Thursday, December 12, 2013


The University of Texas is trying to hire University of Alabama head football coach Nick Saban.

On many levels, I don't care. UT fans are often (not always) arrogant and annoying, and they're all around me in Austin. They have so much money that they're the New York Yankees of football, with every conceivable advantage against other schools. And college athletics, at least in the big revenue sports, is a complete cesspool.

On one level, though, this is very, very interesting.

Here's how compensation basically works for college coaches. They get a salary, there's a bonus structure for bowl games/conference championships/national championships etc. Plus coaches do endorsements, summer camps, etc.

With this framework for compensation, competing for coaches is a fairly straightforward combination of salary/bonus and contract length. And since college football programs are pretty easily broken into tiers, there's a top tier of jobs that compensate the most.

In this environment, a coach never leaves a tier one job for a tier job. If they get fired, they might wind up at a tier two school, but they're never going to move to a lower tier while they're successful.

In the near future, though, I think this is going to get all shook up, so to speak.

In the next few years, some university is going to offer a college football (or basketball) coach both salary/bonus and a percentage of revenue. It's inevitable.

Let's look at an example.

Coach Satan is tempted by an offer from University X. His current university, though, says that they'll match any offer he receives from University X, so why change? Then University X says "Our current attendance average is 75,000. We'll give you 10% of the incremental stadium revenue (ticket sales, parking, concessions) if the average attendance exceeds 75,000."

The actual percentage and the details, though, are relatively unimportant. What matters is that the concept of a coach getting a percentage is accepted. It's not unlike when ESPN started charging cable providers per sub. At first, it was just pennies per sub. What mattered, though, is that it was the first time a channel was compensated in an additional way beyond advertising revenue. It was revolutionary, and in the last twenty five years, that fee per subscriber has gone from a penny to roughly five dollars.

If you think head coach compensation is out of control now, just wait.

Site Meter