Wednesday, September 17, 2014

New study concludes that coaches are not overpaid: “Compare them to public company CEOs”

By Doug Samuels

September 2, 2014

An interesting piece yesterday by the New York Times took a look at a new study by researchers at Vanderbilt. The study dug up 947 coaching contracts from 2005 to 2013 and compared them to CEO’s at public companies and they concluded that, contrary to popular opinion, coaches are not overpaid when you look at the whole picture.

Randall S. Thomas, a law and business professor, and one of the authors of the study, notes that “coaches are running large programs that have tremendous value,” and added that coaching salaries compare “quite directly to public company C.E.O.s.” Look no further than the similar responsibilities, scope of influence, and overall demands of the job to see the direct correlation.

That’s an interesting comparison because, I have to imagine that in the court of public opinion, many people would say that CEOs are grossly overpaid.

Neil Cornrich, an agent who represents major college coaches like Bret Bielema, Bob Stoops, and Kirk Ferentz, told the NY Times (what the coaching profession sees as obvious) that coaches create value for a university, and that the value that they create is not difficult to quantify. Plus, when it comes to salaries, coaching is a lot of other professions, in that individual salaries are market-driven.

“There are very few people that are able to properly handle these jobs, particularly for a period of time, where it adds great value to the university.” Cornrich explained.
Guys like Nick Saban, Frank Beamer, Bob Stoops and Kirk Ferentz are great examples of that.

“If one believes that C.E.O. compensation is set by the market at an appropriate level, and that employment contracts reflect this equilibrium, then one should reach the same conclusion about football coaches.” Thomas went on to explain.

Take a look at some of the most recent incentives in coaching contracts and the parallel between coaches and CEOs is more and more clear. For example, take Rich Rod’s new deal at Arizona; back in June, Rodriguez signed a contract extension that included shares in an unnamed company, granted he stays in Tucson as the head coach of the ‘Cats for the next eight years.

On top of that, coaches nearly always have achievement based incentives, and the use of private helicopters and jets in their deal as well. In a lot of ways, the comparison between the two high profile jobs makes a lot of sense.

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