Is exorbitant college coach pay sustainable? Is it ethical?

Is exorbitant college coach pay sustainable? Is it ethical? | The Excerpt

Posted by Admin October 22, 2024 Football

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On Sunday’s episode of The Excerpt podcast: College football continues to explode in popularity and revenue and this means the salaries of top coaches are skyrocketing into the millions. Earlier this year, Georgia football coach Kirby Smart signed a new 10-year contract that will pay him $13 million per year through 2033, making him the highest paid collegiate coach in the nation. But is the expense justified? USA TODAY Sports Reporter Tom Schad joins The Excerpt to explain what defense universities have for justifying such extravagant paychecks.

Hit play on the player below to hear the podcast and follow along with the transcript beneath it. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.

Taylor Wilson:

Hello and welcome to The Excerpt, I’m Taylor Wilson. Today is Sunday, October 20th, 2024.

As college football continues to explode in popularity and revenue, the salaries of top coaches are skyrocketing into eight figures. Earlier this year, Georgia coach, Kirby Smart, signed a new 10-year contract that will pay him $13 million per year through 2033. This makes him the highest paid collegiate coach in the nation. And to put that in perspective, Coach Smart is making more than the CEO of Delta Air Lines and ranks 15th among CEO pay in the state of Georgia, but is the expense justified? Critics argue that these hefty paychecks can overshadow the educational mission of universities, strain financial resources, and create significant disparities within the academic community. There’s also growing debate about what these salaries should look like in an era where student athletes are beginning to receive forms of compensation.

USA Today Sports has been examining these huge salaries in a special series, and here to delve into the financial and ethical implications of high paid coaches is USA Today Sports reporter, Tom Schad. Tom, I thank you for sitting down with me today.

Tom Schad:

Yeah, no, appreciate you having me.

Taylor Wilson:

So Tom, let’s just start with some perspective for anyone coming into this maybe with fresh ears, when did college coaches really start earning millions and millions of dollars and why did universities decide to pay so much for these coaches?

Tom Schad:

So there are lots of layers to that question. It’s interesting, the context really here is just depending on the time, because we actually reported on USA Today all the way back in 1986, and there was some pretty breathless language in the story about how coaches were making hundreds of thousands of dollars to coach football. Now obviously that seems laughable now 35, 40 years later, but this is something that’s been going on in the industry for a long, long time.

So we started tracking coaches’ salaries on an annual basis in 2006, and in that year the highest paid coach was Bob Stoops at 3 million, this year, it’s Kirby Smart, as you mentioned, at 13 million. So the salaries have gone up, but in terms of the exorbitance, this has always kind of been a thing. Coaches have, especially at these high-powered college football programs, always been viewed almost as CEOs in the way that they’re forced to delegate and manage a program, deal with all of kind of the external stuff in terms of imaging and marketing and PR. And so this is something that’s been going on for a long time, and while we’ve seen the numbers increase, I guess, this idea of a coach making an exorbitant salary has been around for decades.

Taylor Wilson:

So we mentioned Kirby Smart and this massive contract. How unique are these figures to football, Tom, and how do the other sports compare?

Tom Schad:

So it’s all based on the revenue that these programs bring in, right? And so historically, and especially right now, most of that revenue is concentrated in men’s basketball and football. And so you see some kind of approximate close salaries in basketball. Some of the top paid coaches there are making maybe 6, 7, 8 million a year, but football is really its own beast. You don’t see any other collegiate sport where the coach is making north of $10 million a year as they are in football. So I wouldn’t say it’s unique to football, you see some of it in men’s basketball, but it’s a pretty rare phenomenon, at least in college sports.

Taylor Wilson:

Tom, first and foremost, colleges and universities are institutions for education ostensibly. Already it takes millions of dollars to run quality academic and research programs, and most university staff are not making anywhere near what these coaches are. How do these high salaries for athletic programs and coaches impact the primary educational mission of universities, and really how are the schools justifying the cost?

Tom Schad:

So originally if you were to go back again maybe to something like 1986, a lot of these sports programs were funded through the university, and that was kind of always the intent, more or less like a high school program getting funding from the school district. How it’s evolved over the years is basically into its own mini operation. And so while a lot of these athletic departments and football programs in particular do get subsidies from the university, in a lot of cases, it’s completely self-funded. So you have essentially donors that are making donations just to the football program. You have 501(c)(3) nonprofit organizations that are kind of adjacent to the athletic department that are bringing in donations.

And so in terms of how it interacts with the university, it varies from school to school, and there are schools where the athletic department is dependent upon some of their revenue from the school. But when you’re talking about your Alabamas and your Texases and your Georgias, that money is being funded almost exclusively through athletics. It’s like a self-sustaining thing. And a lot of that comes from TV revenue through the conference.

In the Southeastern Conference, for example, television deals for millions if not a billion dollars, that money is then funneled down to the individual schools and the individual athletic programs. And so a lot of it in terms of imaging does not look great because, like you said, you have professors who are making maybe low six figures compared to an assistant coach on the football team who’s making several times that, but they are, in most cases, coming from separate pots of money, if that makes sense.

Taylor Wilson:

It does. So Tom, this is clearly a new landscape for college sports where student athletes are now able to monetize in some ways. Can you refresh our listeners on where things stand in terms of college athletes being compensated, and how has this changed the equation?

Tom Schad:

A lot has changed really since the COVID pandemic, in the past couple of years. I think it was two or three years ago, the NCA started enabling or allowing in part because state laws require them to, enabling players to profit off of their own name, image, and likeness rights. So essentially, if you had a player on a college football team, he could go to the local grocery store and sign an endorsement deal and receive money in exchange for his or her endorsement.

The next kind of phase of that is something that we’re seeing that’s kind of being worked through right now, which is schools paying players directly for participating on the team. Now what that looks like or will look like could be a wide range of issues, but the most likely scenario at this point is stemming from this house settlement in which basically a bunch of lawyers are trying to settle some antitrust lawsuits that have been brought against the NCAA. And the solution is essentially to allow schools to pay athletes from a pool of money that’s capped at a certain amount each year, and athletes have an option to basically opt into this pool or opt out, but in a lot of cases, it will result in money directly going from the school to the player.

So obviously that does have a factor in some of the budgeting, but again, a lot of that money is still coming, like we talked about, it’s still coming from external boosters. So even if an Alabama quarterback is making a $100,000 a year to play quarterback, more often than not, that money’s going to be coming from an outside booster than it is from school revenue.

Taylor Wilson:

Tom, you touched on this a little bit earlier, but in what ways do you think the public perceives these high salaries of college football coaches, and what impact might that have on certain universities’ reputations? I would imagine, I’m a college football fan, I’m used to some of these numbers, but I’d imagine this perception might be a little different inside and outside college football.

Tom Schad:

It truly depends on the perspective at which you’re looking at this issue, right? So if you are a professor at a university and you’re busting your butt trying to get a test together and you’re overworked and whatever, you’re probably furious that some football coach is making several multiples of what you’re making. Ditto for students. If you’re a student in a lot of cases and you don’t care about football, you can look at that and say, well, why aren’t those donors directing money towards the science program or the math department or any other kind of things within the university?

If you’re a football fan though, it all kind of makes sense, and I think that there are lots of people who are sports fans who have just come to accept this as the norm and have come to view high-powered college football as pretty much either a minor leagues or similar to the NFL. I mean, a lot of these coaching salaries are now on par or competitive with what pro coaches are being paid.

You saw multiple coaches from the college ranks, Jim Harbaugh being the biggest one obviously, going directly from college to the NFL and not a huge kind of difference in salary. So yeah, it really just depends on your perspective.

And there are also a lot of people in university leadership who view these football programs as, it’s kind of cliche, but the front door to the university. You might have students who apply to the University of Alabama because they are Alabama football fans or they watch Nick Saban lead them to a national championship or what have you. Ditto for Kirby Smart. And so there are university administrators who look at these salaries and say, “Yeah, well, but if it’s bringing in X amount in television revenue and it’s putting Georgia or Alabama or Ohio State on a national or international stage, then it’s all kind of worth it.”

Taylor Wilson:

A fascinating aspect of this, Tom, is the cost of firing a college football coach. The way these contracts are structured, this is a difficult and expensive thing to do. For example, last year Texas A&M paid $77 million to fire their coach, Jimbo Fisher. What in the world is going on with these astronomical buyouts?

Tom Schad:

It’s a great question, and this is one of the most curious aspects, at least for me personally, of the coaching business. It’s not that Kirby Smart has a $13 million salary, which you can argue is exorbitant or you can argue is worthwhile, it’s that if you were to be fired without cause on December 1st, which in fairness is very unlikely, you would be owed as much as $118 million to not work for the Georgia football program, right?

And so it’s essentially become this kind of golden parachute situation. And we’ve seen it in the CEO ranks where some high-powered CEO of a Fortune 500 company will leave and they’ll get millions of dollars as they go out the door. We’re seeing something similar in the college football ranks. And the reason for it is, one, the leverage that coaches and agents have been able to have through search processes, kind of their magnitude and the way that they’ve been able to essentially bully schools in a lot of cases into giving them more concessions during negotiations, but also the turnover that we’ve seen among coaches.

Firings like Jimbo Fisher’s are not uncommon anymore. It’s kind of unusual at this point for a coach to last 5, 6, 7 years with the same school. And so coaches are putting more of an emphasis on these buyouts basically to try to dissuade the school or make it more difficult for the school to try to get rid of them. But it’s still interesting that we’ve seen kind of the growth of these buyouts and, in a lot of cases, guaranteed buyouts that we have. And then also interesting that we’ve seen schools actually pay them out, like Jimbo Fisher’s. There was a time where $77 million was thought to have made a coach like Jimbo Fisher unfireable. Well, that’s not the case anymore.

Taylor Wilson:

That’s a great point. So we’re clearly in this new era of college football. We mentioned some of the player pay stuff earlier and these massive salaries. We have an expanded college football playoff. It’s just a new era for the sport in a lot of ways, Tom. Do you believe the current model of paying college football coaches these salaries at this level is really sustainable in the long term?

Tom Schad:

It might surprise some people, but I think, yeah, I think it is. There is an ethical component in terms of what should a coach be paid, right? But I think if you’re talking practically what is going to happen or what is the market going to demand, I think yeah, you’re just going to see these salaries continue to go up. As long as there’s still money flowing in and as long as schools like Georgia and Ohio State and Texas are seeing these huge paydays from participating in the new college football playoff or participating in a big bowl game, I think that you’re going to continue to see these donors cough up more and more money to keep their coach.

It is, I think, kind of rational, and it’s a byproduct of the market. There’s also a sort of irrational side of sports, and you’re always going to have these kind of super wealthy donors who want to see Alabama do well, want to see Georgia do well. As weird as it might seem, instead of donating money to a political candidate, they’d rather spend some money to keep Kirby Smart at Georgia or Steve Sarkisian at Texas. So it’s a very long-winded way of answering your question, but yeah, I don’t think this is going to stop anytime soon.

Taylor Wilson:

All right, Tom Schad is a reporter for USA Today Sports. Great insight and breakdown for us, and I appreciate the time, Tom. Thanks so much.

Tom Schad:

Thank you.

Taylor Wilson:

Thanks to our senior producers, Shannon Rae Green and Kaely Monahan for their production assistance. Our executive producer is Laura Beatty.

Let us know what you think of this episode by sending a note to podcasts@usatoday.com. Thanks for listening. I’m Taylor Wilson, and I’ll be back tomorrow morning with another episode of The Excerpt.