Dribble down economics: How NCAA wins turn into coach-friendly contract terms

Can small schools survive NCAA 'arms race?'

CINCINNATI - Kentucky Wildcats Coach John Calipari has a seven-year employment contract worth $54 million. That’s enough to cover the entire athletic budget at Northern Kentucky University for more than four years.

Welcome to March Madness.

College basketball’s ultimate showcase, which generates about $900 million in annual revenue for the NCAA and an estimated $10.4 billion in total bets, also happens to be a time of great wealth creation for basketball coaches.

There is a method to the Madness: Those who win at tournament time gain leverage for contract enhancements in the months that follow.

“There’s a window between now and mid-April that creates opportunities for head coaches,” said Richard Katz, a Cincinnati-based sports agent who represents more than a dozen college coaches. “Leverage is created when you have a winning coach that’s been successful and another school wants that.”

WCPO has been studying the contracts of NCAA basketball coaches with a big Tri-State fan base. Summaries of six contracts, obtained by WCPO in public records requests, are presented throughout this story. None of the coaches agreed to be interviewed about their deals. Xavier University declined to release its contract with Chris Mack, who made $1.4 million in 2014, according to Xavier’s most recent tax returns.

The contracts offer a glimpse of how success on the court can lead to long-term gains for coaches, who become harder to fire and more expensive to keep as they rack up tournament wins.

'Expectations are high'

Calipari, for example, eliminated all athletic performance incentives from his contract in 2014, after UK returned to the NCAA Finals for the second time in three years. His current deal pays an average of $7.7 million each year no matter how the team performs on the court.

“Most coaches don’t have that kind of muscle, to get that high of a guarantee,” said Donna Lopiano, president of Sports Management Resources, a Connecticut-based consulting firm that advises athletic directors on issues relating to college sports. Fox Sports and Sporting News describe Lopiano as one of the most influential women in sports. She is co-author of the Brookings Institution report “Unwinding Madness: What went wrong with college sports and how to fix it.”

Lopiano said colleges are in the middle of an arms race with coaching contracts, as TV deals and athletic conferences get bigger and the nation’s most successful programs have more money to spend. All of that is dribbling down in ways that make it harder for small programs to compete.

“The explosion of assistant coach salaries has been unbelievable over the last three to five years, both in football and basketball,” she said. “Basketball has been kind of copy-catting football, you know, where you’ve got defensive coordinators who are making over $1 million. There are strength coaches now making over $800,000 to a million, which you never saw before.”

Lopiano said coaches - and their agents - are looking for longer-term deals with more income that's guaranteed and deferred. That's putting more pressure on colleges, most of which are already losing money on sports.

“There are 10 or 20 schools in the country that are making more than they spend,” she said. “Basketball and football may individually pay for their sports but they don’t pay for the whole kit and caboodle.”

University of Cincinnati Athletic Director Mike Bohn argues sports help schools boost enrollment and increase alumni involvement, making it easier to raise money for new buildings, research and academic pursuits.

“You have to look at it with a holistic approach,” he said. “Intercollegiate athletics is a rallying point for people to be excited about what’s going on. I mean, the university is experiencing record applications, record enrollment. Is that all a result of our basketball and football program and intercollegiate athletics? No, but it’s certainly a part of that.”

Bohn said UC strives to be "competitive and fair" in its coach contracts, with the goal of establishing a long-term deal that benefits both parties.

“Expectations are high," he said. "That’s why the rewards are high for the coaches that have so many different hats to wear in helping Cincinnati being the institution we all want to be."

UC made dozens of improvements to Mick Cronin's employment agreement in his 11-year tenure, including an $800,000 retention incentive that was added to his contract last May after UNLV tried to lure Cronin to Las Vegas.

“When you find a fit and you have success and you have a model that’s working, you want to sustain that,” Bohn said. “That’s something we’re committed to.”

Mick makes more

Cronin’s contract improvements are an example of how a consistently successful coach gains leverage over time. When the Bearcats play in Sacramento Friday, it will be Cronin’s seventh straight NCAA Tournament appearance. He has twice advanced to the second round and once to the Sweet Sixteen.

Each success led to contract improvements. Bohn said Cronin’s deal is now worth over $2 million a year, based on contract language that guarantees he’ll make at least $2.2 million if UC fires him early and without cause. Here’s a summary of the most important changes to Cronin’s employment deal with UC:

  • Cronin’s original 2006 contract included a list of six things that could get Cronin fired, but added that list was “without limitation.” That language was removed in 2013 and replaced by language that requires “a reasonably thorough and timely investigation” by UC and 14-day notice of alleged violations against Cronin before the university reports any “material or substantial violation” to the NCAA.
  • Cronin’s “liquidation payments,” or the amount he’d receive if he’s fired early and without cause, have increased from $1.7 million at the start of his contract to $6.6 million today. The amount declines annually but is based on a guarantee of about $2.2 million in annual income, Bohn said.
  • Cronin’s “guaranteed payments” from base salary, UC payments of various insurance premiums, shoe and apparel contracts and radio, TV and public relations appearances have increased 140 percent to $1.8 million.
  • His maximum bonus from performance incentives increased 30 percent to $565,000, while his maximum bonus for academic performance increased 75 percent to $75,000.
  • Deferred compensation has quadrupled for Cronin since 2006, starting as $100,000 in deferred pay and ending as a $400,000 annual contribution to a supplemental retirement plan.
  • Cronin gained some perks over the years, including reimbursement of up to $10,000 in business entertainment expenses annually and $17,500 in family travel expenses.
  • Cronin also has locked in some structural improvements to UC’s basketball budgets with clauses that required more than $800,000 a year in annual money for staff bonuses and salary hikes.
  • Finally, Cronin added a clause in 2014 that allows him to renegotiate his contract if UC joins a Power 5 conference, such as the ACC or Big 12.

As friendly as those terms might seem, they’re only the fourth richest of the six contracts we analyzed, after obtaining the documents in public record requests.

Rick Pitino’s latest deal is worth about $5.4 million a year at the University of Louisville. Thad Matta’s average annual pay at Ohio State is about $2.8 million and his deal provides up to 45 hours of flight time each year in a private jet.

Matta is an example of how contract provisions gained in good years can sustain a coach through downturns. The former Xavier University coach has led Ohio to two Final Four appearances and an NIT Championship. But the Buckeyes finished 17-15 this year, its second straight without an NCAA Tournament appearance.

His contract includes a termination provision worth about $9 million at present, more than enough reason for Athletic Director Gene Smith to proclaim Wednesday: “I am confident in his leadership to return the program to the winning ways that we have all enjoyed during his 13-year tenure.”

Small school dilemma

At Miami University, Coach John Cooper lacked winning ways and contract leverage when Athletic Director David Sayler announced last week that the Redhawks would not renew Cooper’s contract when it expires May 30. Sayler said Miami loaned Cooper $90,000 to buy out his previous contract at Tennessee State University as part of his five-year deal worth $1.2 million. Cooper has repaid the loan.

Aware of Miami’s place in the college sports hierarchy, Sayler said the school would consider another buyout. And it can live with a coach who wants to use Miami as a springboard to bigger things.

“We definitely have a slot and pecking order in terms of what we can pay versus what other conferences pay,” Sayler said. “Make your mark, move on if that is what is best for your family and I am supportive of that because that means we are having success.”

And in the meantime, another local program will learn about the growing pains associated with NCAA coaching success. The region’s lowest-paid coach, NKU’s John Brannen, just led the Norse to its first NCAA Tournament appearance.

His contract includes a 5 percent pay raise for that achievement, boosting his salary to $199,500. It’s a long way from the Calipari’s $7.7 million, but the Newport Central Catholic grad is just at the start of his coaching journey.

“His success is going to put pressure on the university to do what it can to reward what he achieved this year and lock him in a way that there’s some longer-term incentives to stay,” former NKU President James Votruba told WCPO this week.

“Over the next four or five years, Coach Brannen will, if he remains, build a program. Then, you have a depth that isn’t as dependent on coaches.”

Methodology

WCPO obtained men’s basketball employment contracts through public-records requests from six universities that have a large fan base in Greater Cincinnati. The coach-pay graphics embedded in this story represent the estimated dollar value of key contract terms. Here’s how the numbers were derived:

Average annual salary represents all clearly-defined pay elements required in each year of the contract’s term divided by the number of years in the contract. It does not include estimates for compensation that’s not clearly defined. For example, several coaches have the right to host summer basketball camps and receive tickets to football and basketball games at their schools, but these clauses typically don’t specify a dollar value attached to each benefit.

Highest possible performance bonus is the maximum bonus a coach can receive for athletic achievements by his program. Most coaches receive cumulative bonuses for winning their conference, advancing through the NCAA tournament or securing “Coach of the Year” honors from the media and athletic conferences.

Highest possible academic bonus is the same estimate for bonuses relating to graduation rates and grade point averages by athletes.

Buyout estimates represent the amount a coach must pay if he leaves for another job. Sometimes these amounts are specified by contract year. NKU requires Brannen to repay half of the remaining pay due to him at the point he leaves.

Golden Parachute is the amount a school must pay the coach if it terminates his contract without cause. Often, this is a specific dollar amount identified in a “liquidated damages” clause, but it can also be derived from analyzing multiple clauses that describe termination terms without naming a dollar figure.

Here are the contracts used in this analysis:

John Calipari, University of Kentucky

Rick Pitino, University of Louisville

Thad Matta, Ohio State University

Mick Cronin, University of Cincinnati

John Cooper, Miami University

John Brannen, Northern Kentucky University