Why does mediocrity get rewarded

Submitted by poseidon7902 on

This isn't a discussion around Hoke per say, he just fits the bill for the conversation.  Generally when a coach is let go, they walk away with a nice chunk of change.  For instance, my understanding is Hoke gets 120k/month for the next 25 months and a lump sum of 3 million in 30 days.  I work in IT and am quite accustomed to how contracts work in that field.  If you don't do the work to the satisfaction of your employer, you don't get paid anymore and don't have a job.  Maybe this is just the nature of the beast, but I can't fathom why a school would want to put itself on the hook for millions of dollars a year and if the coach doesn't pan out, still pay out millions more to make them go away.  It's like we're rewarding mediocrity.  

Humen

December 3rd, 2014 at 9:58 AM ^

Demand, basically. It's easy to find an IT guy. It's not easy, presumably, to find the best coach out of a field of about 300 of them. Because all schools demand winning records now, which is impossible, we've got consistent turnover but an extremely limited field. Coaches have a lot of initial negotiating power




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treetown

December 3rd, 2014 at 10:16 AM ^

With the new OT rules with very few ties, (disregardingly the few cupcake FCS games) D1 CFB is becoming a zero sum game - for every winner there is a loser and for every big winner, the are a lot of losers. With HC being dropped despite a 9-3 record and not winning big soon enough, this will only continue.

bo_lives

December 3rd, 2014 at 10:00 AM ^

It works like that everywhere, e.g. Golden Parachutes in the financial industry. A coach is like a CEO, and all CEOs get generous buyouts. The graduate assistants on Hoke's staff don't get a buyout.

mgolund

December 3rd, 2014 at 10:03 AM ^

The most common kind of employment agreement is at-will. You agree to a salary, but not to a fixed term of employment. You can be fired (or can quit) at any time without penalty.

The other is a term contract. Your agreement is for a specified duration at a specific rate. Thus, if you quit (or are fired) before the term ends, a violation of the contract has occurred. To ameliorate the possible damages, the parties agree to a specific amount to be paid should the university decide to fire the employee in violation of the employment term. It's not a reward, it's limiting the possible damages from a breach of contract lawsuit.

Gandalf the White

December 3rd, 2014 at 10:24 AM ^

sometimes the amount paid to the non-breaching party may be mitigated if the non-breaching party finds employment elsewhere.  In other words, if Brady Hoke were to land a coaching job tomorrow, the pay from that job may lower the amount that Michigan has to pay him.  I beleive I read somewhere that his existing contract is structured like that.  Basic contract dispute resolutions want to put the parties in the economic position they would have been had the contract been performed; they want to try to avoid unjust enrichment...

PeterKlima

December 3rd, 2014 at 10:04 AM ^

Same reasons CEOs get paid tons and get golden parachutes. The idea behind the salary is that they make decisions and do things that bring a lot more value than their salary value to the entity. The idea is that not many people can make the important decisions they make, as well as they can make them because of their qualifications. The lower you go on the ladder, the more people who could do the same thing. Not many people could have taken Ball State into the Top 25. Not many people could have brought SDSU to its first bowl victory in a long time. He was coach of the year in the MAC and mountain West. Not many people can reach a BCS game and oversee the rebuild of the Michigan defense. I can find hundreds of people to work IT for a fraction of what I have to pay A college football HC.




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ESNY

December 3rd, 2014 at 10:04 AM ^

Its all contract based.  At will vs. under a contract for a defined term.   Your employment is at will meaning you can be fired at any time for any reason (within the law) without any further compensation.  Whereas Hoke had a contract for a set number of years where he would be paid even if fired for performance reason but not for cause. 

Dustinlo

December 3rd, 2014 at 10:09 AM ^

Different type of contract as has been said multiple times. Also, it's another thing that a coach seeks and a school can give as an extra incentive in the contract. It's almost another bonus in the contract that is a built in risk control tool for the coach in the event that he fails.

The_Mad Hatter

December 3rd, 2014 at 10:13 AM ^

is not so much with the buyout, but with coaching salaries in general.  They've really exploded in the last decade or so (much like CEO pay).

I get that the job is demanding and requires a very specific skill set in order to win, but I would be much more comfortable with more performance based incentives.  Pay a guy $1-2 million per year in base compensation, but offer big financial incentives for meeting defined goals.  

Beat MSU?  That's a 500k bonus.  OSU?  Make it 750.  Graduate all your seniors?  Here's a million dollars.  Win a NC?  How about $5 million.

Mediocrity, in all things, is worse than failure.  It should not be rewarded.

Wendyk5

December 3rd, 2014 at 10:37 AM ^

College football coach contracts seem incredibly reasonable compared to baseball player contracts. In a dying sport, why would you pay a player over $100 million for a multi year contract when the evidence of any player playing at a high level for an extended amount of time is negligible? I'm not an attorney so maybe I'm missing something but boy, what a coup for the agents. 

alum96

December 3rd, 2014 at 10:43 AM ^

Guaranteed contracts in every sport are insane.  THere are guys on the end of the Pistons bench like Corey Magette last year making $13M a year.  No idea what is going on in some of these sports. 

As for player inflation - it is getting ridiculous.  I saw a Marlins player sign a $325M contract.  To put in perspective the Florida Marlins franchise is worth $500M.  We are going to reach a point here in the next 10 years where some players are going to sign contracts worth more than the franchise value.  I don't know what the breaking  point is.  In a generation the top baseball players are going to be able to retire and just buy their franchise.

http://www.cbssports.com/mlb/eye-on-baseball/24501501/surprise-forbes-r…

The_Mad Hatter

December 3rd, 2014 at 10:58 AM ^

is completely insane.  I don't see how anyone could argue that any one player can add that much value to a team.  Is signing that one guy going to net more than $325M in revenue for the team?

I'm also not fond of the massive contracts given to draft picks that are completely unproven at a professional level.

Gameboy

December 3rd, 2014 at 11:01 AM ^

Pro sports contract is pittance and completely sane compared to what money managers get on Wall Street. There are several who made over a BILLION dollars in a single year. This even after study after study have proven that active money management never do better over the long term than index funds.

At least ball players have to be proven good to get such money. These people on Wall Street get billions for just being lucky.

not TOM BRADY

December 3rd, 2014 at 11:09 AM ^

Then there are guys in the NFL that sign a 30 million dollar contract. Get hurt and cut. Then don't see any of the money. Then there are players who play with injuries because the contacts aren't guaranteed. It can be argued both ways.
There is no breaking point, when the game is rich and teams are getting bigger and bigger TV contracts they pay their players. Stanton would get a 400-450 million dollar deal on the open market right now at his age.

alum96

December 3rd, 2014 at 11:26 AM ^

Football is the only 1 of the big 4 sports without guaranteed contracts.  I understand why due to the potential for catastrophic injury but in a way its the most perverse.  The 1 sport you truly can end your career on any play has the least insurance for you in terms of guaranteed contracts.

I think the whole system is broken - 99% of people work on as is basis not on multi year contract.  You see so many players loaf around and then in their contract year play out of their mind.  One year contracts across the board would increase quality of play in every sport.  Most people "work for their job" every day of their life and can be fired within a few months for bad performance (and lose all income).  Strange that sports is not like that.

jmblue

December 3rd, 2014 at 12:06 PM ^

In a dying sport, why would you pay a player over $100 million for a multi year contract when the evidence of any player playing at a high level for an extended amount of time is negligible?

Baseball is dying? Attendance numbers seem pretty strong to me.

991GT3

December 3rd, 2014 at 10:59 AM ^

Brandon gave him a sweetheart contract almost to the point of being a waste of University money. Hoke wasn't going any where. He would have worked for the same salary he had at San Diego State.

Yet, Brandon gave him a salary which put Hoke in the top ten salaries paid to college coaches. To add insult to injury he also agreed to pay Hoke bonuses ($500,000) for staying on the job.

FWIW, Brandon probably would not have fired Hoke.

JamieH

December 3rd, 2014 at 10:18 AM ^

Well in this case, it is because Michigan gave Hoke a stupid contract.

 

No one else was going to pay him that kind of money.  And no other school or the NFL was going to steal him away.   I.E.  Hoke wanted Michigan FAR more than Michigan needed Hoke.  So Michigan should have negotiated a deal that was far more favorable to Michigan.



But Mr. Pizza Boy didn't operate that way.  So he gave Hoke a contract as if Michigan were battling with 10 other schools for his services and then were going to have to fend off the Hoardes of Middle Earth to keep him every off-season.  And now Michigan gets to pay for it.

I don't want Michigan to be cheapskates or anything, but there is a point to paying coaches well.  You don't just pay a coach well for the hell of it.  You pay a coach well because you need to get them to come to your school from another job or to get them to stay at your school and not think about leaving.  Hoke, no offense, was a sure thing.  Michigan didn't need to open the vault for him unless he set the world on fire once he got here.  A more reasonable contract would have made much more sense and then if he lit up the Big Ten they could have given him a big reward bump. 

alum96

December 3rd, 2014 at 10:38 AM ^

David Brandon came from a world where stupid salaries for modest talent is very common.  When you work with other people's money it is very easy to give it away.  When you come from a culture where salaries are part of an arms race you bring that into an athletic department. 

As others have said, we were competing with no one for Brady Hoke.  He should have had a Gary Anderson type contract.

BiSB

December 3rd, 2014 at 10:40 AM ^

If you see something you think you need, sometimes you have to overpay. Michigan offered him a fine salary (though not a multi-year contract, which goes directly to the OP's point). But had they overpaid slightly, they might have saved themselves a LOT of headache in the intervening 7 years.

MGoStrength

December 3rd, 2014 at 10:18 AM ^

When you are at the top of your field you are able to get more and have more power to negotiate and your employer is under more pressure to keep you there.  That was Hoke after the 2011 season when he went 11-2 and turned a crappy team into a BCS bowl winning team.  The same likely happens for CEOs, athletes, musicians, basically anyone at the top of their industry. It would be different if he were a Division 3 head coach, but instead he's the head coach of the winningest college football team of all time and commands a large salary.

Bryan

December 3rd, 2014 at 10:20 AM ^

Then School B, C, D will. Coaches are paid way too much, but that's the nature of the game. Will UF pay out $4m/ year for 5 years to McElwain? Yep. Is he proven? Not enough so to warrant that kind of money right now, but that will not stop AD's from handing out blank checks. 

turd ferguson

December 3rd, 2014 at 10:26 AM ^

IMO it's good for college football that these types of terms are in coaches' contracts.  In general, I think schools are too quick to fire coaches - and coaches are too quick to search for a better job - and these kinds of clauses provide stability by increasing the costs of movement.

kb

December 3rd, 2014 at 10:25 AM ^

everyone wants to be paid like the best coach in the conference or the best player at a position, so you get inflated contracts.

FrankMurphy

December 3rd, 2014 at 10:25 AM ^

As revenue generators, coaches have acquired a lot of leverage over the years (owing in no small part to savvy agents who would do anything to get their client the most favorable contract possible). There's also the basic rule of supply and demand: there are more jobs than there are Nick Sabans and Urban Meyers out there. The Sabans and Meyers of the world can basically dictate their own terms, which sets the bar by which other coaches (and their agents) assess their own market values.

Having said that, it's not unusual for contracts to be guaranteed for a certain period. Even in IT deals, the company purchasing services is often on the hook for the entire cost of the deal if it terminates without cause during the first year or two.

readyourguard

December 3rd, 2014 at 10:46 AM ^

We could not have gotten him for wings and clothes.  I am 100% certain of that.

"Pizza boy was playing favorites."  Ya think?

Don't confuse the man you heard/saw on the sidelines with his attorneys.  You're not getting a coach - ANY coach, including Hoke - with a contract that says we can fire you at any time without paying you a penny more.  Hoke had a year left on his contract.  He's owed that money.  I'd want it, you'd want it, and anyone who signs a contract would want it.