Ridiculous! December 1, 2012

In a day when colleges and universities are cutting back, when education is devalued at the expense of sports, we have this story reminding us how much money is poured down the drain in severance packages:

From Jeré Longman:

For an especially lucrative occupation, one might consider becoming a fired college football coach.

The latest symbol of the college football arms race is not the coaches’ salaries themselves but rather the money that university officials are spending to buy out those huge contracts when a coach falters.

After Tennessee fired its coach last week, the university’s chancellor said the athletic department would forgo $18 million in contributions it was to make to the university over the next three years for academic scholarships and fellowship programs. Instead, some of the money will be used to pay the severance packages of the coach, Derek Dooley, who is owed $5 million, and his staff, which is owed a reported $4 million if it is not retained. Dooley had four years remaining on his contract.

On Sunday, Auburn fired its coach, Gene Chizik, two seasons after the Tigers went unbeaten and won the national championship. Auburn said it owed $11 million in buyouts to its coaching staff, including $7.5 million to Chizik, who had three years left on his contract. He is to be paid $208,334 a month for the next 36 months. The money could have been used to fund other sports.

“It’s shameful,” said Raymond D. Sauer, chairman of the department of economics at Clemson University and president of the North American Association of Sports Economists. “We can understand the market forces at work, but all that money being burned up that way is a high cost of doing business.”

Sauer said there was “a gusher of money” in the Southeastern Conference. “But it’s limited,” he added.

Coaches’ salaries have soared in recent years at colleges throughout the country, often reaching several million dollars a year, as university officials have intensified efforts to claim some of the sport’s growing riches that come from billion-dollar television contracts, merchandise sales and alumni contributions. But college officials do not seem encumbered by the large contracts; rather, they appear willing to pay the coaches handsomely to go away and make room for new hires — despite little evidence that coaching changes generally result in better teams.

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  • Roger

    A proposal for the NCAA: allow member universities to pay sports coaches as much as they want as long as total oay for for the coach doesn’t exceed the total pay given to the highest paid teaching department head at the university. (Or some similar way to keep higher education in balance and costs in check)

  • Matt Edwards

    Or they could just not fire the coach for a bad season and honor the contracts.

    It seems like the “waste” is coming from university administrators who are greedy for the revenue generated by a successful football program.

  • RobS

    And at the conference level too. Maryland will leave the ACC (with their 4-8 record) for the Big Ten and they’ve already been sued for the $50 million breakup fee.

    Sadly, I’m sure they’re doing math. If they can sell more $30-$40 tickets and get more alumni gifts, they’re going to fire the coach and try to keep the stands full — because they estimate that’s going to be more $ gain than keeping the guy. The donors and alumni value Saturday results of 18-22 year olds more than education really.

    But, the rest of the country values it too when athletes take the field on Sunday afternoon.

  • Brian

    The problem is that they are giving ridiculous contracts to unproven talent. When you hire Urban Meyer at OSU, you have a R.O.I. that is plausible. Chizik & Dooley were given stupid buyout clauses. Pay them a lot per year if you like, but if they get fired the contract, agree to only pay them $500,000 one time. So the coach gets, I have to be good or not get paid. (And I realize all the numbers I just posted are stupid in comparison to where a university should spend its cash.)

  • Chuck

    In Texas, the highest paid “state employee” is University of Texas head football coach Mack Brown. His coaching staff takes up numerous of the other top spots.
    Nobody will ever convince me that this lucrative business being run under the banner and auspices of a state university is not hurting the real mission of these schools. The bigger picture is how these athletic programs generate tens of millions in revenue each year the vast majority of which goes back into the program. Once again, big business under the umbrella of a state college. Something is very wrong with this picture.

  • Patrick

    Here’s something the article ignores.

    What is not discussed is all “education” donations from private alumni are up during winning football seasons and down during losing seasons. The amounts makes the $18 million look small, so winning in football is huge for the educational side of the universities.

    This is true in almost all universities with the exceptions probably of Ivy League schools. 60 Minutes did a special on this aspect of educational fund raising. They interviewed Michigan’s AD and this forces the university to have less patience than normal.

    I forgot the figures, but, he said something like 70% of all donations to the educ. side come during the football season and they are always down when the team is mediocre.

    It’s a business decision and the professional coaches, whether pitiful or great, are rewarded for this reality. The reality is a terrible commentary on the US culture, but, the schools have no choice now. Winning big in football = huge fundraising for the school.

  • Craig

    @Patrick. This is interesting. If a church’s offering plate is light, maybe the pastors should consider investing in a competitive sports programs and jersey sales? Maybe Habitat for Humanity and the Nature Conservancy could get in on this too?

    Or perhaps each professional team could somehow strongly affiliate itself with a charity organization. Maybe each pro-team could sponsor a particular charity. It would seem to cost the professional sports team next to nothing. (But could a bad season have a net-negative effect on the sponsored charity? If so, then we might also wonder whether college sports have net positive effect on alumni contributions.)

  • Bill

    Looking for salary and contract parity across the sports and academic areas is a pipe dream. As long as sports remains a religion, every athletic department will negotiate any contract with any coach and coaching staff they want in order to make them a winner or give them a chance at it. And as long as college administrators and perhaps alumni permit this activity, it will continue. There is a huge financial incentive for schoold to keep doing this.

    Colleges are just as motivated by making money as any other money-making organization to stay in business. If sports gets a college closer to that objective, who is going to say no.

  • Patrick


    Tons of churches are sponsoring their own football teams for exactly this reason in my area. Last decade it’s become the chic thing to do. They now win most football championships on the lower size levels.

  • BradK

    Roger #1, such a proposal is untenable. Schools already have to use “show cause” rules for universities who hire coaches who have violated NCAA rules. They do this because it is illegal for the NCAA to officially blackball a coach and prevent a school from hiring him. It is likely illegal for the NCAA to regulate coaches’ salaries. If the NCAA tried to do this, they would probably be sued and lose.

    Matt #2, these schools DO honor the contracts. The contracts include provisions for what to do in case a coach wants to leave or in the case they are fired. If contracts were not being honored these coaches and schools would be in court suing each other.

    Lots of people see these salaries and athletic budgets as detracting from academics. But the folks who are donating money to athletics and who are buying tickets and merchandise that fund athletic budgets would not be spending that money on those academics even if those athletic departments and teams suddenly ceased to exist. This is unfortunate but true.