Total Guaranteed Compensation
Harbaugh’s salary is only $500,000/year, which puts his salary in line with middle of the road coaches. That being said, he also gets paid $4,500,000 per year for agreeing engage in various other coaching duties like promotional activities, booster events, and radio. Basically, his “salary” really comes to $5M per year.
Further, Harbaugh gets a $2 million signing bonus, which, spread over the life of his contract, adds an additional several hundred thousand dollars per year.
After the third year, his total compensation get’s increased to 5.5 million, and after year 5 he will re-evaluate and, almost surely, get an enormous raise. He also gets an amount in deferred compensation, but it does not state the amount.
Potential Additional Income
Harbaugh gets $125,000 for getting into the Big Ten Championship, and an additional $125,000 for winning that game. If Michigan makes the playoffs, he gets $200,000, and an additional $500,000 for winning the National Championship.
Harbaugh gets $50K for winning the Big Ten Coach of the Year; an additional $25K for winning National Coach of the Year.
Although Harbaugh can keep the profits from his various football camps, he does not get to retain the compensation for television, radio, internet, apparel sponsorships, and/or endorsements. All of this compensation from these activities belong to the University of Michigan.
Perks
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.
Golden parachute: advantage
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.
Buy-out provision: advantage
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.
Academic concern:
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 their discretion.
Miscellaneous:
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.
Final Analysis:
In my analysis Harbaugh has one of the best employment contracts of any college college coach in the country. His guaranteed salary is very high, he gets good perks, and his contract gives him the basic ability to break it at anytime with impunity.