A new study found that schools across the nation accumulated over $533.6 million in dead money for sports programs between 2005-2018, with some committing to more than one sport at a time. This is an interesting trend as it shows how many schools are willing to spend on college athletics despite the fact they may not be successful year after year.
Dead money is the amount of money that a school spends on players who are no longer with the team. The FBS schools spent over $533.6 million in dead money over 10+ years.
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In college football, November can be a frigid and costly month. Two-thirds of the way through the season, a number of coaches around the country are on the hot seat, with eight Football Bowl Subdivision head coaches out of a job and due dead money — money required to fulfill their contracts.
According to a study of financial information acquired by ESPN via state open records laws, public colleges in FBS conferences paid out more than $533.6 million in dead money to head and assistant coaches in football and men’s and women’s basketball from January 1, 2010 to January 31, 2021.
Coaches that have been dismissed or resigned since then, including head football coaches at Georgia Southern, LSU, TCU, Texas Tech, Akron, UConn, and USC, have received tens of millions of dollars in severance payments. According to the university, LSU football coach Ed Orgeron, who led the Tigers to a College Football Playoff national title in 2019 before being fired last month, is due $16.9 million, which will be paid out in 18 monthly installments until December 2025.
Nick Rolovich was fired from Washington State for refusing to take the COVID-19 vaccination for medical reasons, therefore he is not entitled to a buyout, however he has stated his intention to sue the institution.
The amount also excludes any compensation given after Jan. 31, 2021, to coaches who had already been sacked. Of the 130 FBS programs, 86 submitted records, four did not, 22 are private colleges, and 18 gave either no records or partial statistics.
From April 2001 until June 2016, Harvey Perlman served as Nebraska’s chancellor, signing off on the sacking of football coach Frank Solich, as well as the hiring and firing of Bill Callahan, Bo Pelini, and Mike Riley, who was sacked more than a year after Perlman departed.
Perlman recently told ESPN, laughing, that “we have a lot of football coaches on our staff.” “Yes, it was a nightmare. It did not appeal to me. And, as I did, you receive a lot of public backlash for it. But, as I have said, it’s all part of the competitive landscape in which you operate. You’re not going to get coaches if you’re not going to do it.”
In December 2017, Steven Leath, the president of Auburn University from 2017 to 2019, negotiated a seven-year, $49 million contract extension for then-football coach Gus Malzahn. Malzahn was dismissed in 2020, and Auburn agreed to pay more than $21 million to buy out the rest of his contract. It was the highest buyout ever paid by a school at the time.
“You’re at a disadvantage in terms of public relations,” said Leath, who is now the executive director of the Council to Advance Hunting and the Shooting Sports. “There will be those people who believe the coach should be fired and the deal should not be renegotiated at all, regardless of where you wind up on the contract. There will also be some who believe you underpaid him because he walks on water. It’s difficult to win a public relations struggle no matter which side you’re on.”
Dead money payments were topped by Auburn ($31.2 million) and Nebraska ($25.8 million), followed by Texas ($21.5 million), Ole Miss ($20.4 million), and Kansas ($20 million).
After Bo Pelini was dismissed in 2014, Nebraska paid him $6.5 million in dead money. AP Photo/David J. Phillip
During Perlman’s tenure, the Cornhuskers hired and dismissed men’s basketball coach Doc Sadler, while women’s basketball coach Connie Yori resigned under duress. He said that a coach’s buyout commitment had no bearing on whether or not he or she should be fired.
“I considered the payments we made as merely the cost of doing business when we changed coaches,” Perlman stated. “It was simply part of the package.”
According to Perlman, the institution was pushed to agree to bigger and larger contracts with more generous buyouts for coaches due to competitive factors and public perception. He acknowledged that the pay and guaranteed contracts were excessive, but said that “competition forces you to do what you have to do.”
Perlman said, “There were both the terms of the agreement and the message that it carried.” “They were both crucial if the coach was to be successful…. Because you were going to have to recruit, it was all about where you were in the Big Ten. Recruits would see this and conclude, “They’re not paying you very much, therefore they must not respect you very much, so you must not be a very good coach.””
According to Amy Perko, CEO of the Knight Commission on Intercollegiate Athletics, the dead money given to coaches is an illustration of the dysfunctional financial system of big-money college sports.
“Instead of utilizing the money to assist the education, health, and safety of college athletes, institutions wasted more than half a billion dollars on handsomely rewarded coaches, ostensibly to retain their competitive advantages,” stated Perko. “This is why we created the C.A.R.E. model report for 2021. Hundreds of millions of dollars will be squandered if far-reaching actions to rein in out-of-control coach spending aren’t adopted quickly.”
The ACC, Big Ten, Big 12, Pac-12, and SEC schools that were included in the poll of public colleges accounted for 88 percent of the dead money. With $151 million, the SEC topped the way, followed by the Pac-12 ($114.1 million), Big Ten ($106.8 million), Big 12 ($58.8 million), and ACC ($40.0 million).
Football coaches were paid more than three times as much as men’s basketball coaches ($103.5 million) among the Power 5 teams surveyed ($354.9 million), while women’s basketball coaches earned just $12.5 million in severance compensation.
Five schools paid $62.8 million in dead money, including $47.4 million to football coaches, from the American Athletic Conference, Conference USA, Mid-American Conference, Mountain West, Sun Belt, and independent UConn.
Because the school was in between athletic directors at the time of his negotiated extension, Leath claimed he worked directly with Malzahn’s agent, Jimmy Sexton. Agents are used in coaching contract talks, according to Leath “is enormous. “The days of a coach going in to talk about an employment contract in the same manner that a vice president of student affairs or a head of police would are long gone.
“It’s evolved to the point where the agent would rather you didn’t even speak to your own staff,” Leath said. “And there are moments when you have to stand firm and say, “Listen, this individual works for me.” I’m not required to go through you.’ It’s a time-consuming and challenging procedure. It’s simple for it to become antagonistic. It transforms the team spirit of cooperating for the shared aim of progressing the program into a tedious commercial transaction.”
Gus Malzahn received $10.7 million in dead money from Auburn until January 31, 2021. Getty Images/Kevin C. Cox
The Tigers had just defeated Georgia and Alabama, both rated No. 1 at the time, to get to the 2017 SEC championship game. Arkansas has indicated interest in bringing Malzahn on board as well.
According to Leath, Malzahn’s contract renewal included a buyout option “We found it unpleasant, but it was essential due to the playing field everyone was on at the time. So you take the chance that he’ll do well for two, three, or four years and the buyout issue will be resolved. That’s exactly what you want.”
Malzahn’s buyout clause was decreased from having to pay 100 percent of the remaining income to having to pay 75 percent of what was remained on the agreement, according to Leath.
“We improved it for the university,” Leath said. “Don’t get me wrong: those were still fantastic terms for Gus. However, they were unquestionably better for the institution than when we first began.”
Leath claimed he got there by adopting a “just, c’mon, let’s be reasonable here” mentality and met with Malzahn individually. “It would have been considerably better if there had been no agents engaged and you could just sit down and ask yourself, “What is best for the university?” What is the best option for you? What is the greatest long-term strategy for the program?’”
In June of this year, Leath and Auburn parted ways as well. His parting agreement said that he would get $4.5 million over the course of three years.