Three Million Reasons for Carefully Drafting Coaching Contracts

The Ohio State University (OSU) recently lost its final appeal in the wrongful termination lawsuit brought by former basketball coach Jim O’Brien.  O’Brien was essentially fired for loaning $6,000 to a recruit – a clear NCAA violation.  He now stands to recover nearly $3 million from OSU.

Although OSU’s lawyers attempted to appeal to the morality of the court, arguing that O’Brien should not be paid for violating NCAA rules, OSU’s fate was sealed as soon as the ink dried on O’Brien’s  contract.  The O’Brien-OSU contract was extremely unfavorable to OSU, as it included severe limitations of OSU’s rights should O’Brien violate NCAA rules.

In addition to owing O’Brien nearly $3 million, OSU must foot the bill for a case that has spanned three years and three different court houses.  The O’Brien case is instructive for colleges and universities, and offers a number of lessons:

  • A coaching contract should reflect the goals of the particular team and athletic program.  If the program has enacted a zero tolerance rule for NCAA violations, the contract must empower the university to take strong actions against coaches who violate rules, without creating unnecessary risk for the university.
  • The definition of terms is key.  In the O’Brien case, the definition of what did or did not constitute an NCAA violation, was very restrictive – to the point that three courts found in favor of O’Brien, despite his egregious violation of paying a potential recruit.  Terms such as “major violation” must be sufficiently clear, and should be defined by the university’s lawyers within the contract, not left to the NCAA or the courts.
  • Linking contractual terms to an NCAA ruling, sanction or violation can be useful, but is tricky.  Universities have recognized the advantage of a proactive approach, self-reporting violations to the NCAA when possible.  This practice, similar to plea bargaining, often leads to a less severe punishment.  For example, consider a contract that gives the university power to terminate a coach only if a violation reaches a certain threshold.  Such a contract may leave a university without grounds to terminate a coach due to the university’s own efforts reducing a penalty imposed by the NCAA.  Of course the mitigation of a penalty may not lessen a university’s displeasure with its coach, or the recruiting and public relations consequences of an embarrassing and well-publicized violation.
  • Attorneys drafting coaching contracts on behalf of a university must not only have a firm understanding of contract law, but perhaps more importantly must be familiar with NCAA rules and prior contract disputes between universities and coaches.  A contract that relies upon or invokes NCAA rules and interpretations without a clear understanding of the practical effect of such rules and interpretations, may not provide the university the power it requires to promote the values and goals of the institution.

OSU’s argument that O’Brien should not be paid for breaking NCAA rules is availing, echoing the ideals of integrity and sportsmanship that the NCAA promotes.  However, OSU must shoulder the responsibility for its inability to terminate O’Brien without great financial and legal consequence.  OSU simply failed to draft and negotiate a contract that vested it with the power to act upon a violation that the school found worthy of termination.

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  1. […] Disclaimer ← Three Million Reasons for Carefully Drafting Coaching Contracts […]

  2. […] increasing in value, and the business of representing college coaches is booming.  In the wake of Jim O’Brien’s $3 million lawsuit against The Ohio State University, the dismissal clauses in coaching contracts will receive greater consideration and scrutiny.  […]

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