Listen to Wood Selig Discuss Creative Contract Clauses
Termination Clauses: Scheduling a Former School After a Change
While the termination clause is a necessary standard in employment contracts, university officials pay special attention to the language surrounding the “termination by the coach without cause” section. In order to deter coaches from moving from one school to another, universities have worked to include various alternatives and additions to the liquidated damages and buyout clauses in the coaching contracts. This clause, unofficially coined as the “Scheduling” Clause, has become an increasingly utilized stipulation within the contract in lieu or as part of any buyout or liquidated damages provision.
The First of the Coaches to Experience the Clause
In April of 2003, Dennis Felton accepted a coaching position at the University of Georgia and terminated his contract at Western Kentucky University. Since Felton’s contract was not said to expire until 2005, this departure was a clear breach of contract; nevertheless, Western Kentucky had specific language for this issue of early departure. Specified in the buyout clause, the contract legally required “any major conference school that hired Felton to pay Western Kentucky $200,000 and to agree to a four-year, home-and-home series with [Western Kentucky].” 1 With Georgia agreeing to these stipulations, it figuratively opened doors for Western Kentucky and other institutions to utilize this tactic in contract formation.
While Felton was at WKU he suggested this contract clause to then Athletic Director, Wood Selig, as a creative way to contain a buyout yet reward and compensate the “departing school” with an asset that would pay multiple dividends over a number of years. Both parties worked together to construct what was essentially a win-win scenario in the event of a coach’s departure, the collaborative, beneficial negotiation of a coaching contract.
Darrin Horn, a former assistant coach at Western Kentucky, was hired to replace Felton as the Head Coach. Although Horn had a successful tenure at WKU, Horn decided to accept the position at the University of South Carolina in 2008 with three years still remaining on his WKU contract. 2 While Horn was effectively aware of the buyout and scheduling provision, USC enticed him with an elevated base salary and a higher conference RPI (rating percentage index) in the Southeastern Conference opposed to the Sun Belt Conference. 3 As consequence to exiting his contract early, Horn’s WKU contract included a “buyout of $157,000 per year for each year bought out, as well as a provision that would require Horn’s new school to play four games against the [WKU] in the future.” 4
Western Kentucky’s Prolonged Use
This scheduling procurement continued to appear in various contracts of Western Kentucky athletic staff members. When Ross Bjork resigned as the Athletic Director to take the position at the University of Mississippi, considerable focus was given to an unusual termination clause in Bjork’s Western Kentucky contract. His former contract required him to “use his best efforts at the hiring institution to schedule two-year home/home game series between the men’s and women’s basketball teams and one home/home game series for the football team.” [Emphasis added]. While it is still too early to see how this clause will play out for Ross Bjork and Ole Miss, it generated enough curiosity to examine whether other schools are including similar terms in their contracts, and what the advantages of such a clause might be.
Looking exclusively at Division I Athletic Director’s and Men’s Basketball Head Coaches contracts, it turns out that this type of clause is still quite rare among NCAA collegiate institutions.Win AD now offers the ability to search contracts by keyword, the next step in the evolution of access to accurate data. To begin searching, simply access contracts in our database and enter your terms in the upper right search box. Because you can now search .pdfs in Win AD, you’ll get more value from our contracts library—open access to the data and the exact language inherent in those records. Keyword search lets you find creative contract structures—like those of Dennis Felton, Darrin Horn, and Ross Bjork—quickly and easily. Todd Stewart, hired as the Athletic Director in 2012, had the same type of clause integrated in his contract, but increased the terms to include “four four-year home/home game series between the men’s and women’s basketball teams and two two[-year] home/home game series between the football team.” Ken McDonald, the former Head Coach of the Men’s Basketball team, also had a similar clause in his contract, stating that if McDonald terminated the contract without cause he “agrees to guarantee a four-year home/home game series between the Men’s Basketball team of the college/university which employs him and the University’s Men’s Basketball team, with no requirement for financial remuneration.” [Emphasis added]. Notice that the language in his contract does not include the term “best efforts,” but that McDonald “guarantee[s]” the home game and home series. Because McDonald was terminated by Western Kentucky, this clause was never actually exercised.
Use of the Clause at Other Schools
The only other schools to include this type of terminology in their contracts are Southern Illinois University and Virginia Commonwealth University. Chris Lowery, formerly the Head Coach at Southern Illinois, had a termination clause stating:
Unfortunately, Lowery was fired by Southern Illinois in March, so the ramifications of this clause will not be demonstrated. Lastly, Shaka Smart, the Head Coach at VCU, has comparable language in his contract, stating:
His contract language differs slightly from the other schools by allowing the hiring institution to buy out the two game home and home series for an explicitly stated fee.
Why These Creative Clauses Matter
There are three ostensible aspects to applying this unconventional language: a lower cash buyout, putting staff and institutions on notice, and a surrogate source of revenue. First, the Athletic Director is able to negotiate down the buyout amount that the coach pays the school for leaving. This essentially makes the contract more attractive to the potential employee by placing fewer restrictions and regulations within the agreement. Second, by placing a conditional clause in the contract, those schools currently employing—and those interested in attaining the coach or Athletic Director are automatically aware of the implications it places on the person in question. Third, this clause is an indirect way of generating revenue. Strength of schedule implicates stadium attendance (which inevitably increases concessions, apparel, and ticketing sales), NCAA Tournament Selection bids, and national attention. By legally requiring a larger school that just acquired a coach or Athletic Director from a smaller school to schedule the matchup, the smaller school receives revenue by way of season ticket sales, single game sellout, or even a package of games.
A special thanks to Dr. Camden “Wood” Selig for his expertise and for reading drafts of this piece.
- http://onlineathens.com/stories/041103/dog_20030411056.shtml [reports Felton’s move from WKU to UGA as new head basketball coach] ↩
- http://usatoday30.usatoday.com/sports/college/mensbasketball/2008-03-29-scarolina-horn_n.htm [discusses Horn’s initial talks and plans to interview with USC for the head basketball coaching position] ↩
- http://www.wbko.com/news/headlines/17159866.html [addresses the reasons why Horn left WKU for USC] ↩
- http://sports.espn.go.com/ncb/news/story?id=3322582 [reviews Horn’s departure for USC for the head basketball coaching position as well as what the AD of WKU tried to pitch to keep Horn] ↩