Buyout Clauses Don’t Mean Much
Earlier this week, Hydrotech reacted to a blog entry by the Merc’s Jon Wilner, pointing out that while Cal does pay its football coach significantly more than its professors, it is not because Cal values one more than the other, but because they are in entirely different markets, and Cal is willing to pay market rate for world-class employees in both cases. A very good (and subtle) point, it’s worth reiterating.
I, however, want to touch on a different aspect of Wilner’s breakdown of Tedford’s contract; the buyout clauses. In every discussion of a successful coach’s contract, the subject of the buyout clauses are brought up; fans want to see some monetary valuation on how insured they are against their football coach heading for greener pastures. Here’s what Wilner has to say:
*** Under the old deal, if Tedford left Cal before the end of the contract, he owed the university $300,000 for every year left on the deal. (The buyout amount was chopped to $150,000 annually until the Memorial Stadium renovation broke ground.)
Under the new deal, the same dollars apply (the buyout drops by half until Cal occupies the high-performance training center).
BUT:
*** Under the old deal, Tedford received a $2.5 million retention bonus if he stayed through the end of the contract (ie: if he coached in 2009).
Under the new deal, Tedford gets a $1 million retention bonus if he coaches through the 2008 season.
He gets an additional $1.5 million if he’s the head coach through the 2011 season, and he gets another $1 million if he’s the coach through the 2013 season.
In other words, the new deal is much, much more favorable to Tedford — it’s not nearly as back-loaded as the old one. All he has to do is stay two years and he gets an additional $1 million.
And yet, the buyout (the money he would owe the school if he left early) remains the same.
That’s what you call leverage ….
Now, Cal fans should not take the terms of the extension as a definite indication that Tedford’s is ready to bolt. (It wouldn’t surprise me if he stayed a few more years, and it wouldn’t surprise me if he left next winter.)
But clearly, he has far less (financial) incentive to stay through the duration of the new contract.
OK, yeah, Tedford’s got a strong bargaining position, and he (and his agent) used that to their advantage. I’ve no problem with that. He gets more money up front, and he leaves less money on the table if he decides to leave early. Good for him, he deserves it.
Still, for the Cal fan wondering if Tedford will leave, none of this matters. Honestly, when have you ever heard of a coach’s buyout clause being the reason he stayed at his current job? Is that the reason you’d want him to stay anyway? Listen, any school or NFL franchise that tried to hire Tedford away would have to give him more money than he’s currently making; anybody with a great job is going to need a heck of a reason to leave for less money, and the only one I can think of is ‘returning to your mid-major alma mater’. As far as I know, Fresno State’s not hiring, and Tedford’s too competitive to take a step down such as that.
So, we’re limited to only a few rich schools and the NFL. Any of those teams that can afford to throw scads of money at Tedford can afford the buyout as a matter of course; the retention bonuses are tempting, sure, but if someone’s giving you a huge raise right now, a big bonus a few years down the road isn’t as big a deal as the schools like it to be. In fact, what these clauses mostly amount to is negotiating leverage when a coach does decide to leave; the financials are only a negotiating point, not a reason one way or the other.
Coaching searches are interesting beasts. Once a candidate is chosen, the employer will pay whatever it takes to get that #1 choice. Settling for the second-best coach is not an option. Colleges are especially guilty of this, because they can’t go out and sign free agents to fix their teams. With a moribund program and money in their pocket, all these schools can do is throw money at the best coach who will agree to come.
Look, I’m not saying whether Tedford will or will not leave. What I am saying is that money won’t be the reason he leaves. If he does leave, it will be because a) he’ll feel he’s done all he can at the college level, and needs a new (NFL) challenge, or b) he feels he’s held back from succeeding because of the stagnating condition of the facilities at Cal. Yes, it’s nice that he signed his new contract, but if he’s thinking about leaving in two years, I wouldn’t look to the buyout clauses to keep him around.


