This paper bridges a theoretical gap between early celebrity endorsement and hero worship literature. Additionally, the model connects a successful, winning athlete with several established branding constructs. The Roethlisberger Effect takes early theory proposed over 35 years ago in “The Namath Effect” and applies it with a modern touch. Given that the NFL is often referred to as a “copycat league” – i.e. when something works, all other teams work quickly to replicate it – the impact that Roethlisberger has had upon other league and team management philosophies is rather profound.
This paper is an updated version of a poster presentation I authored for the 7th Sport Marketing Association (SMA) Conference (2009).
There are three parties involved in a simple sponsorship mechanism: the sponsor, the sponsored event or team, and the consumers (fans). However, this structure becomes more complicated in some cases where sub-sponsors exist such as in international sporting events. In these cases, would an overarching event influence sub-sponsorship such as team sponsorship? Based on this question, this study aims to investigate the influence of overarching brand on team sponsorship effect, along with consumers’ attitudes toward team sponsors, team identification, and patriotism.
This study was conducted in the context of the 2010 World Cup with the United States team as a target subject. A total of 455 usable surveys were collected from the students at a Division I university two weeks prior to the 2010 World Cup. The results of multiple regression showed that only identification with the US National team (β= .54) and attitude toward the sponsoring companies (β= .28) were significant predictors (F(4,450) = 128.43, p < .00, R2=.53), explaining 53 percent of intention to purchase sponsors’ product. Interestingly, the attitude toward the World Cup and patriotism were not influencing factors on respondents’ intention to purchase sponsors’ products. (more…)
Submitted by Timothy Baghurst, Earl Murray Jr., Chris Jayne and Danon Carter
ABSTRACT
The current and future funding condition for junior college (JC) athletics is unclear, and an athletic program’s budget and funding is usually the responsibility of the athletic director. The purpose of this qualitative phenomenological study was to explore the lived experiences and perceptions of junior college athletic directors to understand financial and leadership issues associated with athletic programs. Sixteen athletic directors (12 male, 4 female) from the same athletic conference in the state of California were interviewed and asked 17 open-ended questions about leadership and the financial issues associated with junior college athletic programs. Three primary themes emerged including leadership, roles and responsibilities, and an unexpected third theme of the student-athlete. Findings and their application to athletic director administration are discussed.
INTRODUCTION
College athletics have become big business, and a university athletic director (AD) plays an integral role in the success of the athletic programs. Colleges and universities at all levels require the managerial skills of an AD. Although leadership and administration of athletics is a frequent focus of research at the National Collegiate Athletics Association (NCAA) level, community college (hereto forth referred to as junior college; JC) programs have received little attention. For example, NCAA Division I athletic budgets may vary widely, but substantial budgets are common (14). Thus, application of findings at this level to JC athletic programs is difficult, as JC ADs may face more responsibilities in addition to fewer funding sources and athletic staff at their disposal. Therefore, the focus of this qualitative phenomenological study was to explore the lived experiences of JC ADs in order to determine how they use their leadership to overcome financial challenges experienced by their athletic programs.
Qualities of an AD
Robertson (2008) highlights several traits and skills necessary to be a successful AD. First, he or she must have the capability of creating an environment that helps all members of the program flourish, and all members of the athletic program must have the same goal in mind. Second, an AD must exhibit the ability to take risk, solve problems, think critically, and be a decision maker. Third, they must have the fiscal savvy to promote their university/college in a way that draws fan and community support thereby generating revenue. Thus, fiscal responsibilities of athletic programs are one of the most important challenges athletic administrators deal with at all levels (20).
JC Leadership Qualities
Nahavandi (2006) defined a leader as “any person who influences individuals and groups within an organization, helps them in the establishment of goals and guides them toward achievement of those goals, thereby allowing them to be effective” (p. 4). Another definition of leadership is “the capacity to influence others by unleashing their power and potential to impact the greater good” (4). Consistent with both definitions, leadership requires the ability to influence followers and guide them toward a goal.
Athletic directors are expected to display leadership skills in overseeing the day-to-day operations of the athletic department, but leadership is also necessary to manage the budget and financials of the program (13). There are several qualities of effective leadership as well as factors that impact the effectiveness of leadership. Effective leadership is defined by the effect on followers. Key traits of effective leaders as described by Kirkpatrick and Locke (1991) include drive, integrity, intelligence, motivation to lead, and knowledge of the business. Overall, leadership success is defined by the effectiveness of leaders to influence followers in every relevant aspect.
Junior college ADs must possess certain leadership qualities or characteristics to be successful. These characteristics include ethics or strong moral values, competence, self-confidence, and a desire to influence (28). Followers must trust the decisions and behaviors of ADs as well as believe in the direction being led. Leadership styles most attributed to ADs are transformational and situational leadership, as these styles incorporates change management, practicality, and flexibility as well as the success these leadership styles have on influencing others.
JC Athletic Finances
The funding for state colleges are being reduced across the country; and this is causing economic instability within many JC athletic programs (34). Junior college ADs are faced with difficult decisions when it comes to their athletic programs, which primarily revolve around the sustainability of the program. In many cases, there is outside pressure to add athletic teams to their program, while in others situations, ADs have to decide to keep a team or cut it from their program to save money (36). In 2009, Mississippi Governor Haley Barbour addressed the state’s JC ADs to explain that they needed to scale back the number of athletic teams that they offered, or the schools would have to drop athletics altogether (34).
Leadership is a key to any successful company, and sports administration is no different. However, how an AD may use his or her acquired leadership techniques to maintain and allow an athletic department to flourish under his or her guidance is unclear. This is particularly true at the JC level, where research is limited. Although there are similarities between the roles and responsibilities of ADs at JC compared with larger four-year universities, there are also differences. According to Lewis & Quarterman (2006), the three most important decisions and choices ADs make for managing and leading JC athletic programs are the enjoyment of athletics, the athletic environment, and a desire to learn more about the sports business. ADs from large universities have a greater focus on fiscal management where much of their time is focused on management, leadership, finance, marketing, ethics, legalities, and governance (2). This is not to say that JC ADs ignore ethical or legal issues, for example, but it is not considered their priority.
Although there are large financial deviations within NCAA Division I athletic programs, (14; 37), only a few operate profitably (10). Thus, the university is placed with a financial burden of justifying the existence of a program, and many DI ADs must turn to donors to gain the fiscal capital needed to balance their athletic budgets (35). For example, in the summer of 2012, facing a $4 million deficit, Maryland University decided to eliminate seven competitive athletic teams (17). Similarly, other prominent universities have taken drastic measures to ensure the survival of their athletic programs as a whole: University of California-Berkley had to cut five teams in 2010 and Rutgers University was forced to drop six competitive athletic teams in 2007 (3).
Unfortunately for ADs at the JC level, the financial situation is even bleaker. Most junior colleges lack the same opportunities. Fewer boosters are available and revenue generated at events is lower. Sustainability is a larger concern because of many educational cuts in state funding (Steinback, 2010). Success at the National Junior College Athletic Association (NJCAA) level does not always equal financial gain or even a program the next year. For example, in 2009 Minneapolis Community and Technical College lost only its second game of the year in the NJCAA DIII national championship game only to have the athletic department shut down completely shortly after. In order to continue to have an athletic program, some institutions have been required to cut the football program; although it is the biggest revenue provider, it is also the most expensive (34).
Study Purpose
The roles and responsibilities of an NCAA AD are well-documented, but less so are those of a JC AD, particularly as they pertain to leadership and financial skills. The current and future funding condition for JC athletics is unclear (6). A better understanding of the skills and qualities necessary for success could be vital as JCs search for their next AD. Therefore, the purpose of this study was to explore the perceived leadership and financial skills of 16 JC ADs to better understand how leadership and financial skills in athletic programs might contribute to success. The qualitative, phenomenological study consisted of semi-structured interviews and asked ADs not only what it was like to serve in that capacity, but also to explain, (1) the relationship between ADs’ perceptions about leadership and funding JC athletic programs, and (2) the relationship between ADs’ perceived leadership skills and financing JC athletic programs. It was intended that ADs explain in general how they perceive leadership and how it is relevant in managing programs. Then, participants were asked to detail their perceived leadership skills to manage programs effectively.
METHOD
Participants
Participants were 16 ADs (12 male, 4 female) from JCs in California who were purposefully selected because they were knowledgeable about athletic programs and financing (11). Participants’ experience ranged between 10 and 21 years (see Table 1). Currently employed ADs were used to provide real-time feedback as opposed to retroactive data.
Procedures
Following university IRB approval, 20 ADs currently employed at a JC within the same athletic conference were mailed a letter to request an interview. From the 20 requests, three participants returned the letter agreeing to participate. The remaining 17 participants were contacted by telephone from which a further 13 agreed to participate.
Prior to each interview participants were asked to sign a consent form. All face-to- face interviews lasted between 25 and 50 minutes and were conducted within a one-month period. The interviews were conducted at a neutral site of the participant’s choosing. A mini cassette recorder was used to record all interviews in their entirety. All interviews were manually transcribed by the researcher using audacity-recording software. Following transcription, each participant was sent his or her transcript to confirm its accuracy.
Instruments
In qualitative research, the researcher is the primary instrument by exploring the phenomenon under study (7). Open-ended questions navigate and focus descriptions of a particular experience through intuition and reflection of that experience. A phenomenological study requires the interviewer to achieve, or attempt to achieve, a state of epoche, the elimination of suppositions and placement of knowledge above every possible doubt (24). Thus, the primary researcher made every effort to suppress any predisposed opinions or presumptions during this study regarding the phenomenon. This allowed the researcher to grasp and freshly comprehend the participants’ experiences with the phenomenon (12).
A face-to-face interview technique with open-ended questions was the most appropriate data collection method as it allowed for some deviation while simultaneously ensuring consistent structure across interviews (12). The semi-structured, open-ended questioning interview process was designed to direct the participant toward his or her lived experiences (27).
NVivo9™ software, in accordance with the modified van Kaam data analysis method, was used to analyze interview transcripts, and identify common themes, and patterns (25). Furthermore, the software package provided a digital transcript of audio files, import, and coding of interview transcripts and aided the exploration of potential emerging themes using a step-by-step process.
Data Validity, Reliability, and Triangulation
Validity is how accurately the account represents participants’ realities of the phenomenon and their credibility (16). To establish the validity for this study, transcripts were shared with the participants to ensure that the data was accurate prior to analysis, which is an important dimension of good quality research (9). This allowed participant to edit, revise, or add information prior to data analysis, none of which did. If both validity and reliability are the goal of qualitative research, the use of triangulation to record the construction of reality is appropriate (18). Triangulation occurs when different data sources, methods of data collection, or types of data are evidence to support research data (12). In the present study, participants were sent interview transcripts and themes derived from the data to ensure its accuracy as a second data source as well as confirm thematic analysis.
Data Analysis
According to Bradley, Curry, and Devers (2007), there is no singular way to conduct qualitative data analysis, although there is general agreement that the process is ongoing. An important first step is to immerse and comprehend the meaning (5). A modification of the van Kaam method of analysis for phenomenological data, which occurs through a multi-step process, was employed in the present study (24). This method identifies common themes and patterns used by participants in a qualitative research study.
The first step requires data to be organized, transcribed, and coded. Organization of data is critical in qualitative research because of the large amount of information gathered during the study (12). The data was organized by material type: all interviews, all observations, and all documents. Finally, data was coded.
The next step in the modified van Kaam data analysis method requires participants’ statements to be categorized, clustered, coded, and labeled into groups (24). The common themes constituting the core elements of the lived experiences of the participants were most important. Coding is a process of making sense of the data, dividing the data into text or image segments, labeling the segments with codes, examining codes for overlap and redundancy, and collapsing these codes into broad themes (12).
RESULTS
The premise of this study was to develop an understanding about the leadership skills of ADs with a particular focus on financial expertise. A semi-structured interview process was used to develop an overall analysis of expert thinking. The analysis revealed three emerging themes: (a) leadership, (b) roles and responsibilities, and (c) student-athletes. Each theme is explained and then supported by participant quotes.
Theme One: Leadership
With respect to leadership, leadership skills, types, and supervision were considered important. Participants mentioned the skills to self-evaluate and feedback and how important it was to reflect on their own performances. Self-evaluation is necessary in addition to soliciting feedback from others who might be able to provide insight. Participant 1 said,
I think through and self-evaluate, and each year I am evaluated by the Vice President and President of the college. The evaluation process also includes coaches, the trainer, and the secretary to find out what I need to improve on and set some goals.
Participant 12 stated, “Understanding my leadership skills involves listening to feedback and asking questions about how I am doing. A good leader must be open to constructive criticism and be a good listener and respect others’ opinions.”
The leadership of ADs may also influence the success of programs. According to Participant 6,
I am a leader by example as a positive person. I am reasonable and approachable, and [I] motivate with pride. I am a leader who likes to inspire others to be better. I am successful if our programs are. I want my coaches and student-athletes to be successful. I want to get the most out of people and care about what they are doing as followers.
Furthermore, Participant 3 said that
As a transformational leader, I look at the goals and vision of the athletic department and what needs to be done for the long term. Each athletic program has different needs and I look at the short and long term goals.
Theme Two: Roles and Responsibilities
A JC AD has multiple roles and responsibilities, but balancing budgets, securing funding, and distributing it appropriately was mentioned frequently. This is supported by Participant 6 who stated that, “Overseeing the budgets is a big part of my job. We have so much money for each program. Every program has a different number of student-athletes, coaches, etc. Each budget is different.”
Athletic directors must be able to budget well for each program they oversee. This is a challenge, as they must find ways to generate revenue to keep the programs active. For example, Participant 7 referred to fundraising.
Fundraising is the best way. I do not know of a community college that does not
fundraise. Most institutions cannot provide things such as backpacks or gear. There are strict rules about what can be purchased with state or district dollars. When there is a shortfall of funds, we have to fundraise to support the programs.
Participant 16 found that securing the necessary budget for JC athletics is frequently a challenge.
Money is very tight for athletic programs at community colleges. As a staff, we must fundraise to keep the programs going. The coaches fundraise for their sport. Some fundraising activities may be charity golf tournaments, barbeques, or bake sales.
Although finances are just one component of the responsibilities of an AD, it is apparent that they are a significant concern. For example, according to Participant 14, “The budget consumes 70% of my time to ensure the programs are run effectively.”
The decisions about athletic programs are a major responsibility for ADs. Participants reported that Title IX Gender Equity was a concern when adding, removing, or maintaining a program. “Title IX gender equity and compliance is a big issue, and we have to evaluate our athletic programs when considering adding or dropping a program”, said Participant 9. Participant 15, who stated that decisions about programs were made in consideration of Title IX and gender equity, supported this. Thus, it becomes a balancing act of meeting guidelines or policies while simultaneously ensuring that there is a sufficient budget.
I try to keep all my athletic programs. I try to make sure they are maintained with enough dollars coming in to keep them going. Terminating a program is the last thing I try to do. If nothing else, adding a program is a good thing but that takes money.
(Participant 16)
In JC athletics, things can change quickly, an AD must make decisions concerning their coaching staff who are responsible for the student-athlete. Thus, a change in a staff member may directly impact the athletic program and the student-athletes. According to Participant 4,
In athletics, change happens often. I deal with change by telling my coaches about changes and we work together on making changes when the time comes. Some people resist change, but change is a reality in athletics.
It is important, therefore, for the AD to be cognizant of upcoming change, and keep the staff apprised of changes that might impact them.
My coaches must deal with change the most because they spend the most time with the student-athletes. I teach them about change, when change is going to take place, how it affect their programs, and help them with change. Some adapt to change well, and others do not. I work with them all.
(Participant 8)
Theme Three: Student-Athletes
Some ADs reported the additional responsibility of having to coach. Although an AD wants to win both as a coach and director, there is recognition of balancing athletic success with academic success. In fact, the ADs placed academics above athletics. According to Participant 16, “The student-athlete should manage time by first looking at their academic responsibilities first then sports.” This is further supported by other examples.
The balance is placing academics ahead of athletics. The student-athlete must be organized and set up time schedules. A balanced student-athlete focuses toward academics and although athletics is important, earning good grades is equally important.
(Participant 14)
Athletic directors recognize that academic success is a reflection on the future prospects of the student-athlete, but also on the JC. Transferring to a larger institution is important for many students.
A student-athlete who cares about moving on beyond a two year college will do a good job with balancing academics and athletics. Although the student-athlete can do well in a sport, the student must have a good grade point average to transfer.
(Participant 8)
Motivation plays a big role in the student-athlete performance athletically and academically. The ADs are tasked with working with coaches to assist with motivating athletes. Just as a coach is a mentor to an athlete, the AD must serve as a mentor to the coach. According to Participant 13, “The athletic director sets the stage for the coaches to motivate the student-athletes.”
I try to promote morale and motivation with my coaches who are the leaders for the student-athlete. The coaches are mentors who motivate and inspire the student-athlete to good. As the athletic director I train the coaches to engage the student-athlete.
(Participant 2)
Some student-athletes are less self-motivated than others and require external motivation to perform better in a sport or academics. The ability to prioritize athletics and completing coursework with passing grades can be a challenge, yet “Increasing his or her self-motivation in the classroom can lead to a successful student-athlete” (Participant 11). Participant 6 noted that athletics has a tendency to be placed ahead of academics.
The challenged student-athlete lacks self-motivation, direction, and the ability to manage their time. This type of student-athlete lacks the passion for being engaged academically to learn in the classroom. They place athletics ahead of academics, which may be why they have difficulties earning good grades in the classroom.
DISCUSSION
The purpose of this qualitative, phenomenological study was to explore ADs lived experiences and perceptions of leadership in JC athletic programs particularly in reference to finances. Interview analysis revealed three main themes of leadership, roles and responsibilities, and the student-athlete. Each theme is discussed in light of current research.
Theme One: Leadership
Athletic directors recognized the importance of leadership in influencing the behavior and actions of others. According to Smith (1997), “As leaders face greater uncertainties and changes, and compounded complexities, they strive for greater flexibility and agility” (p. 277). In the present study, ADs saw their role as leaders encompassing a variety of roles and responsibilities as evidenced in the second theme. What is most important with these varying roles and responsibilities is the opportunity to receive feedback on their performance and make the appropriate adjustments based on the feedback received. “Effective leaders learn that comprehensive systematic reviews and evaluations should include every type of resource, every competency and capacity, and every person and position that affects performance” (33). Thus, some participants acquired evaluations from superiors, such as the college president or those working for the participant such as coaches, and applied this feedback to improve their leadership styles and effectiveness. Overall, the feedback an AD receives is a measuring tool for effectiveness in their role.
Theme Two: Roles and Responsibilities
Balancing budgets and securing funding was a clear concern for the participants. Many participants indicated that they were responsible for preparing the budget. A participative budget process involves lower-level administrators and coaches who better understand the individual line items who are responsible for the athletic department’s budget than senior administrators. A top down budgeting process offers short-term budgets imposed by senior administrators more likely to be consistent with the strategic long-term goals and objectives of the athletic department (20). Thus, those ADs expected to complete budgets without the use of participative budget methodology may experience higher levels of stress (32). Participative budgeting is supported by Wickstrom (2006), as an authoritative style of leadership is not conducive to the work force of the modern era, and that to be a successful leader an AD has to be willing to listen to those they lead.
The present study further found that gender equity and the budgetary requirements that stem from Title IX was considered both a financial and leadership challenge. This is not surprising, as gender equity at JCs has been clearly documented (8). A balance needs to exist between athletic sports programs relative to women’s sports and Title IX laws (19). Some ADs are faced with the decision to cut sports programs (Steinback, 2010) and must be cognizant of their current Title IX standing so that there does not become an imbalance of participation opportunities. Thus, there remains work to be done in achieving a standard of gender equity that not only meets the intent of Title IX but fully affords the respect of dignity for female student-athletes (19). As two-year athletic programs consider new directions, the achievement of gender equity within two year athletic programs still needs to be addressed (19), which is recognized by the participants of the present study.
Theme Three: Student-Athletes
The relationship that ADs had with student-athletes was an unexpected finding. This may be in part because some ADs reported the additional responsibility of serving as a coach. The extra coaching duties may cause additional stressors because it limits the time they have to devote to the financial responsibilities of the profession (21). Participants recognized that they were responsible with the coaches for improving both student athletic and academic performance. Participants stressed the importance of academics over athletics, but this may be due to efforts by the administration to increase retention and graduation rates (29). Not only did ADs report high levels of interaction with student-athletes, they generally viewed it as part of their responsibility to motivate the student to achieve both in athletics and in the classroom. That ADs viewed this as a component of their leadership was unexpected, as this task is frequently the responsibility of a coach or even assistant (15).
Limitations and Future Research
Although the present study provides some interesting findings, they should be evaluated with respect to its limitations. First, this study was limited to current full-time ADs at JCs in the state of California, which may not translate to the experiences of ADs in other locations or athletic conferences. Second, only four participants were female. This is not uncommon (1), and future research should consider whether opinions and perceptions differ between genders. For example, impressions of Title IX may differ by gender (1), and Title IX challenges may differ between JCs and traditional four-year institutions. Third, the specific financial expertise of each participant was not assessed. Therefore, future research should consider whether financial education and training improves AD financial expertise and progress toward short, intermediate, and long term strategic goals. The recommendation may benefit both low-level and senior level administrators at the JC. In addition, future researchers should consider conducting a broader survey of the general background and experiences of ADs in JCs.
CONCLUSIONS
The success of collegiate athletic programs can depend upon the skills of their ADs (31). Thus, they must possess leadership skills across multiple disciplines. Because financial and budgetary concerns were most prevalent among the participants of the present study, future research needs to investigate the training being provided for ADs. The financing and budget process is vital in ensuring that athletic programs are successful, and an action plan is needed for current and future ADs to use as a model to understand the entire financial and budget process of funding athletics programs.
APPLICATIONS IN SPORT
Empirical research has focused primarily on the Division I AD. However, these findings suggest that JC ADs encounter a variety of challenges which have not been investigated. JC administrators need to consider the budgetary and fundraising background and expertise of applicants, which is a paramount responsibility of ADs in JC.
ACKNOWLEDGMENTS
None
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Submitted by C. Barry Pfitzner, Steven D. Lang and Tracy D. Rishel
ABSTRACT
In this paper we attempt to predict the total points scored in National Football League (NFL) games for the 2010-2011 season. Separate regression equations are identified for predicting points for the home and away teams in individual games based on information known prior to the games. The sum of the predictions for the home and away teams computed from the regression equations (updated weekly) are then compared to the over/under line on individual NFL games in a wagering experiment to determine if a successful betting strategy can be identified. All predictions in this paper are out-of-sample—meaning that all of the information necessary for the predictions was available before the games were played. Using this methodology, we find that several successful wagering strategies could have been applied to the 2010-2011 NFL season. We also estimate a single equation to predict the over/under line for individual games. That is, we test to see if the variables we have collected and formulated are important in predicting the betting line for NFL games. These results can be used by either bettors or bookmakers wanting to increase their odds of success in the gaming industry.
INTRODUCTION
Bookmakers set over/under lines for virtually all NFL games. Suppose the over/under line for total points in a particular game is 40. Suppose further that a gambler wagers with the bookmaker that the actual points scored in the game will exceed 40, that is, he bets the “over.” If the teams then score more than 40 points, the gambler wins the wager. If the teams score under 40 points, the gambler loses the bet. If the teams score exactly 40 points, the wager is tied and no money changes hands. The process works symmetrically for bets that the teams will score fewer than 40 points, or betting the “under.” The over/under line differs, of course, on individual games. Since losing bets pay a premium (often called the “vigorish,” “vig,” or “juice” and typically equal 10%), the bookmakers will profit as long the money bet on the “over” is approximately equal to the amount of money bet on the “under” (bookmakers also sometimes “take a position,” that is, they will welcome unbalanced bets from the public if the bookmaker has strong feelings regarding the outcome of the wager [see also the reference to Levitt’s work in the literature review]). It is widely known a gambler must win 52.4% of the wagers to be successful. That particular calculation can be established simply. Let Pw = the proportion of winning bets and (1 – Pw ) = the proportion of losing bets. The equation for breaking even on such bets where every winning wager nets $10 and each losing wager represents a loss of $11 is:
Pw ($10) = (1 – Pw ) ($11) , and solving for Pw
Pw = 11∕21 = .5238, or approximately 52.4%
This research attempts to identify methods of predicting the total points scored in a particular game based on information available prior to that game. The primary research question is whether or not these methods can then be utilized to formulate a successful gambling strategy for the over/under wager, with success requiring a winning percentage of at least 52.4%.
The remainder of this paper is organized as follows: in the next section we describe the efficient markets hypothesis as it applies to the NFL wagering market; we then offer a brief review of the literature; in the following section we describe the data and method; descriptive statistics and the main regression results are then presented; these are followed by the wagering simulations; we next discuss our investigation of the determinants of the over/under line; and finally offer our conclusions.
NFL Betting as a Test of the Efficient Markets Hypothesis
A number of important papers have treated wagering on NFL games as a test of the Efficient Market Hypothesis (EMH). This hypothesis has been widely studied in economics and finance, often with focus on either stock prices or foreign exchange markets. Because of the difficulties of capturing EMH conclusions given the complexities of those markets, some researchers have turned to the simpler betting markets, including sports (and the NFL), as a vehicle for such tests.
If the EMH holds, asset prices are formed on the basis of all information. If true, then the historical time series of such asset prices would not provide information that would allow investors to outperform the naïve strategy of buy-and-hold (see, for example, Vergin 2001). As applied to NFL betting, if the use of past performance information on NFL teams cannot generate a betting strategy that would exceed the 52.4% win criterion, the EMH hypothesis holds for this market. Thus, the thrust of much of the research on the NFL has taken the form of attempts to find winning betting strategies, that is, strategies that violate the weak form of the EMH.
A Brief Review of the Recent Literature
Nearly all of the extant literature on NFL betting uses the point “spread” as the wager of interest. The spread is the number of points by which one team (the favorite) is favored over the opponent (the underdog). Suppose team A is favored over team B by 7 points. A wager on team A is successful only if team A wins by more than 7 points (also known as “covering” the spread). Symmetrically, a wager on team B is successful only if team B loses by fewer than 7 points or, of course, team B wins or ties the game—in any of these cases, team B “covers.” Vergin (2001) and Gray and Gray (1997) are examples of research that focus on the spread.
Based on NFL games from 1976 to 1994, Gray and Gray (1997) find some evidence that the betting spread is not an unbiased predictor of the actual point spread on NFL games. They argue that the spread underestimates home team advantage, and overstates the favorite’s advantage. They further find that teams who have performed well against the spread in recent games are less likely to cover in the current game, and those teams that have performed poorly in recent games against the spread are more likely to cover in the current game. Further Gray and Gray find that teams with better season-long win percentages versus the spread (at a given point in the season) are more likely to beat the spread in the current game. In general, they conclude that bettors value current information too highly, and conversely place too little value on longer term performance. That conclusion is congruent with some stock market momentum/contrarian views on stock performance. Gray and Gray then use the information to generate probit regression models to predict the probability that a team will cover the spread. Gray and Gray find several strategies that would beat the 52.4% win percentage in out-of-sample experiments (along with some inconsistencies). They also point out that some of the advantages in wagering strategies tend to dissipate over time.
Vergin (2001), using data from the 1981-1995 seasons, considers 11 different betting strategies based on presumed bettor overreaction to the most recent performance and outstanding positive performance. He finds that bettors do indeed overreact to outstanding positive performance and recent information, but that bettors do not overreact to outstanding negative performance. Vergin suggests that bettors can use such information to their advantage in making wagers, but warns that the market and therefore this pattern may not hold for the future.
A paper by Paul and Weinbach (2002) is a departure from the analysis of the spread in NFL games. They (as do we in this paper) target the over/under wager, constructing simple betting rules in a search for profitable methods. These authors posit that rooting for high scores is more attractive than rooting for low scores. Ceteris paribus, then, bettors would be more likely to choose “over” bets. Paul and Weinbach show that from 1979-2000, the under bet won 51% of all games. When the over/under line was high (exceeded the mean), the under bet won with increasing frequency. For example, when the line exceeded 47.5 points, the under bet was successful in 58.7% of the games. This result can be interpreted as a violation of the EMH at least with respect to the over/under line.
Levitt (of Freakonomics fame) approaches the efficiency question from a different perspective. It is clear that if NFL bets are balanced, the bookmaker will profit by collecting $11 for each $10 paid out. As we suggested earlier, bookmakers at times take a “position” on unbalanced bets, on the assumption that the bookmaker knows more about a particular wager than the bettors. Levitt presents evidence that the spread on games is not set according to market efficiency. For example, using data from the 2001-2002 seasons, he shows that home underdogs beat the spread in 58% of the games, and twice as much was bet on the visiting favorites. Bookmakers did not “move the line” to balance these bets, thus increasing their profits as the visiting favorite failed to cover in 58% of the cases.
Dare and Holland (2004) re-specify work by Dare and MacDonald (1996) and Gray and Gray (1997) and find no evidence of the momentum effect suggested by Gray and Gray, and some, but less, evidence of the home underdog bias that has been consistently pointed out as a violation of the EMH. Dare and Holland ultimately conclude that the bias they find is too small to reject a null hypothesis of efficient markets, and also that the bias may be too small to exploit in a gambling framework.
Still more recently, Borghesi (2007) analyzes NFL spreads in terms of game day weather conditions. He finds that game day temperatures affect performance, especially for home teams playing in the coldest temperatures. These teams outperform expectations in part because the opponents were adversely acclimatized (for example, a warm weather team visiting a cold weather team). Borghesi shows this bias persists even after controlling for the home underdog advantage.
METHODS
We focus on the total points scored in NFL games and the corresponding over/under line for that game. With the objective of estimating regression equations for home and away team scoring, data were gathered for the 2010-11 season for the analysis. The variables include:
TP = total points scored for the home and visiting teams for each game played
PO = passing offense in yards per game
RO = rushing offense in yards per game
PD = passing defense in yards per game
RD = rushing defense in yards per game
GA = “give aways,” offensive turnovers per game
TA = “take aways,” defensive turnovers per game
D = a dummy variable equal to 1 if the game is played in a closed dome, 0 otherwise
PP = points scored by a given team in their prior game
L = the over/under betting line on the game
Match-ups Matter (we think)
The general regression format is based on the assumption that “match ups” are important in determining points scored in individual games. For example, if team “A” with the best passing offense is playing team “B” with the worst passing defense, ceteris paribus, team “A” would be expected to score many points. Similarly, a team with a very good rushing defense would be expected to allow relatively few points to a team with a poor rushing offense. In accord with this rationale, we formed the following variables:
PY = PO + PD = passing yards
RY = RO + RD = rushing yards
For example, suppose team “A” is averaging 325 yards (that’s high) per game in passing offense and is playing team “B” which is giving up 330 yards (also, of course, high) per game in passing defense. The total of 655 would predict many passing yards will be gained by team “A,” and likely many points will be scored by team “A.”
Similarly, we theorize that if a team’s offense that commits many turnovers plays a team whose defense causes many turnovers, points scored for the offensive team may be lower (and perhaps more points will be scored by the defensive team). For turnovers, we created variables similar to the passing and rushing yards in the previous paragraph:
TO = GA + TA, that is, turnovers = “give aways” for a given team plus “take aways” for the opposition team.
The dome variable will be a check to see if teams score more (or fewer) points if the game is played indoors.
The variable for points scored in the prior game (PP) is intended to check for streakiness in scoring. That is, if a team scores many (or few) points in a given game, are they likely to have a similar performance in the ensuing game?
We also test to ascertain whether or not scoring is contagious. That is, if a given team scores many (or few) points, is the other team likely to score many (or few) points as well? We test for this by two-stage least squares regressions in which the predicted points scored by each team serve as explanatory variables in the companion equation.
General Regression Equations
The general sets of regressions attempted are of the form: where the subscripts h and v refer to the home and visiting teams respectively, and the i subscript indicates a particular game.
Equations such as 1 and 2 are estimated using data for weeks 5 through 17 of the 2010-11 season. We chose to wait until week five to begin the estimations so that statistics on offense, defense, turnovers, etc., are more reliable than would be the case for earlier weeks.
RESULTS AND DISCUSSION
Descriptive Statistics
Table I contains some summary statistics for the data set. Teams averaged approximately 223 yards passing per game (offense or defense, of course) for the season, and they averaged approximately 115 yards rushing. The statistics reported on the rushing and passing standard deviations without parentheses are for the offenses and the defensive standard deviations are (as you might guess) in parentheses. Interestingly, passing defense is less variable across teams than is passing offense (we hypothesize that teams must be more balanced on defense to keep other teams from exploiting an obvious defensive weakness, but teams may be relatively unbalanced offensively and still be successful [see the 2011 Packers, for example, who ranked near the top in passing offense and near the bottom in rushing defense]). Home teams scored approximately 23.2 points on average for the season and outscored the visitors by 1.7 points. Total points averaged 44.5 in 2010-2011 and the over/under line averaged 42.8 (the difference between these means is statistically significant at α < .10; the calculated value for the t-test of paired samples is approximately 1.92). Not surprisingly, the standard deviation was much smaller for the line than for total points.
Table I: Summary Statistics
Regression Results
Though equations 1 and 2 from above represent our theoretical foundation, we did not find empirical support for the dome effect, points scored in the prior game, or for turnovers in predicting points for either the home or away teams. Thus we do not report regressions with those variables included (such estimations are available from the authors upon request). Since our objective is to produce predictions based on variables (and their effects) that are known prior to the games, we updated the equations weekly and checked for effects for those excluded variables. We did not find convincing evidence that any of the excluded variables should be included in the predictive equations.
The dome effect in a previous paper (see Pfitzner, Lang, & Rishel, 2009) found that teams scored approximately 5.4 more points when the game was played in a closed dome stadium for the 2005-2006 season. However, for the 2010-2011 season, games played in domes averaged 45.4 points and games played outdoors averaged 44.3. That difference is not statistically significant; the t-test for independent samples yields a calculated value of 0.54. The dome effect may be idiosyncratic in that, in some seasons, the high scoring teams may happen to be those who play home games in domed stadiums.
The representative estimated equations (at the end of the 16th week) are given in Table II. For the home points equation, the passing yardage and the rushing yardage are significant at α < .01, and α < .05 levels, respectively. The equation explains a modest 4.2% ( ) of the variance in home points scored. On the other hand, the F-statistic indicates that the overall equation meets the test of significance at α < .01. The estimated coefficients for the variables have the anticipated signs. To interpret those coefficients, an additional 100 yards passing (recall that this is the sum of the home team’s passing offense and the visitor’s passing defense) implies approximately 4.3 additional points for the home team, whereas an additional 100 yards rushing implies approximately 4.2 additional points.
Table II: Regression Results for Total Points Scored
The visiting team estimation yields a similar equation in terms of the overall fit. The explanatory variables are statistically significant—the passing yardage variable at α < .05, and the rushing yardage variable is significant at α < .01. The equation explains only 3.7% ( ) of the variance in visiting team points, and the F-statistic implies overall significance at α < .05. The coefficients perhaps suggest a more important role for rushing than for passing in scoring for the visiting team. If the coefficients are to be believed, an additional 100 yards passing yields approximately 2.8 points for the visiting team, and an additional 100 yards rushing is worth 6.7 points.
The reader may find such low values to be of concern, but recognize that the variables for which we are attempting estimates are very difficult to predict and are subject to wide variation. As we show in a later section, the lines on the games are much easier to predict. The model is best judged by its prediction qualities—here based on wagering success.
Other Hypotheses
Another hypothesis we wished to entertain is whether or not scoring is contagious. A priori, we surmised that points scored in given games for visiting and home teams would be positively related. In keeping with our earlier work, there is no evidence that such is the case. The estimated simple correlation coefficient between home team and visiting team points is -0.106, which is not statistically different from zero and “wrong” signed according to our intuition. Our initial thinking was that if team “A” scores and perhaps takes a lead, team “B” has greater incentive to score. An obvious complicating factor is that a given team may dominate time of possession, thus preventing the opposing team opportunities to score. We also experimented with two-stage least squares to test the hypotheses that scoring was contagious. In that formulation we developed a “predicted points” variable for the home team, entered that variable as an independent variable in the visiting team equation, and reversed the procedure for the home team equation. Neither of the predicted points variables were statistically significant. The variable was positively signed for the home team equation, and negatively signed for the away team equation.
As indicated above, we also find no evidence that teams are “streaky” with respect to points scored. In short, we find that points scored in the immediately prior week do not contribute to the explanation of points scored in the current week. That conclusion holds up for the regressions in section VI as well.
Finally, though turnovers clearly matter in who wins or loses, there is no evidence from our work that measuring teams’ turnovers per game prior to the current game aids in predicting points scored by the individual teams.
Wagering on the Over/Under Line
In this simulated wagering project we use the estimated equations to predict scores of the home and away teams for all of the games played over weeks 8 through week 17 (end of the regular season). The points predicted in this manner are then compared to the over/under line for each game. We then simulate betting strategies on those games.
Out-of-Sample Method
Since it is widely known that betting strategies that yield profitable results “in sample,” are often failures in “out-of-sample” simulations, we use a sequentially updating regression technique for each week of games. Suppose, for example, we are predicting points for week 8. We then estimate equations TPhi and TPvi with the data from weeks 5, 6, and 7, then “feed” those equations with the known data for each game through the end of week 7, generating predicted points for the visiting and home team for all individual games in week 8. The predicted points are then totaled and compared to the over/under line for each game. Next we add the data from week 8, re-estimate equations TPhi and TPvi, and make predictions for week 9. The same updating procedure is then used to generate predictions for weeks 10 through 17. This method ensures that our results are not tainted with in-sample bias.
Betting Strategies
We entertain three betting strategies for the predicted points versus the over/under line on the games. These strategies are:
1. Bet only games for which our predicted total points differ from the line by more than 7 points.
2. Bet only games for which our predicted total points differ from the line by more than 5 points.
3. Bet all games for which our predicted total points differ from the line by any amount—in our case, all games.
As stated previously, a betting strategy on such games must predict correctly at least 52.4% of the time to be successful. If a given method cannot beat this 52.4% criterion, as a betting strategy it is deemed to be a failure.
Table III contains a summary of the results for the three betting strategies. The first betting strategy yields only ten “plays” over weeks 6 to 17. That betting strategy would have produced five wins, and five losses. For this (very) small sample, this strategy is, of course, not profitable, with only a 50% winning percentage. The second strategy (a differential greater than 5 points) yields 39 plays and a record of 17-10-0—a winning percentage of 63%. Finally for every game played, the method produces a still profitable record of 97-78-5, with the winning percentage at 55.4%.
Table III: Results of Different Betting Strategies
There is some consistency between these results and those we found for the 2005-2006 season. In that work we found that the “> 5 points” strategy produced a winning percentage of 60.5% based on 39 plays. Betting all games produced a winning percentage of 54%. Interestingly, the earlier research produced nine games with a greater than 10 point difference between the line and the predicted points whereas this work on 2010-2011 season produced only one play (which would have been a winning bet).
It is important to note that we make no adjustment for injuries, weather, and the like that would be considered by those who make other than simulated wagers. We offer these methods only as a guide, not as a final strategy.
Another Method of Predicting the Line and Total Points
Since we have collected and created variables that may be relevant to determining the betting line (and total points), in this section we investigate the relevancy of our variables in that context. For purposes of comparison, we estimate an equation for the over/under line and, separately, for the actual points scored. Further, we compare the results for the 2010-11 season with our results from prior research. These equations may be useful in confirming (or contradicting) the results of the previous sections, and may provide useful information applicable to wagering strategies.
The results of those regressions are contained in Table IV. We estimated regression equations for two seasons with the line as the dependent variable and all of the right-hand side variables (with the exception of turnovers) specified in equations 1 and 2. The estimations for the line are contained in the second column (2005-2006 season) and the fourth column (2010-2011 season). The estimations are remarkably similar. For the line for both seasons, every coefficient estimate is correctly signed and statistically significant at traditional levels of alpha, and for both equations. The line seems to be set on the assumption that teams are streaky (we conclude they are not), and the dome effect on the betting line seems to be a bit smaller in the most recent season.
Table IV: Regression Results for the Line and Total Points, 2005 and 2010 Seasons
As a comparison, we also estimated (far less successfully) an equation for total points with the same set of explanatory variables with those results reported in columns three and five of Table IV. Perhaps the most striking result of these regressions is that the regressions for the line explain fully two-thirds of the variance in that dependent variable and the equations for the actual points explains less than 6% of the variance in total points for either season, with only four of the seven explanatory variables meeting the test for statistical significance at traditional levels for 2005-2006 and only three for 2010-2011. Interestingly, the dome effect for total points for the earlier season estimated 5 additional points scored in dome games, and the corresponding estimate for the 2010-11 season was zero, when controlling for other effects. Recall that for the 2005-2006 season, 5.4 points more were scored in games played in domes, and the corresponding difference was only one point for the 2010-2011 season.
In short, and to be expected, the line is much easier to predict than is actual points scored. That is, the outcome of the games and points scored therein are not easily predicted. It is tempting to say, “That’s why they play the games.” At least two further observations are in order. First, consider the coefficients for points scored in the previous game. Those variables matter as would be anticipated on an a priori basis in determining the line for the game. However, they seem to play an insignificant (statistical or practical) role determining the actual points scored. This particular result may be interpreted as bettors placing too much emphasis on recent information, as other authors have suggested.
Finally, it also seems clear that the effect of playing indoors has dissipated between the two seasons for which we report results in Table IV. As we have emphasized, this may be simply the effect of teams who play many games indoors having poorer scoring teams for any particular year.
CONCLUSIONS
The regression results in this paper identify promising estimating equations for points scored by the home and away teams in individual games based on information known prior to the games. In a regression framework, we apply the model to three simulated betting procedures for NFL games during weeks 6 through 17 of the 2010-2011 season. Betting strategies based on the differences between our predictions and the over/under line produced profitable results for either all games at any differential or those for which our predictions differed from the betting line by 5 or more points.
Based on our earlier results finding profitable wagering strategies for the 2005-2006 season, we (and others) questioned whether these results will hold up in other seasons. Based on the results presented here—so far, so good.
APPLICATIONS IN SPORT
Betting on sports, the NFL in particular, is a very popular pastime among sports (or gambling) enthusiasts and a very lucrative business for bookmakers in Las Vegas and elsewhere. This research was conducted to determine whether successful wagering strategies could be developed based on regression equations used to predict points for the home and away teams in individual games. The sum of the predictions for the home and away teams, updated weekly, were then compared to the over/under line on individual NFL games. Certain betting strategies were identified as successful, and could therefore be used by those wanting to improve their odds while enjoying and increasing their interest in America’s favorite sport.
ACKNOWLEDGMENTS
None
REFERENCES
1. Badarinathi, R., & Kochman, L. (2001). Football betting and the efficient market hypothesis. The American Economist, 40(2), 52-55.
2. Borghesi, R. (2007). The home team weather advantage and biases in the NFL betting market. Journal of Economics and Business, 59, 340-354.
3. Boulier, B. L., Steckler, H. O., & Amundson, S. (2006). Testing the efficiency of the National Football League betting market. Applied Economics, 38, 279-284.
4. Dare, W. H., & Holland, A. S. (2004). Efficiency in the NFL betting market: modifying and consolidating research methods. Applied Economics, 36, 9-15.
5. Dare, W. H., & MacDonald, S. S. (1996). A generalized model for testing home and favourite team advantage in point spread markets. Journal of Financial Economics, 40, 295-318.
6. Gray, P. K., & Gray, S. F. (1997). Testing market efficiency: Evidence from the NFL sports betting market. The Journal of Finance, LII(4), 1725-1737.
7. Levitt, S. D. (2002). How do markets function? An empirical analysis of gambling on the National Football League. National Bureau of Economic Research (Working Paper No. 9422).
8. Paul, R. J., & Weinbach, A. P. (2002). Market efficiency and a profitable betting rule: Evidence from totals on professional football. Journal of Sports Economics, 3, 256-263.
9. Pfitzner, C. B., Lang, S. D., & Rishel, T. D. (2009). The determinants of scoring in NFL games and beating the over/under ;ine. New York Economic Review, 40, 28-39.
10. Pfitzner, C. B., Lang, S. D., & Rishel, T. D. (2006). Can regression help to predict total points scored in NFL games? In A. Avery (Ed.), The 2006 Southeastern INFORMS Conference Proceedings (pp. 312-317). Myrtle Beach, SC: Southeastern INFORMS.
11. Vergin, R. C. (2001). Overreaction in the NFL point spread market. Applied Financial Economics, 11, 497-509.
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
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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).
