Power 5 football buyouts reached second-highest total ever in FY22
The 52 public Power 5 institutions reported spending a combined $90.6 million in football severance payments in the 2021-22 fiscal year, which ended June 30, 2022. It’s the second-highest total – both reported by schools and adjusted for inflation – in the sport’s history, behind only the $98.8 million that the group of schools reported spending in the 2018 fiscal year.
When adjusted for inflation, $98.8 million in June 2018 would’ve equated to more than $116 million in June 2022, according to the U.S. Bureau of Labor Statistics CPI Inflation Calculator.
On3 obtained the latest NCAA Membership Financial Reporting System report for every public Power 5 school through public records requests or schools made available on their athletic department website. The reports list each athletic department’s annual revenues and expenses.
Private institutions are exempt from public records requests.
The 52 public Power 5 schools spent an average of $1.7 million on football-related severance payments in the 2021-22 fiscal year. An institution owes severance pay to an employee following without-cause termination of employment. Buyouts are contractually agreed upon, often based on the amount of number of years remaining in the contract term when an institution terminates a coach’s employment.
Washington reported spending $17,039,928 on football buyouts between July 1, 2021 and June 30, 2022. Florida reported spending almost $15.3 million, Virginia Tech reported $10.0 million, Texas reported $8.2 million and Auburn reported $7.8 million.
Washington’s total was the second-highest reported single-season, football-related severance expense ever from a public school, behind only Florida State‘s $18.4 million from the 2019-20 fiscal year.
More schools are spending more on football buyouts
In the 2021-22 fiscal year, a record 14 public Power 5 schools reported spending at least $1 million on football severance payments. The previous record was 13 schools, which was set in the 2020-21 fiscal year.
Sixteen of the 52 schools, or almost 31%, didn’t report any football-related severance payments last fiscal year. That figure was 44% in the 2018 fiscal year and 42% in 2019. Since the 2005 fiscal year, there has been a trend of more schools spending more money on football buyouts and fewer schools that spend nothing on severance payments.
In the mid-aughts, for example, roughly two-thirds of public Power 5 schools whose financial report is available didn’t report any football-related severance payments. The highest single-year football buyout totals on an annual basis were roughly $3 million.
Florida reported spending $2.7 million in the 2005 fiscal year, which when adjusted for inflation from June 2005 to June 2022 would equate to $4.1 million. Colorado reported spending $3 million in the 2006 fiscal year. Arizona State reported spending almost $3.4 million in the 2007 fiscal year.
Current factors in college athletics landscape
The increase in spending on coaching buyouts in the last five to 10 years is especially notable when considering the current legal and judicial landscape, such as California Assembly Bill 252, which the California Assembly Higher Education Committee approved in April and sent to the Appropriations Committee.
If passed, the bill, which is known as the California Athlete Protection Act, would grant athletes numerous rights, including those who play the highest revenue-producing sports the ability to earn up to $25,000 annually in degree completion funds. Some of those athletes who graduate from a California institution could earn additional revenue based on the remaining funds available through a formula that subtracts the value of athletic scholarships from half of an athletic program’s revenue, then dividing that amount by the number of scholarships a program offers.
Any significant form of revenue sharing could force athletic departments to change their spending habits when it comes to coaches, support staff and facilities. In the 2022 fiscal year, coaching salaries, benefits and bonuses, and buyouts, for the 52 public Power 5 schools totaled $1.5 billion, or more than 21% of the schools’ $7.1 billion in total reported expenses.
When also including support staff, those itemized expenses make up almost 39% of all expenses.
In a zero-sum game of competing nonprofit institutions whose athletic departments are incentivized to spend every dollar they raise or receive while compensation for athletes is limited to athletic student aid, cost-of-attendance stipends and Alston awards, roughly 40% of Power 5 athletic department expenses are spent on coaches and support staff.
Sports Business Journal reported that last week CAA co-head of football and head of CAA coaches Jimmy Sexton, who has represented college football coaches such as Nick Saban, Kirby Smart and Jimbo Fisher, filed a declaration against class certification in House v. NCAA of behalf of the NCAA and the conferences that are defendants.
The plaintiffs, who include former Arizona State swimmer Grant House, Oregon-to-TCU transfer Sedona Prince and former Illinois football player Tymir Oliver, are seeking name, image and likeness revenue they believe they would’ve previously earned under the NCAA’s current interim NIL policy. They’re also seeking a share of TV revenue. In the event the plaintiffs win a certified class-action, antitrust lawsuit, the case could potentially cost the NCAA and its members billions of dollars.
“I also understand the plaintiffs in this action have suggested that each scholarship student-athlete on a team would be paid the same amount (i.e., all football players on a team with an athletics scholarship would be paid the same amount whether the player is a strong contributor or a star, or a bench-warmer.),” Sexton wrote in the declaration, according to SBJ. “From the perspective of an agent who represents professional athletes, in my opinion, if broadcast revenues were shared with student-athletes the market would not develop as plaintiffs suggest…”
$26 million spent on men’s basketball buyouts
The public Power 5 schools reported spending a total of nearly $133 million on severance payments to all coaches and administrators in the 2022 fiscal year. That means roughly 68% of all severance payments were made to fired football coaches.
Those schools spent just over $105 million in total buyouts in the 2021 fiscal year and $66 million in 2020.
Most Power 5 schools opted not to fire any basketball coaches during the first two seasons that were impacted by the COVID-19 pandemic.
Forty-three of the 52 public Power 5 schools didn’t report any expenses related to men’s basketball buyouts in the 2020 fiscal year. That’s nearly 83%. Forty schools, or roughly 77% of the group, had a clean ledger in 2021.
However, there was a dramatic uptick in 2022. Public Power 5 schools reported more than $26 million in men’s basketball buyouts, eclipsing the previous record of $20.3 million in 2018. The 2018 total would equate to almost $24 million in 2022, when adjusted for inflation from June 2018 to June 2022.
The increase in spending could be tied to the improved financial situation and return to normal scheduling in the 2022 season. Plus, several schools that have won at least one national championship in men’s basketball reported multimillion-dollar expenses on buyouts last year, suggesting a confluence of coaching changes for high-profile programs whose administrators and boosters might have a greater willingness for making a coaching change.
Six schools reported spending at least $1 million on men’s basketball buyouts last fiscal year, which is second only to the seven schools that spent at least $1 million in 2018. Maryland‘s nearly $5.3 million was the highest of the bunch last fiscal year. Louisville ($4.9 million), Georgia ($4.2 million), Indiana ($3.7 million), Utah ($3.0 million) and South Carolina ($3.0 million) each eclipsed $3 million.
The 52 public Power 5 schools reported spending $3.9 million on women’s basketball buyouts in the 2022 fiscal year, or nearly 2.3 times more than in 2021, when they spent $1.7 million. There weren’t any schools that reported spending more than $1 million, although Mississippi State came the closest at $890,750.