Jim Harbaugh and Urban Meyer represent two of the most popular football coaches in college today. We all know about their strengths and weaknesses – we can dissect wins and losses. But who has the better employment contract? Although Meyer’s team recently pasted Michigan on the football field, does Meyer’s employment contract also dominate over Harbaugh’s?
Isn’t that all that really matters? In an incredibly unscientific manner, I will discuss six aspects of their contract, and declare a winner.
A. Total Guaranteed Compensation
Harbaugh: Harbaugh’s salary is “only” $500,000/year, which actually puts his salary in line with other middle-of-the road coaches. That being said, he also gets a measly $4,500,000 per year for agreeing engage in various other coaching duties like promotional activities, booster events, and radio. Basically, his salary comes in at 5 million dollars a year.
Plus, Harbaugh got a $2 million signing bonus, which, spread over the life of his contract, adds an additional several hundred thousand dollars per year.
As an added bonus, after his third year at UM his total compensation will be increased to 5.5 million. After year 5 he will re-evaluate and, almost surely, get an enormous raise. He also gets an amount in deferred compensation, but the contract does not state the amount (but makes up his weekly pleated khaki budget).
Meyer: Meyer gets $700,000 per year base salary, plus an additional $1.8 million for agreeing to engage in various other coaching duties (promotional activities, booster events, and radio). He also brings home an additional $1.4 million for the apparel contract with Nike, $10,000 for doing a promotional day with Coca-Cola, and $50,000 to his deferred compensation plan. Finally, since he’s probably struggling to pay his utility bill, he gets retention bonuses of roughly $400,000 per year.
Per year, Harbaugh’s salary comes to ~$5 million, plus several additional hundred thousand dollars for the lifetime value of his signing bonus. Meyer’s contract comes to a little more than $4.5 million.
B. Potential Additional Income
Harbaugh: If Michigan does well, Harbaugh does well. He’ll get $125,000 for getting into the Big Ten Championship, and an additional $125,000 for winning that game. If Michigan makes the playoffs, Harbaugh gets $200,000, and an additional $500,000 for winning the National Championship.
If Harbaugh wins Big Ten Coach of the Year, he’ll bring home $50K; and an additional $25K for winning National Coach of the Year.
Finally, Harbaugh can pocket the profits from his various football camps. He does not, however, get to keep the compensation for television, radio, Internet, apparel sponsorships, and/or endorsements. All of this compensation from these activities belongs to the University of Michigan.
Meyer: Meyer gets $50,000 for making the Big 10 Championship Game, and $100,000 plus an additional year of the contract if OSU wins the Big 10 Championship Game. If Meyer makes a bowl game, he gets $150,000, if he makes the playoffs he gets an additional $200,000, and if he makes the finals, he gets an additional $250,000.
Similar to Harbaugh, Meyer can keep the profits from his various football camps, but does not get retain the compensation for television, radio, Internet, apparel sponsorships, and/or endorsements. All of this compensation from these activities belong to the Ohio State University.
Analysis: If Harbaugh makes the BCS Championship game and wins, he gets an additional $700,000. If, on the other hand, he gets to the BCS Championship game but loses, he only gets and $200,000. If Meyer gets to the BCS Championship game, he gets $450,000 regardless of whether he wins or loses.
That being said, Harbaugh gets additional compensation for being coach of the year (Meyer doesn’t), and substantially more money for getting to the Big 10 Championship Game, and for winning it.
Harbaugh: In addition to normal perks (two cars, moving expenses, normal benefits), he gets a suite for home games, along with 16 additional tickets, a private jet for recruiting purposes, first-class tickets for all other business-related travel, and 25 hours of private jet use for personal use.
Meyer: In additional to the normal perks (two cars, moving expenses, normal benefits), he gets a suite for home games along with 12 additional tickets, two tickets to each home basketball game, a private jet for any Ohio-State activities beyond 200 miles from Columbus and all recruiting activities (up to a max of 50), and 35 hours of private jet use for personal use. OSU will assist him in raising money for the Shelley and Urban Meyer Foundation, and provide him with a golf membership.
Analysis: The perks are similar, although Meyer gets a few more personal hours in the private jet, a golf membership, and help with his personal charity.
D. Golden Parachute
Harbaugh: On paper, it will be very expensive to fire Harbaugh. If they fire him without cause, Michigan will have to pay him the entirety of his contract minus any amount he earns from another job. In other words, it’s basically a fully-guaranteed contract, and UM will make up the difference between what he is owed on his contract and whatever he is paid by his subsequent employer.
Meyer: And it won’t be cheap for Ohio State to fire Urban Meyer. If OSU fires Urban Meyer in 2015, they will owe him $8,683,244, if they fire him in 2016, they will owe him $5,618,634, and if they fire him in 2017, they will owe him $2,727,492. Unlike Harbaugh’s contract, Meyer will get this money even if he finds another job.
Analysis: As a practical matter, if either Harbaugh or Meyer get fired in the next few years (admittedly, it is hard to imagine), either of them will likely be able to choose their next destination, and obtain a lucrative contract. For this reason, since Harbuagh only gets paid the difference between the UM contract and his next job, it is unlikely that UM will have to pay him anything in the event of a termination. For Urban Meyer, though, he can keep his severance payment even if he takes another lucrative job.
E. Buy-out Provision
Harbaugh: If Harbaugh resigns prior to his 4th year, he would owe UM a pro-rata portion of his $2m signing bonus. If he leaves after year 4, he doesn’t owe UM a thing. Provides himself incredible flexibility here.
Meyer: If Meyer leaves and works as another coach or commentator within one year of his leaving OSU, he will owe OSU $2 million. Further, he agrees not to recruit any recruit he was targeting while at OSU for one year unless his works as a coach at a new school and the new school has already contacted that recruit.
Analysis: Harbaugh has to pay nothing if he leaves after the 4th year and immediately coaches another team. Meyer would have to pay $2 million.
F. Academic Concern
Harbaugh: UM pays lip service to his academic mission. If the football team achieves an APR of 960 or higher he may receive an additional compensation not to exceed $150,000. For some reason, the University was not willing to promise this bonus, but leaves it up to the discretion of the University.
Meyer: $50,000 for a GPA of 3.0, $100,000 for a GPA of 3.3, and $150,000 for a GPA of 3.5.
Analysis: OSU promises a smaller bonus unless Meyer gets his students to average a 3.5; Michigan implies a larger bonus but it is apparently not guaranteed.
Harbaugh: UM agrees to indemnify Harbaugh (that is, pay for his attorneys’ fees and any judgment or settlement) to the tune of $5 million. Clearly, this is something that worried Harbaugh, and the fact that he got UM to agree to pay for this possibility is a nice provision for him that will surely help him sleep at night.
Meyer: Meyer’s agreement is more flexible with allowing him to obtain additional compensation. Whereas Harbaugh’s contract does not allow Harbaugh to use the Michigan name and trademark for outside, additional revenue (commercials), OSU implies that Meyer can, with written prior approval, use the OSU trademark and brand for outside endorsement and commercials.
Harbaugh’s contract allows him to get additional money (both guaranteed and possible bonuses), while Meyer gets a little better perks and a much better golden parachute in the event that OSU terminates Meyer.
That being said, the chance that Michigan or OSU fire Harbaugh or Meyer seems so incredibly remote, that it is almost impossible to see this “golden parachute” provision have any relevance.
What is much more likely is that either Harbaugh or Meyer would want to jump to the NFL, and in this case Harbaugh’s contract is much better, as it would allow him to do this with relative impunity whereas Meyer would have to pay $2 million.
The additional compensation along with the flexibility means, in my opinion, that Harbaugh as the better employment contract. So despite losing in 2015 to Ohio State, from an employment perspective, Harbaugh is the winner.