The college football coach carousel is in full swing and in this era of college football, each school competes in an arms race of sorts for not only the top players, but also the top football coaches. This blog post focuses on the modern era of a college football coaching contracts.
Penn State publicly released the Football Coach Term Sheet (the “Term Sheet”) with newly hired Head Football Coach, Matthew Campbell. A term sheet is generally agreed to prior to and incorporated within a coaching employment agreement. The actual employment agreement between the Pennsylvania State University and Matthew Campbell has not, and likely will not be released publicly.
However, the Term Sheet is interesting and provides some insight into the terms that are relevant for one of the most well-resourced football programs in the nation. The Term Sheet consists of eleven different concepts, which we will briefly analyze.
1. Initial Term: The “Initial Term” simply indicates how long the agreement lasts. In the Term Sheet, it is indicated as “[e]ight (8) years, commencing on December 8. 2025.”
2. Guaranteed Compensation: As noted in the Term Sheet, “’Guaranteed Compensation’ consists of base salary plus supplemental compensation.” Guaranteed Compensation typically consists of an allotted salary that a coach is entitled to receive, despite any other conditions that may arise (e.g., early termination, not reaching certain milestones, etc.). The Guaranteed Compensation structure of the Term Sheet is as follows:
- 2026: $8,000,000
- 2027: $8,250,000
- 2028: $8,500,000
- 2029: $9,000,000
- 2030: $9,000,000
- 2031: $9,250,000
- 2032: $9,250,000
- 2033: $9,250,000
3. Retention Bonus: A “Retention Bonus” is a sum of money that is paid, in this case in annual increments, on the condition that the coach remains employed in his capacity as head football coach with the university. A Retention Bonus is put into a contract to both reward a coach for remaining with a program, but also to discourage coaches from leaving. In the Term Sheet, the agreement is subject to a retention bonus of $1,000,000 per contract year.
4. Automatic Contract Extensions: The Term Sheet has built-in “Automatic Contract Extensions,” which subject to a triggered condition, prolong the term of the agreement. In this instance, there is an “[a]utomatic one-year extension for making the [College Football] Playoffs with a compensation increase of no less than an additional $500,000.” There is also an “[a]utomatic two-year extension for winning National Championship with a compensation increase of no less than additional $1,000,000.” This concept is in the contract to help ensure the continued relationship when and if the program is successful. It works to increase the compensation of the head football coach and ensure that he remains with the football program.
5. Compensation Guarantee: The Term Sheet involves a guarantee that if Penn State terminates Matt Campbell’s employment, they will pay 100% of the “Guaranteed Compensation” described above. Notably, it also states that this guarantee is “subject to Coach’s mitigation.” This means that there is an affirmative duty for a fired coach to seek other means of employment. If the fired coach finds other employment, there is an offset between the compensation owed by the new employer and the former employer. This mitigation provision is a means to protect the university.
6. Liquidated Damages: The Term Sheet also contemplates “Liquidated Damages.” This concept would be triggered in the event Matt Campbell leaves Penn State early and would be due to Penn State. These “Liquidated Damages” start high and taper off as the contract goes on. This structure discourages early movement while recognizing that mobility should increase as the contract ages. Because the “Liquidate Damages” becomes modest in later years, the practical effect is to tie the coach tightly for the first half of the Initial Term and allow more flexibility later. The Liquidated Damages in the Term Sheet are as follows:
- 2026: $10,000,000
- 2027: $8,000,000
- 2028: $6,000,000
- 2029: $4,000,000
- 2030: $2,000,000
- 2031: $1,000,000
- 2032: $1,000,000
- 2033: $1,000,000
7. Anticipated Buyout: The “Anticipated Buyout” provision contemplates what Penn State will contribute to Iowa State, effectively covering the Liquidated Damages that Matt Campbell owed his previous institution.
8. Perks: The Term Sheet includes perks of 55 hours per year of private jet service and provision of two (2) vehicles to Coach during the term of the Agreement. These terms are commonplace among high end college coaching contracts.
9. Incentive Bonuses: The Term Sheet includes several incentives tied to award recognition (e.g., coach of the year) and team performance (both conference and postseason based). These incentives reward the Coach for establishing and maintaining a good football program.
10. Academic Bonuses: The Term Sheet also includes several incentives to maintaining the university’s excellent academic standard by tying bonuses to grade point average (“GPA”) and graduation success rate (“GSR”).
11. Program Commitments: Finally, although the amount dedicated to each area is not disclosed, the Term Sheet contemplates the dedication to financing and provision of resources to the following:
- Staff Salary Pool – this provision represents the amount that the program will dedicate to all coaching, recruiting, operation, and other support staff.
- Player Compensation – this provision represents the funds available for NIL to recruit and retain players.
- Program Review to Ensure Appropriate Resources – this commitment likely encompasses a periodic auditing mechanism to ensure that the program remains competitive and sufficient to meet expectations.
- Head & Assistant Coach Recruiting Charter Budget – this commitment refers to the travel costs associated with the recruiting process for the coaching staff.
As evident, coaching contracts are extremely nuanced and involve concepts that affect various stakeholders. They are heavily negotiated instruments that capture a glimpse of the current landscape of the NCAA. Coaching contracts also reflect this balance between long-term commitment and hedging bets, understanding the volatility of the sports industry. By publishing the term sheet, Penn State has given the public a peak behind the proverbial curtain. However, without seeing the full contract, it is difficult to fully see how these concepts are fully integrated into the agreement. Nonetheless, this illustrative example of just one of many coaching contracts during this coaching cycle. As the NCAA evolves, so will the market. And we will be keeping a close eye on the changes.
For more information about coaching contracts and legal considerations related to NCAA, NIL, or sports generally, please contact Cameron Baker at cbaker@foxrothschild.com, Samuel Finkel at sfinkel@foxrothschild.com or any member of the firm’s Entertainment & Sports Law Department.