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91 Ind. L.J. 189 (2015-2016)
College Football Coaches' Pay and Contracts: Are They Overpaid and Unduly Privileged

handle is hein.journals/indana91 and id is 203 raw text is: College Football Coaches' Pay and Contracts: Are They Overpaid and Unduly Privileged? RANDALL S. THOMAS* & R. LAWRENCE VAN HORN* College football coaches' employment contracts and compensation garner public attention and scrutiny in much the same way as those of corporate CEOs. In both cases, the public perception is that they must be overpaid and pampered Economic theory claims that for coaches and CEOs to be overpaid, they must be receiving compensation in excess of the value they create for their organizations. However, both receive pay-for-performance compensation, which structurally aligns their compensation with value creation. This means we need to examine the underlying structure of the contract that gives rise to the observed compensation to determine whether they are appropriately compensated. We compare the employment contracts of Division I Football Bowl Subdivision (FBS) college football coaches with those ofcorporate CEOs during the period 2005 to 2013. We find that coaches are not overpaid, and their contracts are fairly drawn. We also show that CEO and coach contracts exhibit many common features. These contract features are consistent with what economic theory would predict. INTRODUCTION ........................................... ........190 1. COMPETITIVE MARKETS FOR COACHES AND CEOs ............ ........194 A. ECONOMIC THEORY AND COLLEGE FOOTBALL COACHES' CONTRACTS ........................................194 B. COLLEGE FOOTBALL IS A BuSINESS RUN BY A CEO...... ........198 II. RECRUITING, HIRING, AND NEGOTIATING A CONTRACT ..................204 A. COLLEGE FOOTBALL COACHES .......................... .....204 B. NEGOTIATING CEO EMPLOYMENT CONTRACTS ...................209 C. PRINCIPAL DIFFERENCES IN THE HIRING PROCESSES AND THEIR EFFECTS .................................................211 III. FOOTBALL COACH CONTRACTS IN COMPARISON WITH CEO CONTRACTS.......212 A. DESCRIPTION OF THE SAMPLE. .................................212 B. CEO AND FOOTBALL COACH COMPENSATION.............. ......216 C. CONTRACT LENGTH AND DUTIES .....................................227 D. TERMINATION CLAUSES: WITH CAUSE AND WITHOUT CAUSE ................229 E. NONCOMPETITION CLAUSES AND ARBITRATION PROVISIONS..................237 CONCLUSION......................................... ...............240 APPENDIX ................................ .....................242 t Copyright C 2016 Randall S. Thomas and R. Lawrence Van Horn. * John S. Beasley II Professor of Law and Business, Vanderbilt Law School, Vanderbilt University. ** Associate Professor of Economics and Management, Owen Graduate School of Management, Vanderbilt University. We would like to thank John Dotson for his outstanding research assistance on this project. We also wish to thank the athletic directors, search firm representatives, agents, coaches, and reporters that we interviewed for their assistance. We have kept their names confidential at their request. We want to acknowledge the helpful comments we received from Craig Lewis.

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