It's Enough Money To Buy The Damn State
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.)
4 millionth!
Sorry, had to. You gotta admit it's better than "first!".
This isn't going to cost RR much overall, in taxes or otherwise. UM has enough exemptions and tax lawyers to take care of the situation as cheaply as possible.
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:
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"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
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