It's Enough Money To Buy The Damn State Comment Count

Brian July 9th, 2008 at 11:54 AM

The Jihad is over:

Rodriguez, the University of Michigan football coach since December, has reached a settlement to pay the $4 million liquidated damages clause, commonly referred to as a buyout, for leaving West Virginia to take the U-M job.

My suspicion throughout all of this was that Rodriguez would have preferred to settle quickly and move on with life, but the guys on the hook for most of the buyout -- Michigan -- wanted to whittle down the amount they had to pay and the John Beilein precedent was encouraging. This appears to be a plausible scenario:

Rodriguez is expected to pay $1.5 million spread over three years, beginning in 2010. U-M is expected to pay the balance of the sum, $2.5 million, immediately and cover Rodriguez's legal fees later, two people with knowledge of the agreement told the Free Press this morning.

Hurrah, who cares, let's play football.

Update: Further evidence Rodriguez was probably not the one who wanted to lawsuit it up:

The agreement spells out how much Rodriguez will pay and how much will be paid on his behalf. The former WVU coach apparently had a deal with Michigan right from the start of his employment there to pay all or part of the tab.

Reports are that possible depositions of Bill Martin and Mary Sue Coleman were sticking points -- sounds like the U said "screw it, it's chump change" and settled. (Via Bastard Sons.)

Comments

GoBlueBalls

July 9th, 2008 at 12:16 PM ^

Anyone know the tax implications here? RR just get millions from UM to pay settlement w/out paying taxes on it. They just going to pay him more than required?

WolvinLA

July 9th, 2008 at 12:33 PM ^

UM didn't actually pay RR 2.5 mil to pay to WVU, they paid the money directly to WVU "on his behalf."  What likely happened (which is pretty common on employment law cases where employees as well as employers are involved) is that WVU agreed to let RR off the hook for 2.5 mil of it as long as the U picked up that part of the tab.  WVU doesn't really care who they get their money from, as long as they get it.  And actually, a large university has the means to pay much better than an individual, as shown by the payment plan that RR is on when the U has to pay all the money up front.  There are likely to tax implications here.

Yahtzee

July 9th, 2008 at 2:44 PM ^

My assumption would be the $2.5 mill M paid on Rich Rods behalf, will be included in his Gross Salary this year (since payment is made this year) and it pretty much was a gift. If this is true then that means he will be taxed on it (ouch). A lot has to depend on how his contract was negotiated also. I imagine when he was talking with M, he mentioned that fact he has a $4 mill buyout clause. But...I imagine a tax attorney who was paid a substantial amount of money probably found a loophole here with the money being paid to a public institution for toothless red necks! So in the end who knows? Any CPA's out there?

I Blue Myself

July 9th, 2008 at 5:02 PM ^

This comes from a post (quoting the Ann Arbor News) on the Beilein buyout, but the law should be the same with regard to Rodriguez:

-----------------

"I think the answer is effectively he will not be taxed on it,'' said Douglas Kahn, a law professor at Michigan who examined the contract for The News on Friday.

Timing would be the key. Kahn said no tax would be due if Michigan hired Beilein, then paid the buyout. The contract doesn't specify when the buyout must be paid.

"There would be an agreement with West Virginia that the payment isn't made until after he is hired, until he's clearly an employee,'' Kahn said. "If an employer reimburses an employee for a business expense, it becomes a non-itemized deduction. Then it's above the line and there are no limitations on it.''

http://www.mgoblog.com/content/beilein-buyout

 

Nate-Dawg

July 9th, 2008 at 3:10 PM ^

If Austin Panter couldn't beat out John Thompson last year, hard to believe he's going to get much better. We've really fallen off with our linebacking. Yes linebacking. Maybe one of the freshman can step up, or maybe Mouton can pull that corncob out of his ass.