Cost of coaching
Upset about college tuition costs that soar as head football coaches get rich? Miffed that universities place staff on furlough while major college head coach salaries have rocketed 70 percent to an average of $1.64 million over the last six years?
Pace yourself. The high price of head coach compensation – and multi-million dollar firings – likely will keep going up as long as TV revenues lead the way, said Dr. Thomas H. Regan, an associate professor in the University of South Carolina’s Department of Sport and Entertainment Management.
“Even with payouts schools incur with firings, they’re willing to do that because the money they generate with football is so significant,” Regan said.
For some Southeastern Conference and like-minded football programs it might be a good investment, says Dr. Raymond Sauer, a Clemson economics professor who specializes in sports business.
“I don’t think South Carolina and Clemson really have much choice,” Sauer said. “They have done pretty well playing within the rules of the game. But the pressure to chase money is enormous. It’s destroying conferences in real time.”
Roll Tide, and roll out the dough.
Alabama has won three of the last four national championships and has the highest paid head coach, Nick Saban, who makes $5.5 million per year.
Armen Keteyian of “60 Minutes” asked Saban last fall, “Are you worth it?”
Probably not, Saban said.
“But I think the other side of that,” Saban added, “is you almost have to look at what return has there been on that investment?”
Saban became head coach at Alabama in 2007 after Mike Shula went 6-7 in 2006 and was dismissed. Crimson Tide athletic department revenues have tripled since Saban arrived. His tenure has coincided with the SEC’s mega football TV deal that generates $14.64 million per school. Renegotiation prior to the 2013 season is expected to give each school at least $20 million, with a new SEC Network in the wings.
“Of course, the Southeastern Conference contract came in and set the standard,” Regan said. “Then came the Big Ten Network, the (Texas) Longhorn Network and the Pac-10 contract that broke the SEC barrier. But the new SEC deal will again be the biggest because the SEC has won the most football championships.”
Meanwhile, Tennessee suffers from $9 million in buyout costs for head coach Derek Dooley and his staff. Former Tennessee faculty leaders blasted an athletic department decision to halt $18 million in scholarship and fellowship funding in order to pay off Dooley and Co. while stabilizing the athletic budget.
Only 48 major college athletic departments made money in 2010-2011, according to Department of Education figures obtained by BusinessofCollegeSports.com. The black ink list is topped by Alabama at $31.6 million and includes South Carolina ($762,726) and Clemson ($216,618).
Sauer has labeled buyouts such as Auburn’s $7.5 million goodbye package given banished head coach Gene Chizik in November “shameful.” As the president of the North American Association of Sports Economists, he carefully tracks coach salary trends, which seem at odds with the academic mission of universities.
“We’re getting close to that, if we’re not already there,” said Sauer, 56.
He blames a “non-cooperative competitive equilibrium.”
The professor’s explanation: “Given the rules of the game, (Nick Saban) is getting paid roughly market value. The rules of the game are the problem. The demand is there to compete and to win, so you have to go out and compete to win, so that bids up the price for things.”
College head coach salaries wouldn’t be so out-of-control with a salary cap applied by the NCAA or conferences.
A Rice vs. Idaho national championship game is more likely.
“(Schools) can’t cooperate like the NFL because it would be illegal,” Sauer said. “The NCAA is cornered by competitive forces and anti-trust law. When the NCAA tried to put in rules which attempted to restrict pay to (basketball) assistants, they were sued and lost.”
Top 10 bargains
Steve Spurrier made $3.6 million in total USC and outside compensation in 2012 and had another $1.5 million in bonus potential. But he has led South Carolina to 31 wins over the last three seasons, a stretch of unprecedented Gamecock success.
Clemson head coach Dabo Swinney’s 2012 pay was $2 million with $775,000 in bonus potential. The Tigers just capped an 11-win season that included a Chick-fil-A Bowl upset of LSU in ESPN’s highest-rated non-BCS bowl telecast ever. In 2011, Clemson won its first ACC championship in 20 years. Notably, Clemson assistant coaches, led by offensive coordinator Chad Morris and his $1.3 million salary, are the highest paid staff in college football.
Relatively speaking, South Carolina and Clemson have made shrewd investments.
Haves vs. have-nots
SEC Commissioner Mike Slive recently said there might have to be separation between college football haves and have-nots.
“It’s already started,” Regan said, “there’s no doubt.”
Like other analysts, Regan thinks four 16-team super conferences are college football’s future.
Beneath the major college have-nots, Football Championship Subdivision salaries are not increasing as much. The reason, Sauer said, is two FCS schools rarely compete for the same coach. Two-time FCS national champion North Dakota State just gave head coach Craig Bohl an extension on a contract that pays $206,503 in base salary.
Stemming the tide of head coach salaries is harder than stopping the Crimson Tide in a bowl game.
“It looks hopeless to me,” Sauer said.
It’s the law of talent and demand.
“It’s a very competitive market, and there is a lot of revenue the schools are chasing,” Sauer said. “They’re competing for a big, and heretofore growing, pot of revenue. And if you don’t have the best talent, you’re going to fall behind. So they have to get the best talent, and in most market contexts you have to pay for the best talent.
“In that context, I don’t think they’re overpaying for coaches. But they are definitely underpaying for players.”