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Coaching buyouts

2008 November 5
by Skip Sauer

Tennessee’s Phillip Fulmer received a contract extension last summer and is out of his job before all of the leaves have turned. Cost to Tennessee: $6 million.

Clemson’s Tommy Bowden got an extension last December after flirting with Arkansas and was out of his job before Halloween. Cost to Clemson: $3.5 million.

Auburn’s Tommy Tuberville agreed to an extension last November after his name was mentioned with the Texas A&M and Arkansas openings. Cost to Auburn, if it makes a change: $6 million.

Cases can be made for or against removing these coaches. When losing persists to the point that it divides a fan base – or even worse, making them apathetic – universities are obligated to consider pulling the plug.

What’s staggering is how quickly they’re pulling the plug after the group hug.

… Athletics directors used to speak publicly to show support in difficult times. But words soon turned into dreaded votes of confidence.

So contract extensions and automatic rollovers became the next tools to show recruits their coach would stick around. It was quickly understood that extensions are never worth the paper they’re written on.

Then came buyouts. Coaches initially had the upper hand, getting paid handsomely if they were fired and owing nothing if they left. Athletics directors wised up and made buyouts a two-way street, but at the cost of skyrocketing buyout prices both ways.

The reality is buyouts don’t work to keep a coach at a school if he really wants to leave. And they don’t work to keep a school from firing a coach if it really wants him to leave.

That’s from Jon Solomon. Jon argues that Athletic Directors need to “find the discipline and political courage” to make a better bargain with their coaches. I think they buyouts are a form of deferred compensation, in part, and reflect long run marginal products. Bowden, Fulmer, and Tuberville all coached at their schools for a decade or more and each has had a significant measure of success. Not on the field in Clemson’s case, but the program has never been as well stocked with talent and facilities, and Bowden is directly responsible for that. Bowden also had an explicit outside option — the Arkansas job — when his buyout was negotiated, and both Fulmer and Tuberville have significant earning potential elsewhere. Fulmer is reportedly interested in the Clemson opening, although the behavior of his players in recent years will be a liability with Clemson’s administration.

The bottom line is that buyouts are a form of compensation that is market driven. I don’t think they exist because Athletic Directors lack courage. The one policy change that would reduce their size would be to pay the players themselves, rather than the player-proxies that prowl the sidelines. But that ain’t gonna happen folks.

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