The truth about coaching contracts in college football has never been clearer than this season: They're not only packed with big money, but bad money.
On Nov. 11, Louisville fired coach Bobby Petrino after a 2-8 start. The decision means Louisville owes Petrino $14.1 million in guaranteed compensation, not subject to offset or mitigation -- like a reduced payment if he got another job. Had Louisville retained Petrino for 2019 and decided to fire him next season, his guarantee would have increased by $50,000, according to a three-year rolling payout included in his contract. Tom Meeker, a member of Louisville's athletic board, had told The Louisville Courier-Journal last month that the school was "not in a position to buy [Petrino] out." Then it did.
When North Carolina fired Larry Fedora on Sunday, it owed him more than $12 million, while Texas Tech owed Kliff Kingsbury about $4.2 million.
On Nov. 6, Auburn athletic director Allen Greene told reporters that Gus Malzahn is the school's "coach of the future." Malzahn's status had become a hot topic after Auburn, ranked No. 9 in the preseason, fell to 4-3. Last December, Malzahn agreed to a seven-year, $49 million deal to remain at Auburn. That Auburn would consider firing him and paying $32 million -- $16 million within the first 30 days of termination -- seems irresponsible and insane, even by today's standards.
Welcome to college coaching contracts in 2018. Charlie Weis is no longer drawing a paycheck from Notre Dame, but bad money remains prevalent throughout the sport.
"The whole compensation issue [with] college football head coaches has gotten crazy," a former FBS athletic director said. "We're paying 'em more, and we're buying 'em out for more."
We tried to figure out how we got here, what drives the bad money and whether it will ever slow down. I surveyed current and former FBS athletic directors, coaching agents, contract attorneys and others -- granting anonymity so they could speak freely -- to get answers.
The contract clout of the elite coach
Football coaches and the colleges that employ them co-exist in a free market, which is periodically reset by certain contracts. The 10-year deal Notre Dame gave Weis only seven games into his tenure in 2005 is one example. Nick Saban's initial contract at Alabama, which paid him $4 million annually, is another.
Texas A&M made the biggest splash in last year's cycle, signing Jimbo Fisher to a 10-year, $75 million, fully guaranteed deal with no buyout for Fisher if he chooses to leave for another job. Ohio State athletic director Gene Smith, speaking to the school's board of trustees earlier this year, called Fisher's deal "ridiculous."
Still, athletic directors and agents agree that championship-level coaches bring enough appeal to championship-starved programs to get contracts completely slanted in the coach's favor.
"It's all leverage," said a sports attorney who represents coaches. "You're buying talent, and it's a rare talent to be able to do this. Having the right guy in place, it means everything to your athletic department."
While Saban, Fisher, Ohio State's Urban Meyer and Clemson's Dabo Swinney all have won national championships, many others who haven't sniffed the championship stage benefit from their contracts, not only in salary but structure.
"There's a few guys at the top who set the market," a Power 5 athletic director said, "and everybody else beyond that benefits from the upper side of the market."
Another Power 5 athletic director described the low bar some coaches reach before demanding, and often receiving, a sweetened contract.
"It doesn't even have to be multiple winning seasons," the athletic director said. "Just have a winning season and they're the hottest coach on the market. So then the agent will go around and shop the coach to any of the openings at the search firms, and then they start to have leverage. Then, all of a sudden, there will be an inquiry about that coach, who's had one good winning season, or two good winning seasons, and then the overreaction hits."
The overreaction equates to long-term deals with large guarantees and relatively low penalties for coaches to leave. Another factor is a condensed timetable where employment decisions are made, usually between rivalry week and mid-December. Coaches are vetted, competing offers are weighed and interviews are scheduled, sometimes around championship games. There's increased pressure to hire new coaches as soon as possible, especially because of the December early signing date in recruiting, which has become the primary day when prospects sign. Schools also face pressure to retain coaches and quickly revamp contracts.
A Group of 5 athletic director describes this time period as "a speed trap."
"Some job opens up and I'll get a call, 'So-and-so is going to be up for it,' and if we don't sweeten the pot prior to the championship game, or lock him down early, then we run the risk of having a media issue, social media or boosters," the athletic director said. "And then we have to go back as AD, turn around and say to our donors and upper administration, 'Hey, how bad do we want to keep what we have, or do you want to roll the dice on it as we go into the coaches' hiring season?'"
Fear factors
When athletic directors huddle at conventions or league meetings, they typically recap coaching changes and contracts. Regrets, they have more than a few.
"I've heard colleagues say, 'Hey, I didn't want to do this, but I didn't feel like I had a choice,'" a Power 5 athletic director said. "I really think most athletic directors, left to their own devices, would make different decisions. But a lot of places, you get outside constituents who are able to get involved and cloud the decision-making."
While ADs are the public faces of coaching transactions, many other people carry influence. They are donors and board members (often the same people), university presidents, local and national media, and even fans on Twitter.
Athletic directors and agents agree that social media reaction can impact big-dollar decisions (look at Tennessee's search last year), even when those chiming in have "no idea" about contracts being terminated, offered or extended.
"The agents have an advantage because you've got fans yelling," a Power 5 athletic director said. "The pressure point is coming from your own fan base. The agents, they're good at what they do, but it's not like they're molecular physicist negotiators. They just understand, 'Hey, this guy is popular with this fan base and I want to get him more money. If I let it be known another school wants his services and is willing to pay X, I can probably get his current school to get to that same level.'"
A Group of 5 athletic director added: "Some coaches have representation where every year, there's some type of negotiation, and that s--- gets old. 'Let's jockey for the next deal. Let's jockey for another bonus, the newest toy in the budget.' But it's a fear factor of not doing something, especially if the coach is somebody you want to retain."
How do athletic directors combat these fears to make better decisions and ideally distribute less bad money? A Power 5 athletic director said those in his position must block out most or all of what is being said about coaching decisions and contracts. The top priority is aligning with the university president, who typically knows what the trustees and regents want or will agree to with coaching contracts.
Another Power 5 athletic director said it's more about looking in the mirror and accepting what's best for the program, not the loudest constituency.
"The best thing that an AD can do is be comfortable with the fact that [he or she] might get fired one day," he said. "Because once you get comfortable with the fact that you might be fired, you start making really good decisions that have nothing to do with people's emotions."
Is there a confidence issue here, not only with athletic directors but entire schools? The scramble to hire or retain certain coaches can look desperate, even though many of the programs have historical success and strong resources.
Wisconsin hasn't had that problem. The Badgers lost two head coaches -- Bret Bielema and Gary Andersen -- to other Power 5 jobs in a three-year span, continued winning and didn't fall into the bad-money trap like so many others. It helps that Barry Alvarez, Wisconsin's former transcendent coach and current athletic director, is the common thread since 1990. But, as an agent told me, "At Wisconsin, it's more about the school than the coach. We'll give you control of the machine, but we built the machine."
Couldn't more schools take a similar approach?
"They're worried about what might happen instead of what is happening, and what might happen is [the coach] may leave," a Power 5 athletic director said. "That ends up being the thought process. So, I'm going to spend more time on what might happen and protect us from this so-called early departure or premature departure."
Another Power 5 athletic director said his colleagues must remember why they're in their jobs.
"As administrators," he said, "you've got to have more confidence that if your coach leaves and he's chasing guarantee money, then you can go out and find somebody who can do just as good a job, or better."
'A perfect storm'
In many ways, Malzahn's situation epitomizes the current state of coaching contracts. Last November, Auburn beat No. 2 Georgia and No. 1 Alabama in a three-week span, clinching the SEC West division. The win over Alabama, Auburn's first since the Kick Six in 2013, made Malzahn one of two SEC coaches (Hugh Freeze is the other) to beat Saban twice during his historic run. The day before the Iron Bowl, Arkansas fired coach Bret Bielema, clearing the way for a run at Malzahn, who grew up in Fort Smith, Arkansas, began his college playing career at Arkansas and built his reputation as a high school coach in the state.
As Arkansas closed in, Auburn faced a decision with Malzahn, signed through 2020 at $4.725 million annually. The school could wait and see if Malzahn walked, or push to keep the coach. Auburn chose the latter, agreeing in principle to a new deal the day after the Tigers lost to Georgia in the SEC championship game.
Malzahn clearly benefited from the second Alabama win. He also benefited from a suitor -- not just any suitor, but one in the same division. If Auburn had lost Malzahn to Arkansas, it would have had to see him every year. Any loss to the Razorbacks would be a direct reminder to Auburn fans, donors, administrators and others of whom they let get away. "It is powerful from a negotiating standpoint," a coaching agent said.
"That was a perfect storm," another coaching agent said, "where they beat Georgia, beat Alabama, and then Arkansas' going after him. At that point last year, Gus was one of the hottest things going."
A year later, Malzahn's stock has cooled. He's 7-5 since last year's Iron Bowl win. But his contract protects him. While many don't endorse the deal Auburn gave Malzahn -- spearheaded by university president Steven Leath -- they understand the factors that made it happen.
"The challenge, as athletic directors and, in some cases, presidents when they get involved, is they're trying to make unemotional decisions based on the emotions of your fan base," a Power 5 athletic director said. "You're listening to your fans, you're listening to your board. They want the noise in the system to go away.
"There's some self-preservation in there, too. It's easier just to agree to the guarantee number and everybody say you're a hero because you kept the coach. It's kind of like the federal deficit, where we're kicking the problem down the road."
Petrino's deal from April 2016 -- seven years at just over $30 million -- occupies a category of its own. At the time, he was 17-9 in his second stint with the Cardinals with consecutive third-place finishes in the ACC Atlantic division. Tom Jurich, Louisville's longtime athletic director, had given Petrino a chance when few Power 5 schools, if any, would after the Arkansas scandal.
"No way in a million years should Bobby Petrino have a $14 million buyout," a coaching agent said. "That's an AD taking care of a friend. Nobody else in the country was going to hire him."
It's no wonder new Louisville athletic director Vince Tyra, in announcing Petrino's firing Nov. 11, said coaches at the school would no longer receive fully guaranteed contracts.
Negotiating against themselves
For many programs, the fear of losing a successful coach is very real, and coaches and their agents capitalize. The coaches also know how quickly things can turn against them. While it might only take one good year to leverage new contracts, one bad year can turn secure coaches into fired coaches.
Just last year, Clay Helton led USC to its first Pac-12 championship since 2008. In 2016, Helton coached the Trojans to a 10-3 record, a Rose Bowl title and their first top-5 finish since 2008, when Pete Carroll's run of seven straight ended. In February, USC rewarded Helton with a contract extension through 2023. As a private school, USC doesn't release salary figures, but sources said USC would have owed Helton more than $20 million if it fired him. Athletic director Lynn Swann announced on Sunday that Helton would return for the 2019 season.
Helton did well early in his Trojans tenure, but he wasn't being discussed for other vacancies. He got the USC job through a promotion and, at the time, wasn't on the radar for similar-level jobs. The contract extension this winter made sense, a reward for good work, but it also opened up USC to a massive guarantee when things went poorly this season.
Other contract extensions seem more puzzling and less necessary. Last December, Pitt signed Pat Narduzzi to a seven-year extension through 2024, despite the Panthers going 5-7 last fall. Pitt has lacked coaching stability, and the fact athletic director Heather Lyke, who didn't hire Narduzzi, green-lit the extension underscores her belief in him. Narduzzi backed up the pledge this fall, leading the Panthers to their first ACC Coastal division title. But what if he had gone 5-7 again?
Coaches always argue that they need longer, more secure contracts to effectively recruit. But there's debate about how much it really matters.
"It's important," a Power 5 athletic director said. "A lot of the young men like to believe that they're making college decisions with regard to who is the coach, as opposed to what is the institution. So you need to be real sensitive."
But another Power 5 athletic director called the recruiting argument "an agent's ploy," adding that he could "count on one hand the number of times a recruit's asked me how many years was left on the coach's contract."
"Every situation is a little bit different," an agent said. "I think schools are attempting to place less value on that than they have in the past, but at the same time it does matter."
Stopping the bad money train
Another coaching change cycle is upon us, and that means more bad money flying around, either to the newly hired, the newly fired or those with new contracts. Colorado, for years a cash-strapped program, opted Sunday to fire Mike MacIntyre, the 2016 national coach of the year, and pay him $10.3 million (subject to offset). Rutgers, still years away from receiving a full share of Big Ten revenue, is expected to keep Chris Ash despite a 7-27 record. The reason: a $9.8 million guarantee owed to Ash. Illinois just rewarded Lovie Smith, 9-27 in his Illini tenure, with a two-year contract extension.
Will anything slow down the bad money train?
"My guess is there's going to be a cataclysmic event somewhere that causes people to be a little more restrained with the guarantee number," a Power 5 athletic director said. "An event that cripples a school financially, that allows presidents and ADs to point to, when talking to agents, and go, 'We can't let that happen to us.'"
Auburn firing Malzahn would have qualified, but for now he's safe.
Schools must consider other factors, like television revenue, which for years helped soften the bad-money blow but appears to be leveling off. If individual donors have to take on the responsibility, it could cause them to re-examine the landscape.
"I definitely think the appetite is shrinking on some of those misses," a Power 5 AD said.
Some athletic directors say the goal is greater balance in contracts, ideally to where guaranteed salary matches buyout money. While coaches like Washington's Chris Petersen and Penn State's James Franklin earn top-20 salaries, they would pay the schools relatively small amounts to take other jobs ($1.5 million for Petersen, $1 million for Franklin).
A Power 5 athletic director said he doesn't want large buyouts to tie down coaches who no longer want to be at his school. But given the spike in guarantees, the AD understands the desire to drive up buyouts and "provide a little more equity for the school." Many cite Iowa State coach Matt Campbell's contract as one that provides both security for the rising-star coach (six years, $22.5 million fully guaranteed) and the school (Campbell would owe $7 million if he leaves before Feb. 1).
There's also a new tax landscape. The Tax Cuts And Jobs Act of 2017 added 21 percent taxes for excess compensation (compensation more than $1 million for each taxable year) and excess parachute payments (money given to employees after separation). Translation: It's going to become much harder to be so liberal with massive guarantees.
"I'm a believer in the free market, and collusion is not appropriate," a Power 5 athletic director said, echoing others. "I don't see any real orchestrated change at all. I just think there will be more sensitivity for representatives of both coaches and university institutions, making sure you pay real close attention to what the language says, so that you can avoid unintended consequences."
Coaching contracts soon could take on a different structure, beginning with this cycle.
"There's a concerted effort, especially with the [Power 5 programs], with the buyouts," a Group of 5 athletic director said. "They're going to fight hard to do more comp up front, which schools like us can't do. Chancellors, presidents and ADs have got to put their foot down, because the appetite for donors to pay that s--- out, it's not there."
Tyra is changing Louisville's approach to coach contracts. Although Louisville signed basketball coach Chris Mack to a seven-year contract, Tyra ensured the school would be responsible for only three years of salary if it makes a change. Tyra probably will take a similar approach with Petrino's successor.
"If it's all about what their buyout is to leave on their own terms or our terms," Tyra said, "then we've got the wrong people."
Louisville is among those seeking the right person to lead its program but also for the right contract.
"All these things are inexact about how they occur and when they occur, and everybody's shopping for the same thing: perfection," a Power 5 athletic director said. "But we live in an imperfect world, and these situations with football coaches are far from perfect."