
3. A representative that understands the importance of post retirement financial planning and the structures therefor. A Coach’s retirement often comes earlier than expected.
4. A representative that protects the coach and his family financially against the risks of termination, death, and disability.
5. A representative that understands college coaches’ contracts and the various legal nuances that are contained therein.
6. A representative that understands the basis of a time-value theory of money and inflation protection.
7. A representative that is willing to think out of the box and look at the University and coach as entrepreneurial partners.
8. Finally, a representative that is willing to take the coach out of the back room into the courtroom if the coaches’ rights need to be protected.
Coaches are the paramount teachers and highly visible campus leaders, and oftentimes the face of their University. They deserve the very best in complex representation required to sustain their best interest with veteran professional advice. Society should ask no less for them and should honor such noble requests.
REFRENCES
1.) Martin J. Greenberg, College Coaching Contracts Revisited: A Practical Perspective, 127 MARQ. SPORTS LAW
REV. 127, 129 (2001).
2.) Patrick Rishe, College Football Coaching Salaries Grow Astronomically Due to Escalating Media Rights Deals, FORBES (Nov. 20, 2012), http://www.forbes.com/sites/prishe/2012/11/20/college-football-coaching-salaries-growastronomically-due-to-escalating-media-rights-deals/.
3.) Randy Southerland, Biggest Football Expense: Coaches’ Salaries, ATLANTA BUS. CHRONICLE (Aug. 10, 2012),
http://www.bizjournals.com/atlanta/print-edition/2012/08/10/biggest-football-expense-coaches.html?page=all.
4.) CHARLES T. CLOTFELTER, BIG-TIME SPORTS IN AMERICAN UNIVERSITIES 106 (2011).
5.) Steve Weiberg et al., College Football Coaches See Salaries Rise in Down Economy, USATODAY.com (Nov. 10,
2009), http://usatoday30.usatoday.com/sports/college/football/2009-11-09-coaches-salary-analysis_N.htm.
6.) Jay Reeves, New UA President’s Pay Package Worth Up To $652,000, TUSCALOOSANEWS.COM (Sep. 10, 2012), http://www.tuscaloosanews.com/article/20120910/NEWS/120909748.
7.) USA Today Analysis Shows College Football Coaches’ Pay Soaring; Pac-12, SEC Lead, SPORTSBUSINESS DAILY (Nov. 20, 2012), http://www.sportsbusinessdaily.com/Daily/Issues/2012/11/20/Colleges/Coaching-Salaries.aspx (hereinafter “SportsBusiness Daily”).
8.) Jodi Upton & Steve Berkowitz, Athletic Director Salary Database, USATODAY.COM (Mar. 6, 2013), http://www.usatoday.com/story/sports/college/2013/03/06/athletic-director-salary-database-methodology/1968783/.
12.) Dan Simmons, Rebecca Blank, Approved as UW-Madison Chancellor, to Start July 15, WISCONSIN STATE JOURNAL (Apr. 6, 2013), http://host.madison.com/news/local/education/university/rebecca-blank-approved-as-uwmadison-chancellor-to-start-july/article_b80d6c34-9e21-11e2-8975-001a4bcf887a.html?comment_form=true.
13.) Employment Agreement by & between University of Wisconsin-Madison & Gary L. Andersen (Jan. 2, 2013).
14.) Christopher Schnaars & Kristin DeRamus, NCAA College Basketball Coaches’ Salary Database, USATODAY.COM, usatoday30.usatoday.com/sports/college/mensbasketball/story/2012-03-28/ncaa-coaches-salarydatabase/53827374/1 (last visited Apr. 4, 2013).
15.) Steve Berkowitz & Jodi Upton, Salaries Rising for New College Football Coaches, USATODAY.COM (Jan. 17, 2012), http://usatoday30.usatoday.com/sports/college/football/story/2012-01-16/College-football-coachescompenstion/52602734/1.
16.) Employment Agreement by & between University of Texas at Austin & William Mack Brown, §IV (Sep. 1, 2007).
17.) First Amendment to the Employment Agreement by & between Georgia Tech Athletic Association & Paul Johnson, §6 (Dec. 10, 2007).
18.) Employment Agreement by & between University of Arizona & Sean E. Miller, §5(a) (May 1, 2009).
19.) Employment Agreement by & between University Athletic Association & William L. Muschamp, §8 (Dec. 13, 2010).
20.) Employment Agreement by & between UCF Athletics Association, Inc. & George O’Leary, §3.4 (July 1, 2006).
21.) Employment Agreement by & between University of California, Berkley & Daniel Dykes, §2G (Dec. 7, 2012).
22.) Amendment No. 2 to the Employment Agreement by & between University of Texas at Austin & Richard Dale Barnes §VI(G) (3/6/08).
23.) Employment Agreement by & between Ohio State University & Urban F. Meyer, §3.11 (Date Unknown).
25.) Employment Agreement by & between University of Alabama & Nick L. Saban, §5 (Jan. 4, 2007).
26.) Retention Payment Agreement by & between Kansas Athletics, Inc. & Bill Self, §1-2 (Apr. 1, 2008).
27.) Employment Agreement by & between University of Oklahoma & Robert Anthony Stoops, §IV(D)(E) (Jan. 1, 2009).
28.) Employment Agreement by & between Ohio University & Jim Christian, §3.5(k) (July 30, 2012).
29.) Amendment to Employment Agreement by & between Michigan State University & Mark J. Dantonio, §3.4.6 (Oct. 7, 2011).
30.) Employment Agreement by & between University of Louisville Athletic Association, Inc. & Richard A. Pitino, §3.1.14 (July 1, 2010).
31.) Employment Agreement by & between University of South Carolina & Stephen O. Spurrier, §5.01, 5.02 Nov. 23, 2004).
32.) Employment Agreement by & between Indiana University & Thomas Crean, § 4.03(B) (Aug. 11, 2008).
33.) Employment Agreement by & between Texas Tech University & Kliff Kingsbury, §7 (Feb. 18, 2013).
34.) Employment Agreement by & between University of Michigan & Brady Hoke, §3.02(g)(i)(ii), (Mar. 23, 2011).
35.) Employment Agreement by & between Wichita State University Intercollegiate Athletic Association, Inc. & Gregg Marshall, §3.4.12 (Apr. 16, 2011).
36.) Employment Agreement by & between University of Missouri-Columbia & Gary R. Pinkel, §5(A) (Nov. 25, 2008).
37.) Employment Agreement by & between University of Louisville Athletic Association, Inc. & Richard A. Pitino, §3.2, 3.2.1 (July 1, 2010).
38.) Second Amendment to Employment Agreement by & between Indiana University & Thomas Crean, § 5.03 (Nov. 28, 2012).
39.) Employment Agreement by & between Auburn University & Gene Chizik, §26 (Dec. 15, 2008).
40.) Employment Agreement by & between University of Tennessee & Derek Dooley, Art. 2 Sec. C (9/2/2010).
41.) Employment Agreement by & between University of Michigan & Brady Hoke, §3.02(h) (Mar. 23, 2011).
42.) Employment Agreement by & between Oregon State University & Craig Robinson, §12 (Apr. 6, 2008).
43.) Employment Agreement by & between Indiana University & Thomas Crean, §4.04(b) (Aug. 11, 2008).
44.) Employment Agreement by & between University of Arkansas & Bret Bielema, at pages 10-11 (Dec. 4,2012).
45.) Memorandum of Understanding by & between University of Cincinnati & Thomas Tuberville, at 5 (Date Unknown).
46.) Employment Agreement by & between Michigan State University & Mark J. Dantonio, §II(K) (Oct. 7, 2011).
47.) Addendum No. 3, §5.3.f to Employment Agreement by & between Ohio State University & James P. Tressel, (June 16, 2003).
48.) Amendment to Employment Agreement by & between University of Cincinnati & Lyle “Butch” Jones, §3(o) (Jan. 1, 2012).
49.) Employment Agreement by & between Ohio State University & Urban F. Meyer, §3.2 (June 8, 2012).
50.) Employment Agreement by & between Michigan State University & Mark J. Dantonio, §II(I) (Oct. 7, 2011).
60.) Employment Agreement by & between University of Oklahoma & Robert Anthony Stoops, §IV(E) (Jan. 1, 2009).
61.) Employment Agreement by & between Purdue University & Matt Painter, §3.1 – 3.3 (July 1, 2009).
62.) Employment Agreement by & between Wichita State University Intercollegiate Athletic Association, Inc. & Gregg Marshall, §3.4.11, 3.4.12 (Apr. 16, 2011).
63.) Employment Agreement by & between University Athletic Association, Inc. & William L. Muschamp, §11 (Dec.13, 2010).
64.) Draft Memorandum of Understanding between University of Cincinnati and Thomas Tuberville, page 2.
65.) Employment Agreement by & between Boise State University & Chris Petersen, §10 (Feb. 1, 2012).
66.) Employment Agreement by & between University of Cincinnati & Michael W. Cronin, §3(I) (June 21, 2011).
67.) Employment Agreement by & between University of Akron & Terry Bowden, § III (A)(3)(vi) (Aug. 8, 2012).
68.) Employment Agreement by & between Texas A&M University System & Kevin Sumlin, §4.6, 4.7 (Jan. 1, 2013).
69.) Employment Agreement by & between University of Maryland & Mark Turgeon, § 5 (June 27, 2011).
70.) First Amendment to Addendum to Employment Agreement by & between University of New Mexico & Steve Alford, §4 (Apr. 10, 2008).
71.) Draft Memorandum of Understanding between University of Cincinnati and Thomas Tuberville, page 2.
72.) Employment Agreement by & between University of Colorado Boulder & George Michael Macintyre, §9(a) (Jan. 7, 2013).
73.) Retention Payment Agreement by & between Kansas Athletics, Inc. & Bill Self, §5 (Apr. 1, 2008).
74.) Employment Agreement by & between University of Louisville Athletic Association, Inc. & Richard A. Pitino, §3.1.14 (July 1, 2010).
75.) Employment Agreement by & between University of South Carolina & Stephen O. Spurrier, §5.02 (Nov. 23, 2004).
76.) Employment Agreement by & between University of Cincinnati & Michael W. Cronin, §3(h) (June 21, 2011).
77.) Employment Agreement by & between University of Rhode Island & Daniel Hurley, §3.2.5 (Date Unknown).
78.) Employment Agreement by & between Western Michigan University & Philip John Fleck, §J (Dec. 31, 2012).
79.) Employment Agreement by & between University of Massachusetts Amherst & Charles E. Molnar, Jr., §5 (Dec. 7, 2011).
80.) Employment Agreement by & between Central Michigan University & Keno Davis, §(3)(I) (Aug. 15, 2012).
81.) Employment Agreement by & between Texas Tech University & Kliff Kingsbury, §III(4)(j) (Feb. 18, 2013).
82.) Amendment to Employment Agreement by & between University of Minnesota & Orlando “Tubby” Smith, Exhibit A (July 1, 2012).
83.) Employment Agreement by & between Purdue University & Matt Painter, §4.0-4.7 (Date).
84.) Second Amendment to Employment Agreement by & between University of Alabama & Nick L. Saban, §3 (Sep. 9, 2009).
85.) James K. Gentry & Raquel Meyer Alexander, From the Sideline to the Bottom Line, NYTimes.com (Dec. 31, 2011), http://www.nytimes.com/2012/01/01/sports/ncaafootball/contracts-for-top-college-football-coaches-growcomplicated.html?pagewanted=all&_r=0.
86.) Employment Agreement by & between Kansas Athletics, Inc. and Bill Self, §8(a),(b), effective April 1, 2008.
87.) Professional Service Agreement by and between Kansas Athletics, Inc. and BCLT, LLC, effective April 1, 2008.
88.) See Employment Agreement by & between UCF Athletics Association, Inc. & George J. O’Leary (July 1, 2006).
ABSTRACT
Outsourcing is a crucial tool that allows sport organizations to turn over their noncore processes to external service providers. The outsourced service providers help sport organizations focus on sales efforts to maximize revenue. The purpose of this study was to examine outsourced marketing in NCAA Division I institutions from the outsourced marketing companies’ perspective. A survey was conducted to gather information from the general managers at the primary outsourced marketing company’s property affiliated with select schools in NCAA Division I conferences. Collected data were analyzed with descriptive statistics along with qualitative responses. The study found that the outsourced marketing firms focus on revenue generation through securing corporate sponsors. Primary inventories sold included commercials during radio broadcasts of games and signage at athletic facilities. These are typically packaged with the sports of football and/or men’s basketball. The study found that many sponsorship categories remained unfulfilled. There was also growing concern by the companies regarding the escalading financial guarantees paid to the schools. The findings and recommendations are valuable to college administrators, athletic directors and outsourced marketing firms as the parties strive to find outcomes beneficial to everyone involved in the partnership.
INTRODUCTION
More and more collegiate athletic departments have adopted outsourcing as a strategy which uses their corporate partners, such as State Farm, Burger King or Verizon Wireless, to help them earn additional revenue in exchange for advertising at the sporting events. Outsourcing is a crucial business strategy that allows companies to turn over their noncore processes to external service providers while the company concentrates on its core competencies (18). In the highly competitive environment of intercollegiate athletics, some schools are able to handle its corporate partnerships with in-house marketing departments. However, the growing trend for major NCAA Division I schools is to outsource its marketing efforts to an outsourced marketing company that specializes in the sales of inventory such as commercials on radio broadcasts or coaches’ television show, corporate hospitality at home sporting events, signage at athletic facilities and more (24, 38).
The athletic department will typically sit down and outline what they would like to see from an outsourced partner (2). For most schools, outsourced companies offer the opportunity to streamline operations or provide resources that might not otherwise exist, such as sales expertise (24). Li and Burden (24) add that the athletic department may want a company to produce radio call-in shows or coaches’ television shows in addition to the sales efforts. The outsourced companies would have a greater opportunity to improve the quality of the broadcast and simplify the production efforts.
Host Communications, International Sports Properties (ISP Sports) and Learfield Communications were viewed as the main outsourced marketing companies in the early 2000’s (38). Nelligan Sports was also seen as an emerging outsourced marketing company. These outsourced companies handle sponsorship sales while the in-house marketing department shifted its attention to promotions and increasing attendance and ticket sales. The outsourced company would maintain a “property” at the school with the property serving as an extension of the parent company. The property was responsible for the sales efforts and reporting back to the parent company.
The benefits of the outsourced marketing partnership are that of guaranteed and additional revenue (19). An outsourced marketing company will promise a financial guarantee of a set amount to the school’s athletic department in exchange for being able to sell the “rights” of that athletic department. Another option includes a simple revenue-sharing model for the “rights.” The rights could be in the form of a radio commercial, an on-field promotion, a giveaway at a sporting event, or signage at an athletic facility including on a video board (38).
To a lesser extent, the outsourced company will also sell advertising in game programs, on ticket backs and on the athletic department’s website. A fan might pick up a schedule poster and schedule card at a football game with a sponsor’s logo on it. That sponsor may also have a permanent sign at the football stadium visible to fans and may also host a corporate village for its clients prior to the game. In exchange for its advertising opportunities, the sponsor will pay the outsourced marketing company an agreed upon amount of money. The outsourced marketing company will then put that revenue towards the promised guarantee for the athletic department. Once the guarantee is met, the athletic department receives an agreed upon percentage of any future revenue, but it is there that the outsourced company earns its greatest financial sales commission. If this financial model is not used the straight revenue sharing of each sponsorship sold is another viable option.
As these outsourced marketing companies gain more schools under their watch, they spread their sales territory and can start to package a few schools with one corporate sponsor. For example, ISP Sports may approach Verizon about a national sponsorship deal that could reach the Northeast through sponsoring Syracuse University, the West Coast through sponsoring UCLA, the Midwest through sponsoring the University of Houston and the Southeast through a sponsorship of Georgia Tech Athletics. At the same time, Verizon may also discuss a similar deal with Host Communications through sponsoring the athletic departments at Texas, Boston College, Arizona, Kentucky and the University of Michigan. Companies might also pursue schools in a set geographic region, further enabling them to partner with corporate partners exclusive to that particular region. By strategically acquiring attractive schools (those with large market areas and large fan bases) around the country, the outsourced marketing companies can pool their resources, reduce their costs and diversify their portfolio of schools at the same time.
A number of studies have examined the perceptions of athletic directors and senior staff administrators from the institutions that partner with an outsourced company about their relationship with their outsourcing partners (10, 19, 24, 25, 38). Issues examined include details of the outsourcing contracts such as the length of the term, the financial guarantee, and the strengths and weaknesses of the outsourced partnership. This current study provided the outsourced company a chance to respond with its own sentiments about the relationship and future issues related to outsourced marketing. An analysis of the schools’ responses in conjunction with the responses of the outsourced marketing companies could help make for a better relationship in the future. The purpose of this study was to examine outsourced marketing in NCAA Division I institutions from the outsourced marketing companies’ perspective.
An Overview of Outsourced Marketing in Intercollegiate Athletics
The most significant outsourced marketing deal to date took place early in the fall of 2004 as Host Communications won the rights to the University of Kentucky athletics in a ten-year deal valued at more than $80 million. Host placed a bid of $80.475 million edging the bid of $80.35 million submitted by Learfield Communications, while ESPN Regional bid $74 million and Viacom Sports $55.25 (29). The previous deal was $17.65 million over the course of five years and expired April 15, 2005 (20). This deal established a benchmark that has since been surpassed, but clearly raised the fair market value.
To look at the origin of outsourced companies’ involvement with athletic departments, it is necessary to start in Lexington, Kentucky, and the origin of Host Communications. In 1973, Jim Host bid on the rights for the University of Kentucky in what is the first believed outsourced deal in intercollegiate athletics. Within ten years, Host had secured the rights to the Final Four after convincing then NCAA president Walter Byers that corporate marketing was the wave of the future (34). Host saw the opportunity that existed in advertising and licensing given the affinity associated with the college sports fan.
In working with colleges and universities and their marketing efforts, what Host strived for was a clean venue comparable to the Olympic Games where there was limited signage and less clutter in the advertising. The corporate partners who paid the most would receive these exclusive opportunities to advertise. Host notes that the philosophy is not applied to the Bowl Championship Series which is run outside the control of the NCAA (34).
Today, Jim Host is no longer head of the company he started, but he has enjoyed seeing the company grow to the point that it sells advertising on over 500 radio stations for the Final Four (5). This is up from the 200 radio stations the company partnered with in 1982 (12). Host also prints game programs for over 43 NCAA championships and operates most marketing and promotional aspects of the NCAA events. It annually earns over $100 million in revenue (7) and has not limited itself to just intercollegiate athletics. Event marketing in junctures as diverse as Streetball and the National Tour Association (tourism industry) have led the company to be recognized by the SportsBusiness Journal as one of the top five marketing companies in the world and the premier in intercollegiate athletics (6). In 2007, global sports marketing giant IMG purchased Host Communication, as the company exists today as IMG College (17).
In time, other companies began to surface to challenge Host Communications as the “one-stop” shopping point for colleges and universities. The companies realized what athletic departments were failing to grasp, that season-ticket holders were more than just fans who wrote a check once a year for seats to a sporting event. These fans were consumers that could spend up to $100,000 or more during a lifetime on tickets, concessions, and parking (22). In addition, the fans were loyal to their teams and everything associated with their team.
Corporate partners began to realize this and wanted to partner with schools. With money to be made and Jim Host demonstrating some early financial return on investment for the University of Kentucky, more start-up outsourcing companies wanted to become involved in their revenue opportunity. Some of the companies were locally owned and operated, but others were more regional like an ISP Sports, Learfield Communications, or Nelligan Sports. Companies and athletic departments sat down to best figure out which schools were good fits for which company and how to best utilize the relationships over the long-term. After that outsourced companies began to provide sponsorship options or packages to corporate sponsors based on what other schools were doing (22).
In creating packages of what could be sold, the typical items included signage at the athletic facilities, television rights and radio broadcast rights (14). Cohen adds that higher dollar values were attached to such sponsorship packages and enabled athletic departments to offset growing expenses including scholarships and rising facility costs. Schools would “bundle” their inventory and see more of the revenue return directly to the school instead of multiple outside parties (13). Outsourced marketing enabled corporate sponsors to visit one individual or company instead of stopping at the radio station to gain radio advertising during game broadcasts, stopping at the local television station to gain on-air advertising during coaches’ television shows, then concluding with a visit to the athletic department for additional advertising signage at the athletic facilities. This is especially true as video boards became more and more detailed in intercollegiate athletic facilities starting with the University of Nebraska in 1994 (31).
As scoreboards have been supplemented or replaced with video boards fans are now afforded instant replays and advertising messages. A full-color video board could now offer “fan of the game” or “play of the game” or “great moments in history” segments that are presented in collaboration with a corporate sponsor. It could also roll a commercial exactly like the ones seen on television at home. Steinbach (31) noted that with their addition of video boards, Michigan State experienced a sponsorship revenue increase from $400,000 in the pre-video days in 1998 to more than $3 million annually by 2002.
While these video board improvements provided new fan entertainment and sponsorship revenue, they did not come without a price. Many older fans thought the video board was too much like the television they chose to leave at home. Others felt the noise was too distracting and took away from the natural elements of the sporting event including the fans’ cheering, the band and cheerleaders (15). Athletic administrators and outsourced companies had to evolve to package their advertising in subtle fashion around trivia contests, historic moments, replays and scores from around the country. Pure video commercials advertising products were not welcomed in the stadium as it distracted from the entertainment aspect of the game itself. Furthermore, sponsors recognized that if fans were not happy with the advertising, their affinity to the sponsor would not be positive either. Too much advertising could also lead to a clutter of sponsors with their advertising messages being lost on the fans (15). The message was heard by the outsourced companies which now included Viacom Sport and Action Sports Media in the mix.
Recent Concerns in Outsourced Marketing
Arizona State University completed a study in 2004 on a small sample size that found that in intercollegiate athletics, sponsorships are typically formed in the categories of: airlines, auto parts, beer, credit cards, DSL, gas/oil, health and fitness, long distance, paging devices, and tires/auto services (3). The same group also found that categories frequently ignored include: auto parts, boats/marines, computer hardware/software, delivery services, department stores, drug stores, electronics, hardware/home improvement, music stores, pharmaceuticals, personal hygiene, video game systems and video stores. One major concern is that ignoring these categories can result in significant lost revenue. Tim Hofferth, president and chief operating officer of Nelligan sports stresses that outsourced companies cannot ignore pre-existing business relationships between schools and area businesses as those are additional sponsorship opportunities waiting to happen (23). This is particularly important as the parent outsourcing companies, with a greater portfolio of schools, pursue national sponsorships that are more financially viable to the parent company relative to the schools’ properties pursuing regional and local sponsorships. Therefore another concern is that local relationships can be impaired or even lost.
Additional research by Walker (36) noted that it is important that communication between the outsourcing property and the school remain a high priority. Because of the athletic department’s affiliation with an institution of higher education there are certain restrictions that exist that may not be as prevalent in professional sports. Such restrictions may central on alcohol, gambling or lottery sponsorships or trying to maintain a “clean” image at the sporting events to avoid concerns of excess commercialization within higher education. Goals, philosophy and objectives between the school and property must be aligned (11).
Future research needs to also explore whether the escalating guarantees paid to schools have grown too rapidly for the outsourcing companies to keep pace. After Kentucky signed their landmark deal, Connecticut, Arizona, Tennessee, Alabama, Michigan, Texas, North Carolina, Florida, Ohio State and Nebraska have since signed contracts guaranteeing at least $80 million to their schools from their respective firms (29). Wisconsin, Oklahoma, LSU and Arkansas are all guaranteed at least $73 million through their school’s contractual obligations with outsourced marketing firms.
Outsourcing as a Strategic Alliance: A Brief Overview
As competition becomes more and more intensified, individual firms have to seek out strategies to stay competitive. One of such strategies is strategic alliances (16). The age of in-house operations is quickly being replaced by the age of alliances (16).
According to Spekman and Isabella (30), an alliance is a close, collaborative relationship created between two or more firms for the sake of accomplishing some goals that would be difficult for each to accomplish alone. By collaborating, alliance partners will not act in self-interest, but will promote the partnership and foster its strengths. There are several benefits of forming a strategic alliance. According to Parise and Casher (26), a strategic alliance is characterized as “an open-ended agreement between two or more organizations which enables cooperation and sharing of resources for mutual benefits, as well as enhancement of competitive positioning of all organizations in the alliance” (p. 26).
1. Strategic alliances exist to create value. Whether or not it is in the form of new market penetration, increased profit sharing, or competitive opportunities, companies join to reap the benefits that neither partner could enjoy alone.
2. Strategic alliances are developed to create a number of advantages. Some of these advantages are opportunity-based alternatives. In other words, strategic alliances can provide firms in the alliance with many opportunities to reposition themselves in the market because the infrastructure network created by the alliance gives all members access to a range of information, markets, technologies, and ideas that would be far beyond their reach otherwise (16, 27). Due to the fact that it is often difficult for a particular firm to possess all the resources required to meet new challenges and opportunities, the formation of an alliance can be extremely advantageous (16).
3. Strategic alliances are developed to divert corporate attention away from nonessential efforts where the firm lacks expertise, cost advantage, or scale. The skills gained through new partnerships can introduce new techniques, market segments, or new geographic markets, and the addition of complementary skills also helps boost revenue opportunities by gaining greater returns from existing customers, channels, and products (1, 30).
Outsourcing within intercollegiate athletics is a viable means for an athletic department to utilize strategic alliances to create value and take advantages of skills that may not be found with the in-house marketing staff. The outsourced marketing firm can focus on revenue generation while the in-house marketing staff enhances event atmosphere and boosting attendance.
METHODS
Subjects
The general manager at the primary outsourced marketing company’s property affiliated with select schools in NCAA Football Bowl Subdivision conferences was the original subject of this study. The select NCAA Football Bowl Subdivision conferences included such six conferences as the Atlantic Coast Conference (12 schools), Big East Conference (12 schools, including four independents), Big Ten Conference (11 schools), Big Twelve Conference (12 schools), Pacific Ten Conference (10 schools), and Southeastern Conference (12 schools). Each of these six conferences is a member of the Bowl Championship Series, the leader in the Football Bowl Subdivision, formerly Division I-A, post-season play. Furthermore, earlier research by Zullo has indicated that a majority of schools outside of these six selected conferences affiliated with the Bowl Championship Series do not have an existing relationship with an outsourced marketing group (19).
With the six BCS conferences, there are a total of 69 schools. Among these 69 schools, 13 handle their marketing in-house and an additional seven were marketing in-house and recently reached an agreement to start a relationship with an outsourced marketing partner (19). That left 49 schools with outsourced marketing relationships. However, seven schools used multiple companies in their outsourced marketing efforts rather than pooling their efforts bringing the number of included participants down to 42. For example, one firm may sell signage at the stadium while a second sells radio inventory. These schools were not included as this research focused on school’s exclusive outsourcing partnerships only.
The main outsourced parent companies include ESPN Regional, Host Communications (presently called IMG College), International Sports Properties (ISP Sports), Learfield Communications, Action Sports Media, Nelligan Sports, and Viacom Sports (presently called CBS Collegiate Sports Properties). An examination of these companies found an additional 19 Division I schools with outsourced marketing relationships. These 19 schools are not in the six major conferences but have been included in the study to increase the sample size to 61.
Instrumentation
To achieve the objectives of this study, a questionnaire was designed and utilized to examine the outsourced marketing companies’ perspective pertaining to their affiliations with NCAA Division I institutions. The researcher designed the questionnaire in consultation with four account executives from two major sports marketing firms. These four reviewers were not general managers with the outsourced marketing properties thus they could freely express their suggestions and concerns. This collaboration enabled further critique, expertise and anonymous feedback to enhance the instrument’s validity. Further review by academic colleagues aided in the process of eliminating biased questions or clarifying wording. The questionnaire and consent form were then sent to the general managers of the outsourced marketing companies’ operations at 61 major NCAA Division I institutions.
Both close-ended and open-ended questions were included in the survey instrument. There were nine open-ended questions. They were (a) what is the property’s best method of soliciting sponsors? (b) what are the primary goals of outsourced companies? (c) how often do outsourced companies fail to meet their financial guarantee to their schools? (d) what inventory sells the most, the least and why? (e) what sponsorship categories are presently being sold and which are ignored in sales? (f) why do outsourced companies sell certain sports and not others? (g) what are the strengths and weaknesses of outsourced marketing companies? (h) what do outsourced marketing companies perceive as the future problems with outsourced marketing? and (i) at what level is outsourced marketing a good fit within college athletics?
Data Collection and Analysis
The survey instrument was mailed to the respective general managers with a second mailing added to heighten the response rate. Descriptive statistics, such as frequencies were used to analyze the collected data. Qualitative responses were also analyzed to identify reoccurring themes.
RESULTS AND DISCUSSION
As mentioned previously, the purpose of this study was to examine outsourced marketing in NCAA Division I institutions from the outsourced marketing companies’ perspective. Twenty-eight general managers of the identified sixty-one NCAA Division I institutions responded to the survey, which accounted for a 46% response rate.
Primary Goals of Outsourcing Marketing Operations
In conducting their sales efforts, most surveyed properties (93%) focus on personal selling efforts as their means of reaching out to potential partners or sponsors. Telemarketing and using a database are secondary methods of soliciting sponsors or partners. These sponsorships or partnerships are secured for the primary purpose (68%) of generating revenue for the overall parent company to meet the guarantee to the school. After that goal is met then the secondary focus becomes trying to bring in additional revenue beyond that initial guarantee. This is consistent with previous literature by Burden and Li (9-10) and Zullo (38). The findings are also congruent with the strategic alliance research that place an emphasis on the value of partnerships yielding enhance values to both parties (26).
Table 1 Property’s Best Method of Soliciting Sponsors/Partners/Clients
Table 2 Primary Goals of Outsourced Marketing Properties
As mentioned earlier, this revenue is ultimately shared with the affiliated institution of higher education’s athletic department. It should be noted that the surveyed general managers indicated that outsourced properties focus on sales and not on the business of enhancing an athletic department’s marketing or promotional efforts. The outsourced properties responding also did not indicate a willingness to boost ticket sales or create awareness for the athletic department. This is also in line with past research by Zullo (38) and Burden and Li (9). Consistent with research in strategic alliance the in-house marketing departments focus on the areas of ticketing and brand awareness while the outsourced firms avoid such areas where they lack expertise and experience (1, 18, 30)
Duration of Relationship and Success Rates
Of the outsourced properties responding, 42% have been working with their current school for over six years and 54% have worked with their school for less than six years. There was one non-response. Twenty of the twenty-eight properties have successfully met their financial guarantee to the school’s athletic department throughout the duration of the relationship with the remaining eight respondents choosing to not answer the question. Of those eight, the subsequent question found that two of them have failed at least once to meet its financial obligation to the school’s athletic department. That is collectively a success rate of greater than 90% for the outsourced marketing properties in meeting their financial guarantees to the schools.
Table 3 Number of Years Property Has Worked With School
Table 4 Number of Years Property has Successfully Met Financial Guarantee
Table 5 Number of Years Property has Failed to Meet Financial Guarantee
If one tallied the cumulative number of years that all of the respondents have partnered with their respective outsourced marketing firms, factoring in the two years the guarantee was not met, that pooled annual success rate improves further thus supporting the philosophy of such alliances as advantageous (16, 30). Why companies failed to meet their guarantee could be asked on further questionnaires to help facilitate what factors impact not meeting the guarantee. Additional questions could also explore whether the escalade in financial guarantees paid to the schools by the properties has hindered the success rate. Furthermore, questions could also ask whether joint bids have become a necessity with the higher paid guarantees. ISP Sports pursued joint bids with IMG College before the latter company acquired the former in 2010 (4).
Attractiveness of Marketing Inventory
In examining what inventory items are sold most by the outsourced properties, the respondents cited radio broadcast of games (61%) and permanent signage (57%) at athletic facilities as the best selling inventory. These findings are consistent with Cohen’s findings (13-14) and Zullo’s research in 2000 (38). Video board advertising and ribbon signage at athletic facilities are other top sellers on the second tier of inventory, along with game day promotions and print media. Steinbach noted (31) that while start-up expenses for video boards may be higher the boards can offer a significant return investment. A third tier of inventory would consist of coaches’ radio shows, coaches’ TV shows, corporate hospitality, and the athletic department’s internet advertising rights.
Table 6 Best Selling Inventory Items
The idea of an interactive marketing area or fan zone that is increasingly being found at professional sporting events has not caught on as a popular inventory item at the college level yet. This may be due to the greater expense of such a project relative to the production of a radio commercial or one time cost of making a sign to display in an arena or stadium. An interactive area or fan zone’s costs and expenses could offer a lower financial return on investment for the outsourced marketing property.
The findings indicate that inventory provided by the athletic department and sold by the outsourced marketing company is limited. As professional sports are quick to sell more creative inventory, including corporate hospitality, ribbon stripe advertising in arenas and more fan friendly websites, institutions of higher education, athletic departments and outsourced marketing companies appear to continue to do business in the same way over the last decade as shared by Zullo’s (38) research. Athletic departments that prefer the permanent signage route over ribbon advertising or video board are not maximizing their revenue opportunities. Though accompanied by greater start-up costs, the ribbon advertising and video board messages garner greater fan interest and can be sold at a higher rate to the corporate sponsors. Outsourced companies may provide greater access to this newer technology enabling schools to add inventory they could not otherwise do on their own thus demonstrating another value of the strategic alliance (16, 27).
Category Fulfillment
In terms of which sponsorship categories have been filled by the outsourced marketing property in the last three years, 71% of the respondents maintained some form of sponsorship in the categories of sit-down restaurants, fast food, hotel, soda/cola, banking, cellular service provider, car insurance, hospital/medical center, grocery store, automobile brand, life insurance, pizza and airlines. What is notable is the wide range of categories left unfulfilled by outsourced marketing properties including: water, health clubs, credit cards, real estate, tires, military, home improvement, dairy, automotive repair, motor oil, office supply store, tools/power equipment, coffee, satellite television, batteries, delivery services, boats/marinas, and candy. These findings are consistent with the study conducted at Arizona State (3).
Table 7 Sponsorship Categories Successfully Filled in Last Three Years
There are many categories typically sold in professional sport that are ignored in intercollegiate athletics. Future research is needed to address why this is the case. Is the sponsorship not a good fit for the college setting? Have companies tried approaching these categories and failed in their sales efforts? Or are companies aware that a greater financial return can be found with select categories relative to others? Additional research is warranted in this area as strategic alliances may yield new revenue opportunities and open new markets (1, 30), but only as these questions are explored further.
Attractiveness of Sports as Outsourcing Inventories
When surveyed general managers were asked what sports sold well when working with corporate sponsors or partners, the overwhelming response indicated football first and men’s basketball second. Women’s basketball and baseball were second tier sports in the sales effort. However, football and men’s basketball sold the best because that is what the sponsor/partner demanded (79%) in the sponsorship package first and it was demanded based on the historical perception of greatest return on investment value.
Table 8 Top Three Sports Outsourced Properties Sell
Table 9 Reasons for Selling Such Sports
Other sports simply did not garner the sponsor’s interest (71%), offer a significant return on interest (18%), or yield a past history of success in sales (11%). This was especially true of Olympic Sports and women’s athletics excluding women’s basketball. Low regular attendance at Olympic Sporting events equates to low return on investment from the sponsor’s perspective.
Table 10 Top Three Sports Outsourced Properties Did Not Sell
Table 11 Reasons for Not Selling Such Sports
This should not be interpreted as a dislike of these sports, but rather as a financial decision by corporate sponsors. A State Farm or AT&T corporate sponsor has the ability to reach many more fans at a football game then at a tennis match due to the larger attendance of patrons at the football games. Such a sponsor may also have the capability to advertise to a broader audience on the radio and television via the broadcast of the football and men’s basketball games. These findings are consistent with Zullo’s study (38).
Though this may be an area of concern between athletic administrators and outsourced marketing companies, most schools’ administrators understand the financial implications if an outsourced marketing company focuses too much time on selling sponsorships for a softball game instead of football or men’s basketball. The financial guarantee would not be met by the outsourced company and their services would not be retained. While the guarantee would be paid by the property’s parent company, the school would lose confidence in the property’s ability to sell and would look to partner with another company. It is a balancing act by the outsourcing marketing companies and many of these companies have offered to package Olympic Sports or women’s athletics with football and men’s basketball sponsorship packages provided that the corporate sponsor did not object. That noted, schools such as Georgia, Texas, or Stanford may need to explicitly state in their contracts with an outsourcing company that Olympic Sports and women’s athletics must be sold, given the high status of such programs at these schools.
Strengths and Weaknesses of Outsourced Marketing
Respondents noted that the major strength of outsourced marketing properties includes revenue generation (57%) with service quality ranking second. The weaknesses of outsourced marketing properties range from lack of control over content to lack of interest and promotion for certain sports. This reaffirms the previous research of Zullo (38) and Li and Burden (24).
Table 12 The Major Strengths of Outsourced Marketing
Table 13 The Major Weaknesses of Outsourced Marketing
Future Problems/Issues Facing Outsourcing Marketing
The respondents indicated the biggest future problem in outsourced marketing is too great of a financial guarantee for a school (50%), one that an outsourced marketing parent company may have trouble meeting on an annual basis. Smith (29) found that an increasing number of schools were surpassing the 2004 benchmark Kentucky deal as financial guarantees to school were reaching the $100 million mark. Secondary problems include clearly demonstrating a return on investment for sponsors (18%), an oversaturation of the marketplace with sponsorships, and turnover in sales personnel (both 14%). Tertiary concerns include ambush marketing, faculty concerns of over commercialization, increased operational expenses, and lack of control over the inventory and sponsorship content.
Table 14 Biggest Future Problems of Outsourced Marketing
Overwhelmingly, the respondents supported NCAA Football Bowl Subdivision institutions (96%) and conferences (61%) when they were asked the level of intercollegiate athletics outsourced marketing that is best suited for outsourcing. Lower levels of intercollegiate athletics simply did not catch the interest of outsourced marketing properties. Their response is consistent with Tomasini’s (35) findings, as well as those of Zullo (38) and Li and Burden (24). It is hypothesized that this is due to the smaller audience in attendance at sporting events at these levels compared to the NCAA Football Bowl Subdivision institutions.
Table 15 Level of Intercollegiate Athletics Outsourced Marketing is Best Suited For
CONCLUSIONS AND APPLICATION IN SPORT
Direct Practical Recommendations
Given the limited amount of research concerning outsourced marketing in intercollegiate athletics, research on outsourcing in higher education in general is important to consider when deciding whether to outsource sports marketing efforts. In examining the findings of this study and turning it into practical applications for presidents, athletic directors and general managers of outsourced marketing companies, the author would suggest the following recommendations for improving the business relationship and being pro-active in addressing future issues in outsourced sports marketing within the context of higher education:
1. Utilizing their acknowledged strengths, outsourced marketing companies should offer their consulting services in the area of marketing and sales to “smaller” Division I schools in non-BCS conferences that would not otherwise be financially attractive to partner with for an extended relationship. Their sales expertise would be considered invaluable to a smaller school and could be an extended revenue stream for the outsourced company collectively. Smaller schools could be packaged by entire conferences, or by several schools in same geographic region, or other characteristic (ex. HBCUs); outsourced companies could sell their season ending tournaments or championships, or “classic” games, etc. Smaller schools should also think in terms of packaging their entire campuses and not just the intercollegiate athletics department. This would help outsourced marketing companies address their concerns with the escalating financial guarantees paid to certain school that reduce the profit margin of the parent company.
2. Outsourced marketing companies must include new categories in their sales efforts as today’s sponsors simply have more places to spend their advertising dollars. Without a clearly defined return on investment, long term corporate partners may consider advertising elsewhere. Before this occurs, outsourced companies need to pro-actively evolve and consider alternative sponsorship categories that have been largely ignored in intercollegiate athletics as demonstrated by the research findings. This can alleviate departing sponsors due to the untapped revenue streams with new categories while also providing support in the escalating financial guarantees owed to schools.
3. In similar fashion, outsourced marketing companies need to continue to expand their inventory options in collaboration with the athletic department. As more options arise for corporate partners to spend their advertising dollars elsewhere, including professional sports, outsourced marketing companies need to be pro-active in offering new and exciting inventory and not remain stuck in the status quo option of radio commercials and permanent signage.
4. Along those lines, athletic departments who think they might not be able to afford new inventory items, particularly video boards and ribbon advertising, need to consider the option of letting an outsourced marketing company buy or finance the technology as they can earn a greater financial return on investment from the corporate partners with new capabilities.
While the arms race in intercollegiate athletics continues to press on and excessive spending in intercollegiate athletics is being criticized by detractors such as the Knight Commission (37), there exists the opportunity for compromise. As administrators in higher education begin to accept this belief as truth, Myles Brand, the former head of the NCAA, insisted that not all external involvement with intercollegiate athletics has been bad be it from alumni, supporters or corporate partners.
Brand (8) stressed that how you utilize the money contributed is of the greatest importance. He stressed that intercollegiate athletics focuses on opportunities for student-athletes namely in the means of scholarships and a quality education. It is not profit-driven like professional sports and owners of the teams. And funding for these scholarships and athletic department operating budgets can derive from corporate partnerships. The key is maintaining a clean fit for the corporate sponsor on the school itself and not just in the athletic setting (21). Outsourced marketing companies can play a vital role in these efforts through collaboration with their school’s mission thereby appeasing such groups as Faculty Athletic Representatives, the American Association of University Professors, the Drake Group, Coalition on Intercollegiate Athletics (COIA), the NCAA and others.
Commercialization is not a bad thing as it occurs all over campus and it frequently comes with initial resistance. Fans and faculty may not initially like the addition of sponsorships, but it does offset the budget for the athletic department without relying too heavily on the university for financial support. As faculty groups arise around the country to denounce athletics’ place in higher education (32-33), it is important to realize that the excessive spending in big-time intercollegiate athletics is the problem and not necessarily the commercialization as that is occurring everywhere on campus.
In examining outsourced marketing companies and their relationship to colleges and universities around the nation, evolutionary and creative thinking needs to occur more frequently. If the outsourced marketing company continues to think from the mindset of the institution of higher education and not purely as a sales group, future relationships will continue to prosper. It is when outsourced marketing companies lose that train of thought that problems start to arise. Ideally, greater communication and utilization of these findings and similar research will enable future relationship between the school, the athletic department and the outsourced marketing company to create a “win-win” situation for all parties involved. In turn, this can also extend over to better benefit the corporate partners for the duration of the partnership.
Limitations and Delimitations of the Study
A number of limitations existed in this study. The willingness of the surveyed general managers to participate and answer the questionnaire honestly, and to share detailed information about their specific marketing contracts and relationship. Another limitation is that some schools may have several outsourced companies overseeing their sales efforts. One company may handle sales for the radio and television while a second company may direct the sales for the athletic department’s signage at athletic facilities. A third may manage the sales for corporate hospitality and promotions. To address this concern, only schools with a single outsourced marketing partner were selected to participate in this study. In-house marketing and multi-sourcing efforts were not addressed.
Finally, as noted above, not all schools in the six major conferences have an outsourced marketing relationship thereby limiting the initial sample size. However, this was offset with the addition of 19 schools that are not in the six major conferences but have existing relationship with the major outsourced marketing companies. All participating respondents shared the characteristics that they are Division I in nature and have an exclusive outsourcing relationship with one of the leading outsourcing sports marketing firms.
ACKNOWLEDGMENTS
None
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ABSTRACT
The NCAA has become increasingly concerned about the academic well-being of its student-athletes and has adopted a new measure to monitor the academic progress of each collegiate team that grants athletic scholarships. It is called the Academic Progress Rate (APR) and measures the extent to which a team’s student-athletes retain their eligibility and stay in school on a semester by semester basis. Lucas and Lovaglia (2005) believed that the ranking of collegiate teams based upon both academic success and athletic performance would be of value to numerous constituencies and developed such a ranking system for collegiate football teams. In this paper, we build upon their work by constructing a statistically based ranking system that utilizes a team’s multi-year APR and their Average Saragin Rating. During the 2007-2010 academic years that were investigated, the three top ranked teams were Ohio State, Boise State and the University of Florida. The results also revealed a moderate and positive correlation between a team’s multi-year APR and its Average Saragin Rating.
INTRODUCTION
The NCAA recently implemented a number of changes that were designed to improve the academic well-being of student-athletes. These changes fell into four categories: (i) new initial eligibility standards, (ii) new requirements for two-year college transfers, (iii) new requirements for post-season eligibility, and (iv) new penalty structures and thresholds. Refer to Harrison (2012) for an excellent review of these changes and for a history of the NCAA’s commitment to the academic success of student-athletes. A key component of this academic reform movement has been the development and adoption of the APR for each collegiate sports team that grants athletic scholarships (8). The APR measures the extent to which student-athletes are maintaining their eligibility and staying in school. It represents a significant improvement over previous measures of academic success because it provides specific information on the extent to which current student-athletes are satisfactorily completing the academic requirements that are necessary to obtain a degree.
The APR is a number between 0 and 1000. On a term by term basis, each student-athlete receiving athletic aid earns one retention point for staying in school and one eligibility point for remaining academically eligible. Excluded from this calculation are those team members who decide either to leave school to sign a professional contract or to transfer to another school, provided in each instance they were still eligible to compete when they left school. The total points earned by team members are divided by the possible number of total points that could be earned, and then this proportion is multiplied by one thousand. The resulting figure is the APR score for the team. Defined in this manner, the APR provides an up-to-date measure that can be used to evaluate the academic success and the academic culture of collegiate sports teams at a given point in time. It also allows comparisons to be made between teams playing the same sport throughout the country. Each year, the NCAA reports for each team both a single-year APR and a multi-year APR, based upon the last four seasons.
For the 2012-2013 academic year, teams in all sports must have obtained a multi-year APR of at least 900 or have an average single-year APR of at least 930 in the last two academic years in order to be eligible to compete in post-season play. This requirement disqualified the University of Connecticut’s Men’s Basketball team, the 2010-2011 national champions, from participating in the 2012-2013 tournament. The APR requirement becomes more stringent each year until it reaches its desired multi-year standard of 930 in 2015-2016.
The use and wide-spread acceptance of the multi-year APR as an appropriate measure of academic success has had a dramatic effect on college sports teams and athletic departments. It is the single most important measure of academic success for the NCAA and is closely monitored by athletic directors, coaches, and academic advisors. This is especially true at the elite revenue producing schools competing in football and basketball where the imposition of penalties can result in a substantial loss of revenue and prestige.
Lucas and Lovaglia (2005) and, more recently, Crotty (2012), indicated that it would be of value to rank college athletic teams using a combined measure of academic success and athletic performance. They argued that such a measure would be of benefit not only to university administrators when evaluating their athletic programs, but also to potential student-athletes when choosing a college to attend. Lucas and Lovaglia proposed such a measure for Division 1 football programs and called it the Student-Athlete Performance Rate (SAPR). To arrive at a team’s SAPR score, they added a team’s single year APR to a team’s Athletic Success Rate (ASR). Unfortunately, the ASR that was developed was seriously flawed because it did not provide a valid measure of a team’s athletic performance for a particular period in time, but rather it was designed to measure the “well-being” of a team over some undefined period of time. For example, included in the construction of the ASR were such factors as a team’s all-time winning percentage, its average attendance in a particular year, the number of conference championships won in the last five years, and the number of student-athletes that went on to play in the National Football League.
In this paper, we build upon this previous work by describing a statistical ranking system which is based upon valid measures of both athletic success and athletic performance. This ranking system is then applied to the 120 members of the NCAA’s Football Bowl Subdivision (FBS). The methods used to create such a ranking system are described in the next section.
METHODS
A valid measure of academic success and a valid measure of athletic performance are required to construct an overall ranking of schools. For the academic success measure, we use a school’s multi-year APR score (http://www.ncaa.org). At present, the latest available multi-year APRs are based upon the 2007-2010 seasons. Since the multi-year APR is based upon a four year period of time, the athletic performance measure used should also cover this same time period. Various performance measures were considered before it was decided to use the average of the Saragin ratings at the end of each season for each team. A team’s Saragin rating is based on three factors (i) won/loss record, (ii) strength of schedule, and (iii) margin of victory. The Saragin ratings for college football teams have been published on a weekly basis by USA TODAY since 1998 and have been used to help determine which teams will play in the national championship game. The ratings can be found at: http://www.usatoday.com/sports/sagarin-archive.htm.
To obtain an overall ranking of schools, we employ a methodology using two independent standardized z-scores as previously described by Wiseman et al. (2007). With this methodology, we first have to determine whether a correlation exists between a team’s multi-year APR and its Average Saragin Rating. If a correlation does exist, we cannot simply compute standardized z-scores for each individual rating and add them together to obtain an overall measure. Instead, we need to construct two standardized z-scores which are independent and which take into account the correlation that exists. For each school, these z-scores would be: (i) the standardized z-score for the Average Saragin Rating and (ii) the standardized z-score for the multi-year APR given the Average Saragin Rating. The first standardized z-score would be computed as follows:
For the second z-score, we would need to calculate the expected multi-year APR given the Average Saragin Rating and the standard deviation of the multi-year APR given the Average Saragin Rating. To obtain these values, we compute:
where µAPR is the average multi-year APR, p is the correlation coefficient between the Average Saragin Rating and the multi-year APR, and σAPR is the standard deviation of the multi-year APRs. Given the above, the second z-score would be:
Statistical theory concerning bivariate normal distributions tells us that the standardized z-scores for the Average Saragin Rating and for the multi-year APR given the Average Saragin Rating will each have a mean of 0.0 and a standard deviation of 1.0. Further, since the two z-scores are statistically independent, they can be added together to obtain an overall summated z-score for combined athletic performance and academic success. The higher the overall value of Zsum = ZSaragin(i)+ ZAPR|Saragin, the higher the overall ranking.
RESULTS
Table 1 presents the Average Saragin Ratings for the four seasons as well as the multi-year APR score for all 120 schools. The average Saragin rating (µSaragin) was 70.62 with a standard deviation (σSaragin) of 10.03. The highest average ratings were obtained by the following five universities: Florida (90.85), Alabama (90.82), Oklahoma (89.17), Oregon (88.98), and Ohio State (88.35). The average multi-year APR (µAPR) was 951.97 with a standard deviation (σAPR) of 18.27. The five highest ranked universities according to their multi-year APR were Northwestern (995), Boise State (989), Duke (989), Ohio State (988), and Rice (986).
Table 1. Average Saragin Rating and Multi-Year APR for Schools in the Football Bowl Subdivision: 2007-2010
When the individual schools were grouped by conference, the Average Saragin Ratings of the six major conferences (SEC, Big East, Pac 10, Big 10, Big 12 and ACC) were all greater than the five smaller conferences (Mid-American, Sun Belt, Mountain West, Conference USA and Western Athletic). In terms of the academic success measure, similar results were obtained except for the Mountain West conference which had a higher multi-year APR than three of the major conferences — the Pac 10, the Big East and the Big 12. These results are shown in Figure 1.
Figure 1. Scatterplot of Average Saragin Rating and Average Multi-Year APR by Conference: 2007-2010
A correlation of r =.32 (p<.01) was found between the Average Saragin Rating and the multi-year APR. This finding is similar to results obtained in earlier studies that used graduation rates as the measure of academic success (1,3,6,7,9,10). Universities that ranked highly on both measures were Florida (1st and 19th), Alabama (2nd and 23rd), Oklahoma (3rd and 23rd), Ohio State (5th and 4th), Boise State (10th and 2nd), and TCU (8th and 17th). Given the correlation that existed between multi-year APR and the Average Saragin Rating, the two independent z-scores (ZSaragin(i) and ZAPR|Saragin(i)) were obtained and then added together for each of the 120 schools. These scores are presented in Table 2 and the top ranked school for the four year period was Ohio State which had the fifth highest Average Saragin Rating of 88.35 and the fourth highest multi-year APR of 988. Boise State, Florida, Alabama, and Northwestern had the next highest rankings. The Anderson-Darling test was used to test for normality of the two z-scores and the test results revealed that the normality assumption could not be rejected at the 5% level of significance.
Table 2. Comparison of the Top 25 Ranked Schools using Alternative Ranking Methods: 2007-2010*
The previous ranking of schools gave equal weight to athletic performance and to academic success. Giving such equal weight to each of the components was originally suggested by Lucas and Lovaglia (2005). However, one could also argue that more weight should be given to the athletic performance measure since this would be a national ranking of football teams. Our methodology allows for that possibility. For example, if we decided to give the first z-score (ZSaragin) a weight of .8 and the second z-score (ZAPR|Saragin) a weight of .2, we could obtain a weighted average of the two z-scores and re-rank the schools based upon this weighted average. The results of such a weighting are shown in Table 3 and, once again, the top ranked school was Ohio State. It was followed by Florida, Alabama, Oklahoma, and Boise State. Now, however, seven new schools entered into the Top 25. These were schools that had relatively strong Average Saragin Ratings but relatively poorer multi-year APRs. They were South Carolina, Oregon, Oregon State, West Virginia, USC, Auburn, and Texas. The schools that they replaced were Northwestern, Air Force Academy, Rutgers, Duke, Georgia Tech, Kansas, and Wake Forest. These latter schools are generally better known for their academics than for their football success.
Sensitivity analyses were conducted in order to determine how the rankings would have changed if different weights were used. These analyses were conducted for the following three sets of weights –(.9, .1), (.75, .25) and (.7, .3), where the first number is the weight given to the Average Saragin Rating and the second number is the weight given to the multi-year APR given the Average Saragin Rating. The rank correlations between each of these three weighting schemes and the (.8, .2) weighting scheme that was originally used were .97, .98 and .91, respectively. This indicates that the actual rankings were relatively insensitive to the actual weights used when the weight given to the Average Saragin Rating was .7 or higher.
DISCUSSION
We have shown that it is possible to have a combined ranking of athletic teams based upon athletic and academic success. The results of this ranking for the 2007-2010 period indicated a positive correlation between athletic success and academic success. The analysis also revealed that the top performing football schools are more likely to ensure that their student-athletes stay in school and maintain their eligibility. This makes sense because such schools have the most to lose financially if their teams are not eligible for post-season play. These teams also spend a considerable amount of time, effort, and money recruiting promising student-athletes. They also generate a substantial amount of money and provide a high level of academic support and facilities for its student-athletes in order to help them maintain their eligibility. Such a high level of support may not be available for student-athletes at poorer performing schools with fewer resources devoted to their academic well-being.
Additionally, many of these large and successful schools offer specific programs geared to the student-athlete population, thus increasing the likelihood of their academic success. Similarly, these schools may also be less likely to take a chance on a potential student-athlete with significant athletic potential, but with very little chance of academic success at their school.
CONCLUSION
The ranking of FBS teams was based upon their success in the classroom and their performance on the football field. Rankings for other collegiate sports, both male and female, including the non-revenue sports could easily be obtained using the methodology described. In addition, it would be of interest to identify the key factors that lead certain teams to have high APRs, while other teams have low APRs. Such an investigation is the subject of future research, and should be of value to numerous groups including the NCAA as it continues with its academic reform movement.
APPLICATIONS IN SPORT
Critics and some members of the NCAA have argued that the organization should increase its emphasis on the academic well-being of its student-athletes. This has led to the academic reform movement that has taken place in recent years. With the methods presented here, the NCAA could recognize schools that excel both on the field and in the classroom. It also gives member schools a scorecard as to how well its team is doing on and off the field. The results also indicate that the schools with the weakest football teams in the non-BCS conferences, often times, are also the ones whose teams have the lowest multi-year APRs. Reasons for these differences should be investigated so that corrective actions can be undertaken which will enable all student-athletes to increase their likelihood of academic success.
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Submitted by Sungick Min, WonYul Bae, David Pifer and Colin Pillay
Abstract
World Wrestling Entertainment, Inc. (WWE), which is headquartered in Stamford, Connecticut, produces one of the most popular sporting events in the world, spans a diverse audience, and has a fanatical base and following for its entertainment value. This study was designed to investigate the numerous ways in which the company promotes and markets its brand, its programming, its events, and its products. Drawing from 107 randomly collected survey questionnaires, the results of this research indicated a variety of significant differences in the effects of WWE marketing promotions on the age, income, marital status, and ethnicity demographics. These findings can in turn be used to help the WWE target designated consumer segments with the appropriate resources and marketing strategies as the company strives to increase future opportunities for success. Further samples from other areas in the country are needed, though, to verify if the regionally recognized inclination is consistent across the country. In addition, research should be performed at different times of the year to clarify seasonal sport preferences.
INTRODUCTION
Professional wrestling fans receive different reactions from people. Some people think it is “cool” to be a fan; others are disappointed because they consider it to be faked. Fans respond that they enjoy the entertainment value of professional wrestling. According to Ball (1990), wrestling fans tend to be stereotyped as the “dregs of society,” a group composed mainly of lower-class people.
Nevertheless, professional wrestling is also a tremendous entertainment business and has become an addiction for a large portion of young Americans. Ball (1990) stated, “Professional wrestling in the United States provides an ideal platform for the study of entertainment-culture and portrays some of the richest symbolism in society today” (p. 4).
It incorporates action in the arena, and sometimes outside the arena. It is an action adventure show, a cartoon, drama, and a sitcom. It is like a big soap opera for men, a hybrid of everything ever seen on television. World Wrestling Entertainment, Inc. (WWE), which produces some of the most popular shows in the world and reaches a diverse audience, has an enormous fan base and following for its entertainment value. As one of television’s most unique shows, it draws upon many other successful forms of entertainment. The continuing story lines are familiar to viewers of soap operas. The action, adventure, and racier elements draw their motivation from the best that sports and Hollywood have to offer. According to Gresseon (1998), professional wrestling has gone from a dull participant ritual to an exciting, action-filled form of entertainment.
The action in WWE events may be “fake,” but the entertainment value of World Wrestling created by Vincent and Linda McMahon is very real. Gresson (1998) asserted that wrestling has taken into consideration the audience’s needs and successfully translated them into spectacular shows that draw spectacular profits. The WWE has dominated its market and has established its brand in the minds of the American public. As an integrated media and entertainment company, the WWE is principally engaged in the development, production, and marketing of television programming, pay-per-view programming, live events, and the licensing and sale of branded consumer products featuring its successful World Wrestling Entertainment brand.
REVIEW OF LITERATURE
In WWE’s 2006 annual report, net revenues of $400.1 million were generated, while an income from continuing operations of $55.2 million, before interest, taxes, depreciation, amortizations, stock options, and other non-cash charges, was reported.
WWE is incredibly prevalent in the male demographic, especially those aged 14 to 34. The company has been involved in the entertainment business for over 20 years and has established the brand as one of the most popular forms of entertainment today. According to Stotlar (2005), demographic changes in the United States population have directly influenced sport marketing. Brenner (2004) indicated that population trends have caused organizations to take a long, hard look at marketing efforts as teams and leagues find that there is no single, correct approach. To increase market penetration, marketers often discuss how to reach Hispanic, Asian, or other ethnic consumer groups, but oversimplify the challenge by applying such labels. According to WWE, its operations are organized around two principal activities:
1. Creation, marketing and distribution of live and televised entertainment, including the
sale of advertising time on its television programs; and
2. Marketing and promotion of its branded merchandise.
In an effort to further exploit and bolster its business, WWE launched a brand extension that created two separate and distinct brands, “Raw” and “SmackDown!” Each extension has its own distinct story lines, thus enabling the company to have two separate live event tours. The two tours permit the company to visit new domestic markets while touring internationally on a more frequent basis. In addition, WWE currently maintains licensing agreements with approximately 70 licensees worldwide. The company logo and images of WWE characters appear on thousands of retail products, including various types of apparel, toys, video games, and a wide assortment of other items.
According to WWE’s 2006 annual report, the company produces and promotes wrestling matches for TV and live audiences. Its nine hours of TV programming each week include “Raw”, a top US cable program, and “Smackdown!”, the highest-rated UPN show. Most of its programming airs on Viacom outlets, including MTV, TNN, and UPN. WWE also produces 14 pay-per-view programs and about 240 live events each year, licenses characters for merchandising, and sells videos and DVDs that showcase such wrestling stars as “The Rock”, “Hollywood Hulk Hogan”, and “The Undertaker.”
WWE’s success prompted this study, which set out to investigate the numerous ways in which the company promotes and markets its brand, its programming, its events, and its products. Kwon and Armstrong (2004) asserted that one of the most crucial elements of sport marketing involves segmenting the market of sport consumers into smaller, homogeneous groups for which specific marketing strategies can be cultivated. Accordingly, this study examined the different results of WWE promotions and marketing based on age, income, marital status, and ethnicity.
Pitts and Stotlar (2002) defined sport marketing as “the process of designing and implementing activities for the production, pricing, promotion, and distribution of a sport product to satisfy the needs or desires of consumers and to achieve the company’s goals” (p. 80).
Understanding the “4 Ps of Marketing” is crucial to any successful marketing channels in an organization. In traditional marketing, the “4 Ps of Marketing”, a concept coined by E. Jerome McCarthy (McCarthy & Perreault, 1990), specifically refers to the following:
Product: the essence of the product or service that includes product lines, product extensions, and the meeting of new consumer needs within the targeted group of customers.
Price: shows the desired image a company wants to portray about a product or service while taking into consideration competitors’ prices, available discounts, and market share.
Place: the actual, physical distribution of a product or service. This can include the transporting of goods to wholesale and retail outlets or the geographic location of a business or organization.
Promotions: carrying messages about products and services to potential consumers. This can be performed through publicity, advertising, or other means of communication.
A brief overview of the 4 Ps as they relate to the WWE will serve as a base from which to understand WWE’s success. To begin, the WWE “products” are its superstars – “The Rock”, “Trish Stratus”, “Stone Cold Steve Austin”, and “The Undertaker”. These superstars are professional and skilled in the portrayal of popular characters. One of WWE’s top superstars, “The Rock”, the son of a Samoan homemaker and an African-American pro wrestler, became a feature film action hero in Universal’s blockbuster, “The Scorpion King”. WWE has a vastly increased talent pool that translates directly to brand extension and additional revenue streams producing more pay-per-view events, more live events, more international tours, more branded merchandise, and more new television programming with new stars and new brands outside the genre.
Compared to other sports leagues, the WWE ticket “price” is one of the most expensive. According to the WWE website (2007), the average ticket price for three live events in Asia in March 2002 was $63.00 and the average ticket price for live events in the United States was $36.00. Each of WWE’s other 11 domestic pay-per-view events have a suggested retail price of $34.95, up from $29.95. Compared to the baseball ticket, ESPN (2007) indicates that the lowest average price is $13.79.
According to the WWE annual report (2006), it has major arenas, such as Madison Square Garden in New York City, Arrowhead Pond of Anaheim, California; Allstate Arena in Chicago, First Union Center in Philadelphia, Fleet Center in Boston, and Earls Court in London, England. These major arenas represent the “place” in the marketing mix. WWE has a 46,500-square-foot entertainment complex located in Times Square. The complex boasts a 600-seat restaurant and 2,200 square feet of retail space. The complex provides for a variety of entertainment uses, including:
1. Airing WWE’s regularly scheduled TV shows and pay-per-views;
2. Hosting concerts and other live events, including press conferences,
stockholder meetings and product launches;
3. A night club;
4. Appearances and autograph sessions featuring performers; and,
5. Banquets, birthday parties and other social and corporate functions.
“Promotion” is the final P in the marketing mix to be discussed. According to WWE, the company promotes and markets its brand, its programming, its events, and its products in numerous ways, including:
1. Approximately 200 live events are held each year in major stadiums and arenas
throughout the world, including Madison Square Garden in New York City, Arrowhead
Pond of Anaheim, California; Sky dome in Toronto, Canada; and the Manchester
Evening News Arena in Manchester, England;
2. Nine hours of original television programming are produced, 52 weeks per year;
3. 12 domestic pay-per-view events are produced each year;
4. Programs and pay-per-view events are distributed in over 150 countries in nine languages;
5. Branded merchandise is marketed and sold directly to consumers and to major retailers
worldwide;
6. The branded merchandise is licensed to approximately 85 companies to produce and distribute thousands of retail products worldwide;
7. Two monthly magazines are published with a combined annual circulation of
approximately 5.8 million; and,
8. News and information is distributed about the WWE’s story lines, performers, and
programming and, consequently, affects e-commerce sales through Internet sites.
For years, a great deal of research has been undertaken in an effort to understand the behavior of sport marketing strategies. However, most studies have focused on direct sport marketing strategies, while studies examining the factors that influence indirect consumer behavior have been neglected. At present, studies investigating the effectiveness of WWE marketing strategies have not been well designed, thus creating a need for further research. The purpose of this study is to examine the effectiveness of various WWE marketing platforms and the demographic composition of its fan base. An empirical analysis looks at the numerous ways in which the company promotes and markets its brand, its programming, its events, and its products.
Furthermore, this study also examines the effectiveness of WWE promotions and marketing based on age, sex, educational level, and ethnicity. Differences based on age, sex, educational level, and ethnicity may compel sports marketers to adapt current marketing approaches.
Best marketing practices of current WWE are also examined, and recommendations for sports marketers on how to successfully target the population segment are provided.
In sum, the general research question for this study is: How do WWE marketing channels affect various fan bases?
METHODS Sample and data collection
As mentioned, WWE’s 2006 annual report showed a strong following of fans in males aged 14 to 34. Taking this into account, the designated target population of this study was university students aged 18-34. In addition to its representation of the WWE fan base, this demographic was also deemed appropriate due to the fact that university students fall into the age demographic (18-34) that is most sought after by sport producers. According to Turco (1996), college students differ significantly from other markets in their consuming behaviors. Therefore, surveys were distributed to over 500 students and a total of 107 viable questionnaires were obtained using SurveyMonkey. Within the collected sample, 40 students were from a public university in South Korea and 67 students were taking Sport Exercise and Science (SES) activity classes from April 23 to May 4, 2007, at the University of Northern Colorado. This sample size was intended to be used as a pilot study for future research.
Instrumentation
The questionnaire was comprised of several sections with a total of 35 items. Part of the survey contained questions to gain information about general demographics of spectators, WWE-related information, and marketing-related information. Requested demographic information included age, sex, marital status, and household income. This survey was formulated to WWE marketing channels before the questions for demographic information. The objective of the study was to provide other related information necessary to assist WWE in developing effective marketing strategies. It took respondents approximately 15 minutes to complete the questionnaire.
Procedures
The data was collected through SurveyMonkey from April 23 to April 30 in 2007. The researcher contacted course instructors and obtained consent from them to disseminate the surveys. Permission to conduct the study was obtained from the author’s Institutional Review Board, which approved the methodology and survey instrument. All participants were informed in advance that participation was voluntary and that all information would remain confidential and anonymous. They were able to refuse and decide to stop responding at anytime. 107 survey questionnaires were distributed randomly. A total of 103 usable surveys were collected. All questionnaires were answered anonymously. It was assumed that the participants in the survey gave honest and thoughtful responses to each question.
Data Analysis
A cross tabulation is the process of taking two variables and tabulating the results of one variable against the other variable. A cross-tabulation gives us a basic picture of how two variables inter-relate. It aids us in searching for patterns of interaction. Each cell indicates the number of respondents that gave a specific combination of responses, that is, each cell contains a single cross tabulation. A cross tabulation was performed to examine the correlation between the different variables and various demographic make-up of its fan base. Descriptive statistics were also calculated for each of the demographics. SPSS 13.0 for Windows was utilized to perform the above statistical analyses.
RESULTS
The participants of this study included Caucasian, Asian, African-American, and Hispanic populations. Of the 107 total respondents, 55% considered themselves Caucasian and 38% considered themselves Asian. Only 7% of the responses gathered this study were from African-American and Hispanic (Chart 1). Figure 1 indicates that there is a significant difference between various ethnic groups. The majority of Caucasian respondents indicated that they made their decision to go to the WWE event to entertain guests, while most Asian respondents preferred attending the event to spend time with their families.
CHART 1 Demographics of Participants
FIGURE 1 Factors to Go to the WWE Event
Overall, giveaways were not seen as a significant factor in determining whether or not to go to the WWE event. In addition, in the question regarding the importance of the excitement offered by WWE, approximately 90 % of female respondents provided a response of neutral or less. 29% of male respondents produced a neutral response (Table 1).
TABLE 1 The Levels of Excitement by WWE
One of the interesting findings in this study is that while the majority of Caucasian respondents watched over 3 hours of television a week, their Asian counterparts reported watching less than 5 hours of television in a single week (Table 2). According to the WWE Report (2006), the majority of the WWE fan base was Caucasian. However, the results of this study indicate that 52% of Caucasian respondents were not watching WWE events on television. In general, the results of this study indicated that there were more male than female spectators at WWE events. The majority of the respondents who attended the events was from middle-income families and was Caucasian.
TABLE 2 Hours of Watching WWE on Television
A large proportion of the spectators were single. The people in different age groups differed significantly in the marketing channels. Those 30 years of age or younger appear to be more interested in attending the events, ordering pay-per-view, and visiting the WWE site. In regards to ethnicity, not only did very few Hispanic people attend WWE events, but very few participated in or were affected by the other marketing strategies.
DISCUSSION
According to the responses, pay-per-view and the website were the most effective sources of information about WWE. CD’s, home videos, print media, and other items were relatively less effective sources of information for WWE. Consequently, WWE should develop additional weekly television programming through creative and entertaining events while strengthening its pay-per-view marketing efforts to reach new consumers.
In essence, WWE must strengthen its existing television and pay-per-view distribution relationships and develop broader distribution arrangements for WWE branded programming worldwide. This can be accomplished by continuing to produce high quality, exciting live events, branded programming, and consumer products for global distribution.
In addition, WWE must develop its story lines by further integrating contemporary themes and increasing its focus on the continuous cultivation of skilled, young, entertaining characters to complement its pool of established talent. This can be accomplished by recruiting, developing, and maintaining a roster of highly skilled athletes who possess the physical presence, acting ability, and charisma to develop into popular performers. WWE should also augment the licensing and direct sales of WWE branded goods through its distribution channels while cultivating its Internet operations to further promote the brand and develop additional sources of revenue. In addition, the organization should also inflate the licensing and direct sale of WWE branded merchandise, and bring the distribution of home videos, CD’s and publications in-house.
WWE must meet certain objectives if it wants to achieve its goal and be the number one entertainment business in the United States or among the Hispanic Community. While advertising and broadcasting in Spanish may invite Latino and Hispanic consumers to the arena, the presence of Spanish-speaking ushers, vendors, and customer service representatives will ensure an enjoyable experience. According to Sergio Del Prado, Los Angeles Dodgers’ Vice President of sales and marketing (summarized in 10 Tips for Reaching Hispanic Consumers, 2007), “one thing where people really drop the ball, you get [Latinos] to commit, and then they come to the ballpark and nobody speaks the language and they feel different than anyone else.”
A Hispanic marketing blitz should contain promotions in the Hispanic newspapers, on Hispanic TV channels, and on Hispanic radio stations. Heavy advertising through all these media outlets will enhance the WWE brand name and symbol in the Hispanic community. Spending on advertising to Hispanic media outlets should be double that of English speaking outlets. WWE does not want to be an organization for the elite, but an organization that all of the country, regardless of income and race, can enjoy and love. This end message has to be communicated to WWE’s prospective Hispanic fan base in order for WWE to become profitable in the Hispanic community.
In addition to Hispanics, young people are a second market that WWE must target in order to achieve lucrative success. WWE must gear its consideration toward the young generation, a mission that can be accomplished by concentrating on young people while they are at school. WWE must work with the schools to generate programs and initiatives that spark the students’ interests. This can be accomplished through WWE ticket and merchandise giveaways. For instance, students who accomplish a certain GPA receive four tickets to a WWE live event. At the event, WWE will acknowledge their accomplishments with either scoreboard or public address recognition during a break in activities. This sort of program could generate short-term expenses, but will benefit WWE in the end. These students and their parents will become consumers of the WWE’s brand and will subsequently be more interested in WWE’s product. This interest will bring them back to the live events, where additional marketing strategies can move them up the consumer escalator.
Considering the time people normally spend on watching TV, television promotion showed high efficiency to communicate the information about WWE events to the respondents. However, it is obvious that TV advertising is the most expensive means to promote any event. Due to the fact that most people who attend WWE events are working class and spend plenty of time in their automobile driving regularly, radio is a comparatively cost-effective and efficient method to market a WWE event.
CONCLUSIONS
The aim of this study was to analyze the effectiveness of various WWE marketing platforms and the demographic composition of its fan base. What was discovered was that many people cannot pay for the price of a WWE event. The price is too costly for many people living in the United States at the present time and many of WWE’s prospective consumers consider a live event as a novelty and not a usual night of entertainment. Providing new ticket plans that are reasonable for the majority of U. S. residents would be exceedingly favorable to WWE. It would augment its revenue and attendance in a very short period of time and supply WWE with a stronger fan base for the future.
APPLICATIONS IN SPORT
WWE should implement new forms of entertainment and build brands that harmonize its existing businesses, including the improvement of new television programming that will extend beyond its current offerings. Such formulations will appeal to WWE’s targeted demographic market and build up branded location-based entertainment businesses directly or through licensing agreements, joint business enterprises, and other preparations. For the promotion to be flourishing and fill the stands, this decision must be made based on knowledge of WWE’s prospective spectators, their characteristics, and behavior patterns.
ACKNOWLEDGEMENTS
None
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