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Column: Contract Extension or Not, U/Tubby Need Practice Facility
By J.B. Bauer
http://www.gopherhole.com/news_article/show/148502?referrer_id=331171
Earlier this week, we looked at typical components of compensation that are found in a men’s basketball head coach's contract. Today, the topics of a practice facility, contract length and the big one—the termination clause—are explored.
Practice Facility
Some coaches have received commitments to capital projects from an institution within the coaching contract. In hindsight, perhaps if Tubby had demanded a more concrete plan for a basketball facility something would have been built by now, but it shouldn’t take a contractual commitment to a head coach in order to compel the U to improve facilities where needed.
All parties involved seem to acknowledge that improved facilities are desired, yet the years keep passing with little to nothing done. At one point in time, an argument could be made that a state-of-the-art practice facility on campus would give the Gophers an edge in recruiting. That time has long since passed.
Today, Minnesota is trailing its competitors with respect to facilities and perhaps partly related, recruiting. A new practice facility will not mean that the Gophers start attracting more talent because the facilities are so impressive that they set Minnesota apart from others. Rather, this is an area where the U needs to catch up with others.
Instead of being something that would have been a positive to Minnesota when a prospective student-athlete was comparing the U to other interested institutions, a new practice facility now will mostly just mitigate the risk that talented kids see the current facilities as a negative large enough to sway their consideration or decision away from the U.
While a fancy new building or area won’t have the same impact it may have several years ago, an upgrade to facilities would take away a potential negative for some prospective student-athletes and would be nice for current and future players and staff.
While a fancy new building or area won’t have the same impact it may have several years ago, an upgrade to facilities would take away a potential negative for some prospective student-athletes and would be nice for current and future players and staff.
With all that said, I don’t think the matter needs to be or should be included in the head coach’s contract. Facilities show a commitment to a program, not just whoever happens to be the coach. However, it’s time to stop talking about the need and start meaningful planning and fundraising for a new basketball practice facility.
With all that said, I don’t think the matter needs to be or should be included in the head coach’s contract. Facilities show a commitment to a program, not just whoever happens to be the coach. However, it’s time to stop talking about the need and start meaningful planning and fundraising for a new basketball practice facility.
Contract Length
In college basketball today, I’m not a believer in the need for a contract to be stretched out in order to recruit. Smith still has two years left on his contract and an extension is not needed at this time. Whether there is two years left or ten years left, kids know better.
Head coaching contracts are made to be broken. A prospective student-athlete needs to talk to the coach and take a look at the overall situation. What is the likelihood the coach leaves because a more preferable job opportunity presents itself? What is the likelihood the school terminates the coach’s employment? Might a coach retire?
With opportunities for early termination by either side at little or no cost in most contracts, the stated length of the agreement means little.
If a coach is heading into his last year under an existing agreement, an extension or renegotiation makes more sense as a show of mutual interest between the parties.
Although I don’t think it’s necessary at this time, through their public comments the U has indicated the plan is to renegotiate with two season still left on Tubby Smith’s current agreement. As contract length means very little by itself, that’s fine unless the termination clause is not reasonable.
Termination Clause
The norm in college basketball is that termination clauses (without just cause) favor the head coach. That is, if a coach is terminated early by the school, he is likely to receive more money than he would have to pay if he were to leave early by his own choice.
If another school really wants the services of a coach at another institution and that coach is open to changing employers, the buyout dollars required under the existing contract’s termination clause are rarely large enough to prevent it from happening.
Tubby Smith has been free to walk away from his agreement at no cost for the past two years. If he’d like to stop coaching at Minnesota today, he can do so without paying a dime even though he’s "under contract" through April 2014.
As we get into payout scenarios under which the school terminates Coach Smith, the termination clause may not sound very equitable. Nonetheless, it’s the norm and not unique to the U.
Under the terms of Smith’s current contract, if the effective date of a termination is between now and April 30, 2013, Minnesota owes Tubby Smith a $1.5 million termination fee. If the effective date of a termination is after April 30, 2013 but before the contract is up at the end of April 2014, there is no termination fee due, but the U would have to continue to pay Smith his base and supplemental salary through the end of the contract.
Not to get too deep into the contract’s language, but one issue is the effective date of termination. In the case of Minnesota terminating the contract, they must provide 90 days written notice to Coach Smith. When a coach is fired, he’s usually out the door immediately. Maybe there’s a quick press conference and even a few tears shed that same day, but the guy certainly isn’t going to be hanging around for another three months.
My read of the contract is that if the U fired Tubby today, Smith would be paid his base and supplemental salary (which now totals approximately $1.9 million per year) for 3 months and also receive a $1.5 million goodbye gift. In other words, the real termination cost to the University would be around $2 million.
If negotiations on a new deal were halted and employment continued under the current contract, but in early March of next year Minnesota decided to end Smith’s employment as head coach, I believe the 90 day written notice provision from early March would put the effective termination date into the period where the U would be required to pay out the remaining base and supplemental salary due to Smith through April 2014.
In addition, because of the 90 day notification period in the contract, in this scenario I also believe Smith would be due his $250,000 supplemental retirement contribution on April 30, 2013 because he would technically be an employee until June 2013 and therefore be due the contribution. All together, his departing gift would appear to be nearly $2.5 million if terminated in early March 2013 (14 months of base and supplemental salary plus the $250,000 supplemental retirement contribution).
Based on the above, if the U entered into a new deal with Tubby this summer which included a termination fee of $2 million to $2.5 million in the event the school terminates his employment after the 2012-13 season, they’d be in about the same position financially under the new deal as they are today.
Therefore, I wouldn’t be overly concerned about the negotiation skills of the University if a new deal is reached and it includes an eye-catching termination fee of up to $2.5 million after next season. If the U can keep the termination fee after one year to $2.0 million or less, they actually may put themselves in a better position than they are currently in.
On the other side, if I’m negotiating for Tubby my demands likely include a termination payout of more than $3 million should things not work out in 2012-13.
With the importance of next year to the basketball program under Coach Smith, from the school’s perspective I might have significant concerns with a new deal that included a termination amount in excess of $3 million.
We know a new deal doesn’t guarantee that a coach and institution will be together for a definitive period of time, but what makes the 2012-13 season so important? Later this week, we'll wrap up our "contract talks" with a look at what the Gophers will try to accomplish both on the court and on the recruiting trail over the next year.
By J.B. Bauer
http://www.gopherhole.com/news_article/show/148502?referrer_id=331171
Earlier this week, we looked at typical components of compensation that are found in a men’s basketball head coach's contract. Today, the topics of a practice facility, contract length and the big one—the termination clause—are explored.
Practice Facility
Some coaches have received commitments to capital projects from an institution within the coaching contract. In hindsight, perhaps if Tubby had demanded a more concrete plan for a basketball facility something would have been built by now, but it shouldn’t take a contractual commitment to a head coach in order to compel the U to improve facilities where needed.
All parties involved seem to acknowledge that improved facilities are desired, yet the years keep passing with little to nothing done. At one point in time, an argument could be made that a state-of-the-art practice facility on campus would give the Gophers an edge in recruiting. That time has long since passed.
Today, Minnesota is trailing its competitors with respect to facilities and perhaps partly related, recruiting. A new practice facility will not mean that the Gophers start attracting more talent because the facilities are so impressive that they set Minnesota apart from others. Rather, this is an area where the U needs to catch up with others.
Instead of being something that would have been a positive to Minnesota when a prospective student-athlete was comparing the U to other interested institutions, a new practice facility now will mostly just mitigate the risk that talented kids see the current facilities as a negative large enough to sway their consideration or decision away from the U.
While a fancy new building or area won’t have the same impact it may have several years ago, an upgrade to facilities would take away a potential negative for some prospective student-athletes and would be nice for current and future players and staff.
While a fancy new building or area won’t have the same impact it may have several years ago, an upgrade to facilities would take away a potential negative for some prospective student-athletes and would be nice for current and future players and staff.
With all that said, I don’t think the matter needs to be or should be included in the head coach’s contract. Facilities show a commitment to a program, not just whoever happens to be the coach. However, it’s time to stop talking about the need and start meaningful planning and fundraising for a new basketball practice facility.
With all that said, I don’t think the matter needs to be or should be included in the head coach’s contract. Facilities show a commitment to a program, not just whoever happens to be the coach. However, it’s time to stop talking about the need and start meaningful planning and fundraising for a new basketball practice facility.
Contract Length
In college basketball today, I’m not a believer in the need for a contract to be stretched out in order to recruit. Smith still has two years left on his contract and an extension is not needed at this time. Whether there is two years left or ten years left, kids know better.
Head coaching contracts are made to be broken. A prospective student-athlete needs to talk to the coach and take a look at the overall situation. What is the likelihood the coach leaves because a more preferable job opportunity presents itself? What is the likelihood the school terminates the coach’s employment? Might a coach retire?
With opportunities for early termination by either side at little or no cost in most contracts, the stated length of the agreement means little.
If a coach is heading into his last year under an existing agreement, an extension or renegotiation makes more sense as a show of mutual interest between the parties.
Although I don’t think it’s necessary at this time, through their public comments the U has indicated the plan is to renegotiate with two season still left on Tubby Smith’s current agreement. As contract length means very little by itself, that’s fine unless the termination clause is not reasonable.
Termination Clause
The norm in college basketball is that termination clauses (without just cause) favor the head coach. That is, if a coach is terminated early by the school, he is likely to receive more money than he would have to pay if he were to leave early by his own choice.
If another school really wants the services of a coach at another institution and that coach is open to changing employers, the buyout dollars required under the existing contract’s termination clause are rarely large enough to prevent it from happening.
Tubby Smith has been free to walk away from his agreement at no cost for the past two years. If he’d like to stop coaching at Minnesota today, he can do so without paying a dime even though he’s "under contract" through April 2014.
As we get into payout scenarios under which the school terminates Coach Smith, the termination clause may not sound very equitable. Nonetheless, it’s the norm and not unique to the U.
Under the terms of Smith’s current contract, if the effective date of a termination is between now and April 30, 2013, Minnesota owes Tubby Smith a $1.5 million termination fee. If the effective date of a termination is after April 30, 2013 but before the contract is up at the end of April 2014, there is no termination fee due, but the U would have to continue to pay Smith his base and supplemental salary through the end of the contract.
Not to get too deep into the contract’s language, but one issue is the effective date of termination. In the case of Minnesota terminating the contract, they must provide 90 days written notice to Coach Smith. When a coach is fired, he’s usually out the door immediately. Maybe there’s a quick press conference and even a few tears shed that same day, but the guy certainly isn’t going to be hanging around for another three months.
My read of the contract is that if the U fired Tubby today, Smith would be paid his base and supplemental salary (which now totals approximately $1.9 million per year) for 3 months and also receive a $1.5 million goodbye gift. In other words, the real termination cost to the University would be around $2 million.
If negotiations on a new deal were halted and employment continued under the current contract, but in early March of next year Minnesota decided to end Smith’s employment as head coach, I believe the 90 day written notice provision from early March would put the effective termination date into the period where the U would be required to pay out the remaining base and supplemental salary due to Smith through April 2014.
In addition, because of the 90 day notification period in the contract, in this scenario I also believe Smith would be due his $250,000 supplemental retirement contribution on April 30, 2013 because he would technically be an employee until June 2013 and therefore be due the contribution. All together, his departing gift would appear to be nearly $2.5 million if terminated in early March 2013 (14 months of base and supplemental salary plus the $250,000 supplemental retirement contribution).
Based on the above, if the U entered into a new deal with Tubby this summer which included a termination fee of $2 million to $2.5 million in the event the school terminates his employment after the 2012-13 season, they’d be in about the same position financially under the new deal as they are today.
Therefore, I wouldn’t be overly concerned about the negotiation skills of the University if a new deal is reached and it includes an eye-catching termination fee of up to $2.5 million after next season. If the U can keep the termination fee after one year to $2.0 million or less, they actually may put themselves in a better position than they are currently in.
On the other side, if I’m negotiating for Tubby my demands likely include a termination payout of more than $3 million should things not work out in 2012-13.
With the importance of next year to the basketball program under Coach Smith, from the school’s perspective I might have significant concerns with a new deal that included a termination amount in excess of $3 million.
We know a new deal doesn’t guarantee that a coach and institution will be together for a definitive period of time, but what makes the 2012-13 season so important? Later this week, we'll wrap up our "contract talks" with a look at what the Gophers will try to accomplish both on the court and on the recruiting trail over the next year.
