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Wednesday, January 03, 2007
 
Coaching Movement and Buyout Clauses

As I periodically checked my web browser this morning at work to keep an eye on the reality show-like drama involving Nick Saban, the Miami Dolphins, and the University of Alabama, I was struck by the importance of well-written buyout clauses in coaches' contracts. It would seem to me that if one aspires to be a coaches' agent in intercollegiate or professional sports, they should take an extra few semesters worth of contract law while in law school, with much of that work focused exclusively on writing solid buyout clauses. While I'm of course being a bit facetious here, it is somewhat mind-boggling how few coaches' contracts actually run their full course and how many are terminated by either the quick-triggered administrator, eager to replace a coach at the first sign of trouble (see Maturi, Joel, athletic director at the University of Minnesota, who last week fired Glen Mason, the school's football coach, who had won at least six games in seven of the past eight seasons, a feat thought by many to be nearly impossible at a school that had only won 6+ games in six of the previous 21 seasons), or the coach with the wandering eye, always looking to leave for greener pastures, particularly when green is the color on small, rectangular pieces of currency (see Saban, Nick).

While most of these buyout clauses seem to work relatively seemlessly, we do find the occassional snafu, such as the Jim O'Brien/Ohio State basketball case from recent memory. To all of you aspiring coaches' agents out there, please pay attention extra during lecture in contract law class and spend a little extra time perfecting those buyout clauses.





5 Comments:

Excellent point, but what about the flip side to buyout clauses? If a coach has an expensive buyout and he WANTS to take another job, he can be hampered because his prospective employer doesn't want to pay the heavy price tag. Case in point: John Beilein, basketball coach at West Virginia. He was up for a couple of jobs last year but couldn't go anywhere because he has a $3 million buyout. That's a lot of security, but it comes with a price.

Anonymous Seth Davis -- 1/03/2007 2:33 PM  


I would suggest that perhaps Beilein's agent wasn't overly successful in negotiating a more advantageous (i.e. lower) buyout during his last contract negotiations (he renegotiated an extension after his tournament success a couple years ago if I recall). I don't think its a coincidence that WVU football coach Rich Rodriguez has also long been rumored to have one of the most restrictive buyout clauses in the business.

Blogger Chad McEvoy -- 1/03/2007 2:54 PM  


what about a clause in a pro coaches contract that prevented them from terminating their contract with their pro team to take a college job, would that work? is there an anti-trust issue there?

Anonymous Anonymous -- 1/04/2007 2:38 PM  


Anonymous,

What you are discussing is referred to as a restrictive covenant, and is actually quite common in many industries. It is typical, for example, for a coach's contract to include a list of schools that he/she may not terminate the current contract early in order to take, typically conference and/or geographic rival institutions. Outside of sport, restrictive covenants are common in industries such as the media, where television or radio personalities might be restricted from leaving to take a job at the rival station across town.

Blogger Chad McEvoy -- 1/05/2007 10:40 AM  


Actually a restrictive covenant is a term used in real estate law. The correct term is a covenant not to compete or no compete clause. However, those will only be enforced if they are reasonable. That, of course, would be up to a court to decide. Further, this is not an antitrust issue unless you want to cap coaching salaries. Of course that will not work. Agents and A.D.s and college counsel all know what they are doing. No one has the guts to enforce any of these provisions out of fear or public criticism and to protect their OWN jobs. The truth is that buyout clauses are meaningless today in this environment since the colleges which "take" a coach from one school to another frequently will pay any "penalty" or "buyout clause." That way, no one is hurt and the agents and coaches laugh all the way to the bank. Myles Brand had better be prepared for the Congressional inquiry....

Anonymous Anonymous -- 1/05/2007 11:58 AM  


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