By Kyle Swanson, Daily Staff Reporter
Published September 21, 2008
Eight games into the season and more than 10 months after he agreed to coach the team, Michigan football coach Rich Rodriguez and the University of Michigan finalized a contract on Friday. Before signing the agreement, Rodriguez had been working under a letter of intent.
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The 6-year contract outlines Rodriguez’s responsibilities, compensation package and buyout terms.
University spokeswoman Kelly Cunningham called the length of contract negotiation and the document’s terms “standard.”
“It takes a while to go through contract negotiations for any coach,” she said.
According to the contract, Rodriguez will earn $300,000 in base salary this year along with $1.65 million in additional compensation from media appearances and apparel endorsements.
That amount is $550,000 lower than the $2.2 million in additional compensation agreed to in Rodriguez’s letter of intent with the University last December, but Rodriguez will also receive a $550,000 annual retirement package under the contract.
Rodriguez is eligible for additional compensation of up to $300,000 based on the team’s bowl game performance.
At about $2 million, Rodriguez's compensation package trumps that of his predecessor, Lloyd Carr’s. Carr's 2007 contract had a base salary of $650,000 and more than $800,000 in additional compensation.
According to USA Today, the average earnings for Big 10 coaches in 2007 were $1,504,181. Although Rodriguez’s pay is competitive among conference coaches, it is considerably less than Iowa’s Kirk Ferentz, who earned more than $2.8 million in non-performance based compensation in 2007. Rodriguez’s pay is significantly higher than Indiana’s Terry Hoeppner, though, who earned $600,000 in non-performance based compensation in 2007.
Rodriguez’s contract includes an initial $4 million buyout clause if Rodriguez prematurely terminates the agreement. The letter of intent specified that the buyout would decrease by $500,000 a year, but the contract does not decrease the buyout amount until 2011.
The contract’s buyout clause is similar to Rodriguez’s terms with former employer West Virginia University, which demanded that the coach pay $4 million to cancel his contract and leave for Michigan. After a long legal battle, Rodriguez and the University of Michigan decided to pay the buyout fee rather than allow the issue to carry on into the football season. Rodriguez paid $1.5 million of the buyout and the University of Michigan paid the remaining $2.5 million.
University Athletic Director Bill Martin said in a statement at the time, "Rich and the rest of us felt that it would be best to get this distracting issue behind us."
However, the Athletic Department's decision to pay the majority of Rodriguez's buyout and all of Rodriguez's legal fees raises the question of whether such a move creates a precedent for the Michigan Athletic Department to chip in for future contract buyouts.
In an interview last month, University President Mary Sue Coleman said she agreed with Martin’s decision to help pay Rodriguez's buyout.
“I think they felt, and certainly I agreed with them, that the lawsuit was a big distraction, and ultimately that this was the right decision,” said Coleman, adding that the funds used for the payment came from the Athletic Department’s coffers, not tuition or state sources. “I agree with the decision that Bill Martin made.”
When asked if she thought the move would set a precedent for future Michigan coaches, Coleman said, "Each situation is independent and will have to be evaluated by the athletic director at the time."
Murray Sperber, a professor at the University of California at Berkeley and author of “Beer and Circus: How Big-Time College Sports Is Crippling Undergraduate Education,” said he thought the University’s participation in the buyout sent a negative message.
“It’s a terrible precedent,” said Sperber, an outspoken critic of bloated athletic programs. “It gives a signal Michigan will do anything to win in football.”
Sperber said Rodriguez’s case was noteworthy because West Virginia University enforced the buyout clause, while they often go unenforced.
“Michigan not only set a precedent, but they may have done a really dumb thing,” Sperber said, adding that if Rodriguez leaves the Michigan football program early and the University’s buyout isn’t enforced, the University will “look really stupid.”
Sperber said the case could lead to a national trend, noting that there might be more buyout clauses in contracts and increased enforcement of the clauses. It could also lead to more schools paying for coaches’ buyout clauses, he said.
“It’s an athletic arms race,” Sperber said. “One side gets a weapon, the other side gets a better weapon.”
Detroit Free Press columnist Michael Rosenberg, who often covers the Michigan football team, agreed that the University may have set a precedent, but noted that the practice isn’t new to the sports world.
“There was no doubt in my mind when Rodriguez was hired that Michigan was going to have to pay at least a big chunk of that buyout,” he said. “To be fair, I think that’s how college sports operate right now.”
Former University President James Duderstadt echoed Sperber and Rosenberg, saying the “absurd” levels of pay are a sign of the times.
“Clearly, the commercialization of big time college sports has now reached new levels, and the arms race for big-name coaches is continuing to spiral upwards,” Duderstadt said in an e-mail interview. “Sooner or later, I fear that either Congress or the IRS is going to lower the hammer and threaten the tax-exempt status of big-time athletics programs, arguing that such excessive compensation is clearly inconsistent with their tax benefits.”
- Daily Staff Reporter Jacob Smilovitz contributed to this report.