Former head coach Rich Rodriguez has settled his dispute with West Virginia University over the $4M buyout clause in his contract. West Virginia made great concessions, allowing Rich Rodriguez to pay $1.5M over three years, rather than RIGHT F*!@ING NOW like the contract required, with Michigan kicking in the remaining $2.5M. A great victory indeed for LessRichRod and the Maize and Blue.
"Hey, look what I just pulled out of my ass!"
Who could have forseen that they'd pony up the whole $4M? Oh yeah, us.
--Rich Rodriguez "Disappointed", "Upset" by WVU Suit (Jan. 2, 2008)
--Rich Rodriguez? The Governor Is on Line Four (Jan. 30, 2008)
For those curious, Rodriguez's contract with Michigan reported pays him $2.5M per year. Take out taxes and the $500,000 he's paying annually to WVU, and it's a big hurting.
Oh, and Rich had better f-ing believe that the IRS is waiting patiently to make sure Rich claims the $2.5M Michigan is paying on his behalf as income. He's going to owe money on the year. I suppose I should be more clear. I'm not saying he won't get a refund. I'm saying he'll owe so much in taxes on $2.5M (salary) AND $2.5M (Michigan-paid penalty) that he might actually be in the red for the year. He'll owe somewhere around $1.5M to $1.75M on that income, depending on his deductions, in addition to whatever he owes the liberal state of Michigan (3.9% of federal tax income).
Don't believe me on the tax mumbo jumbo? Check out this article (free registration to retrieve full text article) written for the Florida Tax Review analyzing a similar buyout payment situation...with purloined-Mountaineer-turned-Michigan-basketball coach John Beilein. They said:
Beilein’s buyout obligation arose out of his employment relationship with West Virginia University. It is his personal obligation. There is considerable authority that an employer’s payment of an employee’s personal obligation constitutes gross income to the employee. It is very likely, therefore, that the Service would contend that the new employer’s payment of the buyout obligation is additional compensation to the employee and taxable to him. (internal citations ommitted).
The authors go on to cite a few ways in which Beilein might be able to deduct the "compensation", but I disagree with all of them, though Brien would argue that a buy-out in a college coaching contract is just about as close as you can come to an "ordinary and necessary" business expense these days.
So much for taking the money and running. What percentage, exactly, of Michigan alumni donations to the athletics department covers damages?
7 Responses:
A couple Michigan fans are pissed that he (or the University) put us through this, but most fans are just glad its over, we don't have to hear about it anymore, and it won't drag into the season. And I don't think anyone is too worried about how Michigan will come up with 2.5 million or how RichRod will pay 1.5 million (starting in 2010 by the way). We can move on to football matters, like who is QB.
I think if you ask 100 Michigan fans what they are more concerned with - RichRod buyout drama or who the QB will be, 99 will say the QB.
You won't hear about the buyout. You're going to be hearing about RichRod all season. If he doesn't live up to expectations (Rose Bowl berth+), everyone is going to wonder why their donations to the athletics department were used to fund WVU's program.
Actually, I fully expect a couple breach of contract lawsuits from pissed off donors who feel robbed that their donations were redirected to pay someone else's legal liabilities, especially to another school.
J-Red, I can't follow you sometimes.
"You won't hear about the buyout."
Next sentence: "...everyone is going to wonder why their donations to the athletics department were used to fund WVU's program."
That relates directly to the buyout.
Furthermore, almost no one is truly expecting a Rose Bowl berth this year. Hoping, yes. Expecting, no.
You are right, though, that a lot rides on the success and failure of RR as a coach (you know, wins and losses). So if he wins, this will all be basically forgotten/forgiven. If he loses a lot, then people will revisit this.
I can't wait for RichRod to be exposed as the dreadful football coach that he is. Sure, it's easy to win when you play in a horrible conference and when you pretty much luck into a player like Steve Slaton. Not so easy to compete in the Big 10. Has RichRod EVER won a truly meaningful game? I don't think so.
I meant "you won't hear about the buyout" in the same sense big tuna ment "most fans are glad it's over". You won't hear about the buyout lawsuit between WVU and RichRod. You'll hear plenty about the effects of the buyout, especially if things don't go well or Michigan has the audacity to plead poverty in the next fundraising cycle.
J-Red: Okay, understood, except that I'm not anticipating a lot of backfire on the decision to pay the buyout if RR is a winner at UM. If he's a loser, of course there will be. But if there weren't a buyout to grouse about, people would find something else to complain about.
And Jeremy, I am not crowning RR king of the football world and I am prepared for the possibility of failure, but I am amused to see you give him zero credit for having built the team that beat Oklahoma in the BCS, actually coaching the team that beat UGA a couple years ago in the BCS, and no credit for "lucking" into Steve Slaton (I guess Gary Williams lucked into Juan Dixon...oh right, I forgot, you all do hate Gary Williams).
And you've got to be the only person outside Michigan and Ohio who thinks the Big Ten is a good conference.
A couple of us are still with Gary, we're just watching closely to make sure he looks like he's fully into it.
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