Thoughts On Cal Coach Dykes' Contract Part 2: Buyout!

Last time we looked at the first part of the contract and dealt mostly with the compensation for Dykes. To recap, Dykes gets $250,000.00 in base salary and between 1.55 mil and 1.85 mil, increasing over time, in talent fee salary on an annual basis. He got a $600,000.00 signing bonus, presumably to pay the buyout from LaTech. There are a series of bonuses (both performance and academic) that are lower than other comparable coaches, including Jeff Tedford. You can read more here.

In this second installment, I wanted to look at the latter half of the contract. Most people look at the numbers, but there is always more to a contract. The majority of this post will deal with the termination of the contract. What happens if Cal fires Dykes? What constitutes "with cause" firing? What happens if Dykes quits? The contract lays out specifics regarding how much Cal would owe Dykes if they fire him or Dykes would owe Cal if he quits. I look at these numbers compared to Coach Tedford's numbers. SPOILER ALERT: They are worse for Dykes!

So, let's keep going. We left off in Section 5 (which incorporated the Addendum). We pick up in section 6:

Section 6. The thing about section 6 is that it is incredibly packed, but vague. It provides that a series of policies apply to Dykes. These policies appear to be the same policies that apply to most Cal employees. Policies with names like: "Leaves Related To Life Events" or "UC Conflict Of Interest Code" or "Whistleblower Protection Policy" (I'm sure Dykes will be blowing a lot of whistles, but different meaning so ha ha JOKEZ). So, although this section is about 1 page long, it stands in for what must be a dizzying array of policies, rules, and regulations for the byzantine Cal bureaucracy that none of us really know. Or really even want to know.

Section 7. Here, the contract specifically states that his educational responsibilities as an instructor to students is a priority. He shall not take actions (like make appearances etc) that reflect poorly upon the school. Did Tedford appear on TV shows and say "Education is for losers?" Hey, can't hurt to spell it out, I guess.

Section 8. Coach Dykes cannot make any sort of promotional agreement without running it by Cal first. So, he can't hawk Coke if Cal says "We're a Pepsi school now." He has to tell the school all the money he makes off of promotional agreements. Also, he can't make "commercial activities" (like go on the radio or TV) without running it by Cal first. However, he can do spontaneous media interviews (like while walking off the field or in the locker room) without getting Cal's OK.

Section 9. This section is called "Discipline and Termination." It includes the list of reasons why the Coach can be disciplined or terminated:

a. Material breach of the contract.
b. Misconduct, like fraud or dishonesty (although dishonesty is part of the coaches creed!)
c. Failing to properly represent Cal.
d. A material breach of any Cal regulation
e. Selling or using illegal drugs or condoning an assistant coach to do the same
f. Material breach of NCAA, Pac-12 or other athletic association's regulations.
g. Not acting morally or ethically (but he's a college football coach!).

There is no specific language regarding academics. Nothing like "If the team GPA dips below xxxx, termination with cause is appropriate." However, there are myriad vague phrases about representing the school appropriately and having high moral character. Sandy could probably try to shoehorn something about academics into a termination with cause if the situation got truly dire enough. I doubt it will get quite that bad. It got bad with Tedford, but the firing was clearly without cause (at least non-on the field cause).

If Sandy tries to punish Dykes here, he has certain rights (as outlined in the Section 6 policies). He can even appeal to the chancellor. Dykes has 10 days from termination to make the appeal, though, because of the "exigencies of operat[ing] a NCAA Division 1 football program."

If Dykes is terminated in Section 9 (i.e. with cause), then he doesn't get any more money. Remember Al Davis trying to prove that he fired Lane Kiffin with cause to avoid paying him more money? It would be like that, but less public and embarrassing for all involved.

Section 10. If Dykes dies or become permanently disabled such that he can't act as Coach anymore, the Contract ends and there are no more obligations to fulfill by either party.

Section 11. Both parties can terminate at the same time without cause as "mutual termination." It has to be by written agreement and if it happens, all future obligations end (like in section 10).

Section 12. This section is called "Termination By University Without Cause." This is where it gets juicy. Let's dive right in. If Cal fires Dykes without cause (i.e. for any reason other than those items listed above in section 9), then Cal has to pay certain amounts. This is a clear buyout. In Tedford's contract, we saw that there wasn't really as clear a buy out. It also gets smaller over time. The chart here is if Dykes was fired without cause prior to the date, how much must Cal pay him:

12.31.13: $3,750,000.00
12:31.14: $3,000.000.00
12:31.15: $2,250,000.00
12.31.16: $1,500,000.00
12:31.17: $750,000.00

It decreases by $750,000.00 per year (which is a little under half of Dykes' annual base salary). These payments are made in monthly installments until December 31, 2017 (i.e. the natural end of the contract). Cal shall also pay any additional bonuses Dykes is owed.

As with the Tedford contract, Dykes has to mitigate his damages by trying to get another job. However, he only has to get a "BCS level head coach or coordinator." Nothing about the NFL is included here. If he receives any money (by any job, not just BCS level head coach or coordinator), the buyout amount is decreased by the sum earned. Also, he cannot try to avoid this with schemes to get paid after December 31, 2017.

He only gets the buyout money if he signs a release of claims at the time of termination. The documents are attached, but unsigned. Basically, they say that he can't sue Cal for things related to his employment there. If he does inappropriately sue Cal after signing the agreement, Cal no longer has to pay him any buy out money and he actually has to pay back what he has received.

The amounts listed here are significantly less than Tedford's quote unquote buyout. Tedford didn't have a specifically enumerated buyout, but it was essentially the rest of his pay (with some slight complications there). If they were to fire Dykes in 2013, they'd only owe him $3,750,000.00, which is millions less than his actual full contract is worth. This is a significantly superior deal for Cal than the Tedford one.

Section 13. This is the last big section and it is titled "Termination By Coach." It starts with a lot of bla bla bla about how Cal is investing a lot in Dykes and Dykes will get secret Cal information that could be used against Cal if he were to leave. So, to keep him from doing that, there is a buyout here, too. But in this instance, it is what Dykes has to pay Cal! Let's look at it. I'll use the same setup as before with the date and amount Dykes owes if he terminates prior to that date.

12.31.13: $3,000,000.00
12.31.14: $2,500,000.00
12.31.15: $2,000,000.00
12.31.16: $1,000,000.00
12.31.17: $750,000.00

Dykes has to pay the money within 60 days of the date of termination. If Dykes fails to do so, Dykes agrees that Cal can sue him for their money. Cal's rights to the money are predicated on all parties signing the release of claims document as discussed above.

This is what I wrote about Tedford's contract and its reverse buyout:

Section 20. If Tedford bails before the end of his contract, he has to pay $300,000 a year back to Cal for every year remaining on his contract. However, if Cal has yet to enter the Simpson High Performance Center, this is only $150,000 a year for each remaining. Further, Tedford cannot coach at any other Pac10 school. This Pac10 restriction is waived for the years before Cal enters the Simpson High Performance Center.

So, Dykes reverse buyout is SIGNIFICANTLY worse than Tedford's reverse buyout.

Section 14. This written contract IS the entirety of the contract. This exists to keep any oral promises or other non-written contract provisions as being part of the employment contract.

Section 15. If any part of the contract is found to be invalid, only it is invalid and not the entirety of the contract.

Section 16. California law is the applicable law.

Section 17. Any notices required under the contract must be provided in writing. Dykes' notice address is a law firm in Alabama. Is that better or worse than Tedford's lawyer being in LA????

I think better. Here's why. Presumably, Dykes lawyers rolled into Sandy's offices in their gorgeous blue seersucker suits with their mint julips and their genteel personalities and said "I Say, I Say, you do play an enjoyable form of this football here on the West Coast. Let's make a deal." I love Southern Lawyers! Also, Foghorn Leghorn!

There is an Attachment A, which provides the specific duties and responsibilities of the head coach. It is a bunch of vague things like "Build relationships with external stakeholders," "manage the football program," and "Demonstrate consistent support for student services and community programs. There are some specifics like "Hold regular (weekly or bi-weekly) performance team meetings" or "Annual formal written performance reviews conducted with all direct reports." It is a list of what you'd expect a football coach to do in the broadest general sense.

Then, there are two unsigned Release Of Claims documents. One is if Cal fires Dykes without cause and the other is if Dykes quits. These need to be signed by all parties if the harmed party is to receive their buyout monies. They are pretty straight forward releases, keeping parties from suing over anything related to the contract. So, they could sue over other issues (Dykes has a slip and fall on the Cal campus), but not over something related to Dykes employment as Cal head coach.

CONCLUSION

So, what is the larger take away from this section? Cal has provided greater specifics regarding the buyouts for Dykes' contract compared to Tedford's contract. The buyout provisions of this contract are in Cal's favor compared to Tedford's buyout provisions. For Tedford's buyout provisions, he was going to get every dollar he was owed remaining under the contract and, if he left early, he would only have to pay back a fraction of what he was owed. For Dykes, it is flipped. If he is fired without cause, he gets a smaller amount than what he is owed on the remaining contract. If he quits early, he has to pay back a significantly larger amount than Tedford did.

What is your thought on all of this? Tell us in the comments!