Will your coach's next contract include equity?
- by Zach Barnett 1 month ago
Over the last two decades, Rich Rodriguez has played a major role in reshaping the way college football is played and coached by shaping, molding and popularizing the zone read offense as the head coach at Glenville State, the offensive coordinator at Tulane and Clemson, and then as the head coach at West Virginia and Michigan. On Wednesday, the now-Arizona head coach may have played a part in changing the way coaches and athletics directors are compensated.
Earlier this week, Arizona announced contracts extensions for athletics director Greg Byrne, Rodriguez and men's basketball coach Sean Miller. The compensation packages are close to the median of those respective professions, but Arizona has put its most important athletic department figures in position to potentially obtain generational wealth thanks to a clause that awards shares in an unnamed company that will come into their possession should each man remain in his current position for the next eight years. An anonymous Arizona booster has gifted a piece of a master limited partnership totaling 500,000 shares - 175,000 each for Rodriguez and Miller, 100,000 for Byrne and 50,000 for the university - presently valued at $35.36 apiece. (Worth noting: The company is not a mystery to Rodriguez and company. It must remain anonymous only until the contract is approved.)
Should the shares retain their current value - and this is the big bet about the stock market, after all - Rodriguez would be eligible for a lump sum payment of $6.188 million in 2022. Should the stock price double over the next eight years, Rodriguez's shares would be valued at $12.376 million. All this, of course, is in addition to his regular salary and bonus package.
Rodriguez could, in theory, be among the wealthiest coaches in college football - with only a small portion of that wealth coming from Arizona's athletic budget.
In talking with both coaches and agents within college football, there is no question how massive this contract clause could be within the profession. The word "game-changer" was used by multiple sources. It is impossible to overstate the proverbial eyebrow raise this news caused among college football's top-tier coaching ranks.
If Auburn wants to reward Gus Malzahn and fend him off from NFL suitors, Auburn alum and Apple CEO Tim Cook could dangle a slice of the world's most valuable company to keep Malzahn on the Plains. Had Texas been in search of a new coach following the 2014 season instead of 2013, it's possible - likely, even - the Longhorns would have placed a call to Texas graduate and Exxon CEO Rex Tillerson in hopes of sweetening the deal for its desired target.
Prominent mega-fans - Kevin Plank at Maryland, T. Boone Pickens at Oklahoma State, Phil Knight at Oregon - now hold more power to shape their favorite programs than ever. Stanford, a private university with the reputation of paying coaches somewhat below their conference counterparts and an army of tech billionaires tied to the school - think Google co-founders and Stanford graduates Sergey Brin and Larry Page just to name two - stands to benefit from this more than anyone. Most major universities have at least one alum in position to offer a similar clause. Those that don't are poised to fall further behind than they already are.
Many companies offer stock options that vest over time (similar to the Arizona trio's contracts) to incentivize key employees to remain with the company. We could soon see schools do the same with highly-targeted assistants as well. Could Michigan give Doug Nussmeier a stake in Domino's to keep him in Ann Arbor longer than a year? Would Jeremy Pruitt still be at Florida State with the right options package?
It's likely that Arizona is not the first school to procure such a sweetheart deal for its key personnel, but they are the first to put a clause in a publicly-available contract. The Wildcats have given the rest of the coaching world a precedent to cite in the next round of their own contract negotiations.
An ownership stake in our mystery company through these master limited partnerships has given Arizona a leg up in keeping Byrne, Rodriguez and Miller in Tucson. Arizona does not have the deep pockets than many of its competitors do, which is part of the reason it pledged such a revolutionary clause into these new extensions in the first place. But the Wildcats do not have an exclusive ability to dangle such a carrot in front of coaches, and may in fact see its own tactic used against it. For example, Miller must stay at Tucson for eight full years before his 175,000 shares actually become his. What's to stop another school in search of one of the best program builders in college basketball a larger piece in a more valuable company, and make it available to as a signing bonus?
Arizona wanted to keep its highly-valuable talent locked down, and created an ingenious tactic in hopes of doing just that. But in the process, the Wildcats may have just reset the market.