Coaching contracts in the FBS:
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Coaching contracts in the FBS: A legal analysis and financial valuation of the termination and liquidation damages portion of head football coaching contracts. Chris Reynolds, J.D. & Ryan Brewer, M.B.A. Advisor: Paul M. Pedersen, Ph.D. 2009 Scholarly Conference on College Sport.

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Coaching contracts in the FBS: A legal analysis and financial valuation of the termination and liquidation damages portion of head football coaching contracts

Chris Reynolds, J.D. & Ryan Brewer, M.B.A.

Advisor: Paul M. Pedersen, Ph.D.

2009 Scholarly Conference on College Sport


Coaching contracts
Coaching Contracts

  • Popularity of college football

  • Influence of coaches and increase in salaries

  • Increased media attention given to contracts

    • Barnhart (2008), Corry & Fenech(2008)

  • Scholarly research related to coaching contracts


Contractual agreement between coach institution
Contractual Agreement Between Coach/Institution

  • Grounded in contract law

  • Expresses a compensation promise for services performed by one party to another

  • Conveys promise as well as the consequences for either party breaching any promise asserted in the document (Restatement of the Law, Second: Contracts, 1981)


Purpose of study
Purpose of Study

  • Because of the popularity of football, the impact of football coaches, and the media attention devoted to coaching contracts, this study sought…

    • To examine coaching contracts in college football to…

      • [Part A] Determine the elements of the (a)typical

      • [Part B] Analyze one element in particular (buy-out)

      • [Part C] Examine effectiveness of buy-out clauses

  • Sample (n=75)

  • Exploratory analysis of coaching contracts

    • Schools participating in Football Bowl Subdivision (FBS)


Part a elements components
Part A: Elements/Components

  • Determine components of football coaching contracts

  • Typically, the major purpose of content analysis is to identify patterns in text (Krippendorff, 2004)

  • Thematic analysis of text – The identification of themes or major ideas in a document (Cotton & Wolohan, 2007)

  • Eight general themes/elements/components emerged from analysis of 75 contracts


Eight elements
Eight Elements

  • 1) Contract Term

  • 2) Duties and Responsibilities

  • 3) Compensation Package

    • Guaranteed Base Compensation

    • Outside Activities/Income (Supplemental Income)

    • Fringe Benefits

    • Bonuses

      • Academic Achievements

      • Bowl Participation

      • Golden Handcuffs Clause


Eight elements cont
Eight Elements (cont.)

  • 1) Contract Term

  • 2) Duties and Responsibilities

  • 3) Compensation Package

  • 4) Severability

  • 5) Governing Law and Jurisdiction

  • 6) Waiver

  • 7) Notice

  • 8) Termination and Liquidation Damages

    • Commonly known as “Buy-out Clause”

    • Penalties for leaving early; Coaches’ penalties


Part b buy out clause
Part B: Buy-out Clause

  • 75 contracts examined

    • 58 included buy-out clauses (77.3%)

    • 17 did not include buy-out clauses that would compensate the coach if he left the institution prior to the expiration of his employment contact

      • Texas, Kansas, Maryland, Texas Tech

      • Alabama, Kentucky, Troy

      • Iowa, Illinois, Florida State

      • Virginia Tech, Rutgers,

      • Fresno State, New Mexico St.

      • Toledo, Miami, Marshall


Buy out clause cont
Buy-out Clause (cont.)

  • Typical Clause

    • An amount equivalent to one year’s salary

  • Atypical Clauses

    • Marshall - MAC - Mark Snyder

      • $700,000

    • Louisville - Big East - Steve Kragthrope

      • $2,000,000

    • Utah - Mountain West - Kyle Wittingham

      • $600,000 if new position is in the MWC

      • $250,000 otherwise


Analysis of use of buy out clause as a correlate of program success
Analysis of use of buy-out clause as a correlate of program success

  • Research Hypothesis (H1):

    • FBS programs whose coaches do nothave buy-out clauses are more successfulthan programs where coaches contracts include buy-out clauses

  • Statistical analysis

    • Group 1: n=17 (no buy-out clause)

    • Group 2: n=58 (buy-out clause)


Analytical basis
Analytical Basis success

  • Power Rankings

    • Used to identify “program success”

    • Includes W-L records 1998-2008

    • Includes strength of schedule 1998-2008

  • Buy-out Versus no Buy-out

    • Value of buy-out not considered


Results
Results success

  • Group 1 (no buy-out):

    • Mean group rank across time: 45.1

      • Rankings beginning 1-year from date of

        contract to present

        • N : 17

        • Mean : 45.1

        • Standard Deviation: 27.0

        • % Power Teams: 58.8%

  • Group 2 (buy-out):

    • Mean group rank across time: 61.5

      • Rankings were taken from end-of-season (‘98-’08)

        • N: 58

        • Mean: 61.5

        • Standard Deviation: 23.7

        • % Power Teams: 46.6%


Results1
Results success

  • T-Test

    • Significant difference between means at the p = 0.07899 level.

    • Strong “pilot” evidence for ∆ (H1)

  • Implications

    • Use of buy-outs in future coaching contracts

    • Use of other forms of motivation to stay


Analysis of use of buy out clause as a correlate of program success1
Analysis of use of buy-out clause as a correlate of program success

  • Research hypothesis (H2)

    • Guaranteed compensation contracted to a football coach (most recent coach’s labor contract) predicts historical program

      winning percentage

  • Statistical analysis

    • OLS linear regression

      • One exogenous variable (guaranteed compensation)

      • One response variable (historical performance factor)


Some definitions
Some definitions…. success

  • Guaranteed compensation (x) includes all money the coach will earn by “just showing up.” It does not include dollar value equivalents for country club memberships and other intangible benefits.

  • Historical performance factor (y) combines the effect of Ws & Ls and strength of schedule, weighting the most recent year (2008) 10, 2007 9, 2006 8, …, 1999 1.


Highest paid coaches in sample most current coaches contracts
Highest Paid Coaches in Sample success(most current coaches’ contracts)

As a % of Budget

As a direct measure of dollars

Charlie Weiss

Les Miles

Nick Saban

Rich Rodriguez

J. Tressel

Urban Meyer

Kirk Ferentz

M. Brown

B. Petrino

T. Tuberville

  • George O'Leary

  • Mark Snyder

  • Jim Leavitt

  • Robb Akey

  • Rickey Bustle

  • Les Miles

  • B. Petrino

  • Nick Saban

  • Butch Jones

  • Greg Schiano


Highest ranked teams in sample last 10 years
Highest Ranked Teams in Sample success(last 10 years)

Texas Tech

Utah

FSU

Auburn

Wisconsin

Michigan

Tennessee

  • Texas

  • Boise State

  • Ohio State

  • Georgia

  • Florida

  • LSU

  • Virginia Tech

  • West Virginia



Conclusion
Conclusion Compensation

  • Study found…

    • Eight elements of coaching contracts

    • Buy-out clause included in 77%

    • Buy-outs appear to reduce team power

    • Compensation explains team power

  • Recommendations for future study

    • Applications to Title IX

    • Reverse model: winning  compensation

  • Audience questions and comments


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