Math is hard. Contracts are hard. Lawyer jargon is downright ridiculous. All are involved when trying to evaluate a coaching contracts and the potential buyout. That has been a hot discussion among WVU fans lately.... apparently. It was brought to my attention via our members on the message board that there were several conflicting stories out there about the buyout - what it was, what it is, how it's changed, etc. And, finally, saltydog8159 put it plainly in our VIP Mailbag:
The truth about the Buyout as of today and how it works throughout the contract
Easy enough. Maybe. Let's break down what the contract is, and what it was, and what it could be depending on what WVU does (or doesn't do) moving forward.
The first thing that needs clearing up....
Contracts are paid out on a biweekly or twice-monthly basis, just like most people are paid with any other job in the country. If a coach is making $4 million over twelve months, then he has already received $3 million of that by the time you get through nine months of the year. That will be important later.
The second thing that needs clearing up....
The old contract had a deadline where the buyout percentage decreased. The new extension eliminated that, and the buyout percentage is the same no matter when Neal Brown would hypothetically be fired. That will also be important later.
The old contract
Under the old contract, the term ran through the end of the 2026 season, there were salaries of $4.1 million, $4.2 million and $4.4 million in 2024, 2025, and 2026, respectively. If Brown was fired on or before 12/31/2024, then he would receive 100% of his remaining salary. If he was fired after that date, then the percentage dropped down to 85%.
The new contract
Under the new extension, the term runs through the end of the 2027 season, with salaries of $4 million in 2024 and 2025, $4.3 million in 2026, and $4.4 million in 2027, adding an extra year and shifting money around. The buyout is 75% of the remaining salarywhether Brown is fired tomorrow or two years from now.
The Math
Again,when a coach is fired is important to the math here, even if there is no deadline like the old contract. The reason is that the buyout would be the prorated portion of the current year's salary. The buyout number will be different if Brown is fired in September as opposed to November, although those numbers will be, quite frankly, insignificant in the grand scheme of things.
That being said, let's look at a couple hypothetical situations. First, what if Neal Brown is fired at the end of September (giving us a clear 3/4 of the calendar year for 3/4 of a salary)?
Old Contract -100% of the remainder of his 2024 salary ($1.03 million) plus 100% of both 2025 ($4.2) and 2026 ($4.4) for a grand total of $9.63 million
New Contract -75% of his remaining 2024 salary ($1.00 million) plus 75% of the remaining three years ($4+4.3+4.4 for a total of $12.7). Seventy-five percent of that number ($13.7) comes out to a grand total of $10.275 million.
Result? With the new extension, WVU is paying out $645,000 more to Brown if they fire him at the end of this month than they would have under the old deal.
Okay, let's now go to Brown being fired at the end of the season. All money paid this year is a sunk cost, done and gone. So we're just looking at future salaries. In that scenario, WVU would have paid $8.6 million (100% of his remaining contract) under the old deal, but will pay $9.525 (75% of $12.7 million) under the new deal, which equals $925,000 more. Take away $100,00 because of the savings in salary, and your true difference is $825,000.
Let's say WVU pulls a reverse-Dana and waits until January 1st to make their move, prompting the 85% trigger in the old deal. That would have saved WVU $1.3 million on the old deal, bringing the buyout down to $7.31 million..... while it would still remain $9.525 under the new deal.
How about the ship gets righted, WVU finishes 8-4 on the season, and they ride it out for one more year, but things go horribly in 2025? WVU moves on after the 2025 season. That would mean Brown got his salary for all of 2025, then the buyout for beyond that. In the old deal, that would be a total of $7.94 million ($4.2 million in salary plus $3.74 million in buyout), while the new extension would have paid him $10.525 million ($4 million salary plus $6.525 million in buyout). That's a difference of $2.585 million - saving $200,000 in salary, but paying $2.785 million more in buyout.
The result
No matter when WVU hypothetically fires Neal Brown, the University would be on the hook formore in buyout money now than they were under the old contract. And the difference only gets greater with time, as the examples we just gave saw the contrast go from $645,000 to $2.585 million.
The salaries get slightly lower, which is a positive, especially in the early parts of the deal. The Athletic Department also spread the payments out over more time, as the contract states that"The Severance Benefit shall be paid by the University in regular bi-weekly installments.... through the Termination Date."
The previous contract had similar language, but the term sheet was shorter. Once you start getting into present value of money, alternative investment opportunities, etc etc etc..... there's an argument for "I'd rather pay $9.525 million over three years than $8.6 million over two years." Of course, the margin for that argument gets thinner the more the gap grows between the two scenarios.