Coaches – How Hard Is It to Sign a Multi-Million Dollar Contract?

By Robert J. Romano, Esq.

t1_donovan1As every lawyer was taught in his or her first year contract course, the essential elements of an agreement between two or more parties are offer, acceptance, consideration, legality and capacity. Additionally, any contract which terms cannot be performed and completed within one year has to be reduced to writing. Said writing must identify all contracting parties, recite the subject matter, provide the essential terms and conditions, and has to be acknowledged by all parties in order to be protected against voidability.

This raises the question, why did it take college basketball coach Billy Donovan over 16 months to sign his lucrative, six year, $19.5 million dollar coaching contract with the University of Florida; all of the time still performing his duties as a basketball coach?

One report indicated that the cause of the 16-month delay was due to negotiations over buyout and termination terms and conditions. The results of which are that if Coach Donovan leaves the University before the end of his contract, he must pay the school a lump sum of $500,000. If the University of Florida terminates Donovan without cause, he receives $2.5 million for every year left on his contract. By its terms, if Florida fires Coach Donovan after his third year, he would receive approximately $7.5 million.

The significant haggling over the termination and buyout terms and conditions is presumably a result of the litigation concerning Rich Rodriquez and West Virginia University. As was well publicized, after a seven-year period as head coach at WVU, Coach Rodriguez left to take over a head coaching position at the University of Michigan.  As a result, WVU filed a lawsuit against Rodriquez alleging breach of contract and damages. Rodriguez, in turn, counterclaimed alleging WVU breached the contract by verbally agreeing to eliminate the buyout clause from the contract and then failing to do so.  A settlement was finally reached, after a long and sometimes ugly dispute, in July of this year with Coach Rodriguez, with the help of the University of Michigan, paying $4 million to WVU in accordance with the contracted buyout terms and conditions.

rod_michiganBuyout clauses typically require a coach to pay their current university a specific amount in order for the coach to be released from a contract anytime before it has expired. Buyout clauses are an essential part of a coaches’ contract from the university’s perspective since it is well established in the area of contract law that employers cannot sue for specific performance of a personal service contract. Per the terms of most buyout clauses, if a coach leaves before a release is obtained, he or she can be sued for breach of contract by the university or college. Therefore a buyout clause can discourage a coach from leaving a university early if the terms are severe enough. Unless, as in the Rodriguez case, the new contracting university picks up all or part of the buyout tab.

Termination clauses in coaching contracts, on the other hand, are broken down into two categories: termination for cause and termination without cause.

Termination for cause allows for a college or university to terminate a coaching contact when it can show “just cause.”  Most universities maintain that “just cause” exist in situations when a coach violates a criminal statute, a coach knowingly commits or even condones by a member of his or her staff a violation or NCCA or conference rules, a coach is unwilling to perform his or her duties, or in situations that would allow the termination of any other university employee consider to be in the same “classification” of the coach.

In addition, coaching contracts usually contain a morals clause, which states that any act by a coach, which is considered an act of moral turpitude, could result in termination. Acts of moral turpitude are usually defined as conduct that is considered contrary to community standards of justice, honesty, or good morals.

In an effort to protect the coach and in the name of fair play, most termination clauses contain a due process section which include the following: a notice provision, an opportunity to be heard or hearing provision, a term which outlines the time frame within such notice and hearing need to be scheduled, and what, if any, punishment could be enforced by the university if just cause is found to exist.

Absent a finding of just cause, a university can still terminate a coach. However, a university will be responsible for full payment under the terms of contract unless the contract calls for a negotiated predetermined settlement amount (as is the case in Coach Donovan’s new contract). Most predetermined settlement amounts consists of either a lump sum payment, full payment of all or specific components of the contract for the remainder of the contract term, or for a payment of a percentage of the compensation package for the remainder of the contract term. All of which, except for the lump sum, can be mitigated if the coach finds subsequent employment at another university or at the professional level.

Therefore, it is important to understand that even though negotiations are sometimes tough, intensive and time consuming, the earlier a contract can be entered into, the more secure your client’s future is.

Robert J. Romano, Esq. is the founding partner of THE ROMANO SPORTS AGENCY, which specializes in representing NCAA and Professional League Coaches in all aspects of contract negotiations. For more information, visit his web site at www.romanosportslaw.com, or contact him at rjr2128@columbia.edu

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  1. […] this may appear unusual, it reminded me of Robert Romano’s article Coaches – How Hard Is It to Sign a Multi-Million Dollar Contract?: As every lawyer was taught in his or her first year contract course, the essential elements of an […]

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