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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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