Desperate to revive their men’s basketball program after three straight last-place finishes, university leaders at Missouri took a chance last year.
They fired the head coach and hired a new one at more than double the price: $2.7 million instead of $1.2 million last year.
They gave the new coach, Cuonzo Martin, virtually bulletproof job security for at least three seasons, no matter how many games he might lose.
They also increased the pay pool of assistant basketball coaches 68% up to $805,000, including $375,000 per year for the father of a top national recruit, Michael Porter Jr.
“We had done extensive research, and this was an investment for us because we felt there wasn’t that downside,” athletics director Jim Sterk told USA TODAY Sports recently. “We’re going to run a program of integrity. And we’re going to do it the right way. And we’re going to have success.”
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That investment is paying off so far. Missouri (19-11) is winning again and bringing in more revenue, with $5 million projected in ticket sales, compared to $3 million last year.
But success isn't guaranteed by hiring a high-priced coach. An injury could wipe out the season of a top recruit, which happened with Porter Jr. in the first game of Missouri’s season. Or another top player could get suspended amid allegations of sexual misconduct, which happened at Missouri in January.
These kinds of bets on coaches are getting bigger and especially more speculative in the two richest leagues in all the land: the Southeastern and Big Ten Conferences, according to an analysis of men’s basketball contracts and compensation by USA TODAY Sports.
Though Martin, 46, had only one losing season in his previous nine, he had coached in only two NCAA tournaments and won one regular-season league title, in 2011. By contrast, Oregon's Dana Altman made $2.65 million in guaranteed pay last year and has coached in 13 NCAA tournaments, including a Final Four, an Elite Eight and a Sweet 16.
Missouri said they had to up the ante with Martin because of market forces, and because they could. The SEC and Big Ten are so flush with rising television and postseason revenue that they are not just giving more to proven marquee coaches, such as John Calipari at Kentucky ($7.45 million this year). They are also giving it to coaches without extensive postseason prosperity or previous success at big-time programs.
“He is not overpaid compared to SEC coaches,” said Maurice Graham, who signed Martin’s contract as a member of University of Missouri Board of Curators, the school’s governing body.
Similar hires in the SEC and Big Ten have had mixed results, such as at Illinois and Louisiana State, which signed 35-year-old Will Wade at $2.5 million annually.
Yet even if they all pan out, industry analysts say the pay spiral has other consequences in terms of appearances at a critical time for college basketball. While the pay keeps going up for coaches, compensation for players is capped by the NCAA at the cost of attending college.
And now that controversial system is being tested by a corruption and bribery scandal at other schools. The FBI and federal prosecutors have been cracking down on those who allegedly tried to give players or their families more than the NCAA limit for the players’ basketball skills. They arrested 10 men as part of the scandal last year, and emerging evidence from it points to a widespread black market for player compensation.
Meanwhile, Martin and Missouri found a similar but legal way to help lure Porter with more money for his family. They simply hired his father, Michael Porter Sr., as an assistant coach and gave him what it wanted – more than $1.1 million over three years. After all, it’s a free market for coaches. And it’s especially loose in the SEC and Big Ten.
The class divide
The SEC and Big Ten have become the upper class of the college sports economy – a function of the outsized popularity of their football and men’s basketball teams in the South and Midwest. The SEC is the only league in college sports paying at least $2 million to all of its head men’s basketball coaches this year at public schools, up from two in 2010-11.
In the Big Ten, three of the top five highest-paid coaches are new this season. Each of those three earn at least $2.75 million in guaranteed pay even though they had combined for just two appearances in the Sweet 16 and just one prior season running a Power 5 conference program.
Rising revenues from television deals have enriched both leagues, especially through their own league networks. Their members are spending more because they can. And their incentive to spend less either doesn’t exist or is outweighed by the need to keep up with the competition.
At Missouri, the school reported $97.8 million in athletics revenues in fiscal 2017, up from $83.7 million in fiscal 2014.
“Number one, what we spend is relative to what we bring in, but two, it’s relative to the market we’re competing in,” said Tim Hickman, Missouri’s chief financial officer in athletics. “In our case, most days we’re competing with our fellow SEC teams and trying to be competitive across the board in how we’re doing that. A lot of your spending is driven by that.”
The SEC shared about $40 million with each of its members in fiscal year 2016, up from about $21 million two years earlier. The Big Ten gave about $32 million to each of its 11 longest-standing members in fiscal year 2015 and could reach near $50 million each this year.
By contrast, the Pac-12’s television networks have underperformed amid distribution issues, leading to lesser revenue-sharing with its members at about $25 million each in fiscal 2015, the most recent year available. Missouri hired Martin away from Cal of the Pac-12, where he would have made $1.99 million this season.
Cal then replaced Martin last year with longtime assistant coach Wyking Jones and is paying him $1 million annually. The other new head coach in the Pac-12, Washington’s Mike Hopkins, is earning $1.8 million.
The financial picture has been similar in the Big 12, where there was only one new head coach hired in men’s basketball last year: Mike Boynton, who is earning $1 million this year at Oklahoma State. Boynton, a longtime assistant coach, replaced Brad Underwood, who left for richer pastures in the Big Ten at Illinois, which is paying him $2.75 million this year. Like Missouri, Illinois had the money and spent it.
“I know of no (athletic director) who gets a bonus for turning a profit, whereas I know of many who get a bonus for athletic successes of their program,” sports economist and NCAA critic Andy Schwarz told USA TODAY Sports. “And so if there is extra money rattling around, might as well make the coach happy, make the empire a little more peaceful.”
The spending on Underwood at Illinois (4-14 in the Big Ten) isn’t yet paying off. Before his hire there, he had coached only one season at Oklahoma State, where he finished fifth in the Big 12 and earned $1 million guaranteed. Before that, he had won conference championships in his only three seasons at Stephen F. Austin.
Ohio State and LSU did better hiring new coaches with similar backgrounds. Chris Holtmann, 46, had coached three seasons at Butler, earning three NCAA berths, including one in the Sweet 16. He now makes $3 million in guaranteed annual pay at Ohio State, which is ranked in the top 25.
Besides Missouri, LSU is the only other SEC school with a new coach this year. LSU is 16-12 under Wade, who is making $2.5 million guaranteed despite only two NCAA tournaments berths in four prior seasons, never further than the second round. His predecessor finished 10-21 last year and earned $1.5 million guaranteed.
But Missouri went a step further than LSU.
No. 1: Mike Krzyzewski, Duke: $8,982,325 - Because Duke is a private school, Krzyzewski’s total is the one reported on the school’s most recently available federal income tax return, which covers pay for the 2015 calendar year, including benefits and bonuses. Duke’s return stated that $2,199,737 of Krzyzewski’s total had been reported as deferred compensation on prior years’ returns. Rob Kinnan, USA TODAY Sports
On page 9 of Martin’s employment contract, a single sentence stands out to Martin Greenberg, an attorney who has worked as a coaches' agent and has studied coaches’ contracts for decades.
It states the university “shall not have the right to terminate this contract for employment without cause before April 30, 2020.” Losing too many games does not constitute “cause” in this case. That protection extends to April 30, 2021 if Martin wins at least 20 games or gets an NCAA tournament berth in any of his first three seasons.
“That is a highly unusual clause in college coaches’ contracts,” Greenberg said. He notes that such contracts typically give both sides a buyout or exit clause at any time, just because unforeseen circumstances can cause either side to want out.
Martin declined comment through university spokesman, and Martin’s agent didn’t return a message seeking comment.
Sterk told USA TODAY Sports he doesn’t see the guarantee as a risk. After all, Missouri gave three seasons to coach Kim Anderson, whose record was 26-67 before his firing last year. The bond also is somewhat mutual. As long as Sterk is his boss, Martin’s contract says he couldn’t quit Missouri for another job before April 2021 without owing the university less than $3 million.
“I have no doubt we could have found a lesser expensive coach,” Graham said. But this is the price Graham and Sterk said they had to pay to get the coach they wanted. And their reasons for wanting him went beyond his coaching history.
After racial tension and protests roiled the Missouri campus in 2015, campus leadership sought to change the culture there. Martin, an African-American, brings an inspirational background as a cancer survivor from East St. Louis who previously had success at Missouri State.
Missouri’s enrollment has plummeted since the protests of 2015, falling from 6,191 first-time students that fall to 4,134 last fall, its lowest amount of first-time students since 1999. In athletics, slow ticket sales in men's basketball and football led the Tigers to have $4.5 million more in expenses than revenues last year. But now the picture is brighter.
Martin “is the type of person we needed as a part of the evolving new culture on the University of Missouri campus,” Graham said.
'A coach who can attract top prospects’
NCAA rules generally forbid recruits, players and their families from accepting money beyond cost of attendance and benefits based on the players' athletic status.
Because of this controversial restriction, economists say schools have more money to spend on coaches, whose pay is not limited and goes up according to the free market.
A comparison between the recent FBI case and the coach Porter hiring at Missouri further shows how questionable and arbitrary such NCAA rules might seem:
► In the federal case, the FBI arrested former sports agency employee Christian Dawkins and two men affiliated with Adidas after they allegedly conspired to funnel about $250,000 to high school basketball recruits or their families. Their alleged goal was to entice the recruits to play for Adidas-sponsored universities – Louisville and Miami – and then to sign with Adidas and Dawkins after turning pro.
► In the Porter hiring, Missouri agreed to pay $375,000 annually to a recruit’s father as part of an effort that helped entice his son to play for the Tigers. “At the end of the day, I want to play with my dad,” Porter Jr. said of his recruitment last year in a blog for USA TODAY Sports.
In the FBI case, the alleged payments are considered bribes, and the men are facing prison time for their alleged participation in a black market that exists because some players’ values are higher than their fixed NCAA price. The federal government says the men engaged in a criminal scheme that served to defraud Louisville and Miami because it would break NCAA rules and put the schools at risk of penalties.
By contrast, the Missouri situation is perfectly legal because the father was hired to work as an assistant coach. NCAA rules allow this because it's coaching pay, not extra pay for players or their families. Other schools have made similar package recruiting deals over the past few decades.
“It’s not supposed to make sense in America when you see things like this, and it doesn’t,” college players advocate Ramogi Huma said of the two cases.
Huma, who leads the National College Players Association, said Adidas officials are “just trying to operate their business” in a free market. So is Missouri, which paid for the increased value it saw in the Porter family since early 2016.
Back then, Porter’s son was a rising national prospect but was still more than a year away from college. Porter Sr. was earning $144,200 annually an assistant coach on the Missouri women’s team under his sister-in-law, the head coach.
Then in May 2016, Porter Sr. was hired as an assistant on the Washington men’s team for $300,000, plus a $5,000 monthly housing allowance and a $15,000 annual travel allowance for him and his immediate family, according to the contract obtained by USA TODAY Sports. His 6-10 son committed to play there two months later.
But after the Washington head coach was fired last March, Porter Sr. became a free agent and Missouri pounced. It hired him to join the men’s team at $375,000 per year. That would rank him 11th nationally in assistant coaches' pay at public schools, according to data for last season published by Spencer Fane LLC, which assists USA TODAY Sports with its coaching compensation surveys.. His son got out of his commitment to Washington and came with him. So did his younger son, Jontay, another top high school recruit.
Porter Sr. declined comment for this story through a university spokesman.
“Revenue is growing rapidly while the cost of the most important input – players – is capped by NCAA rules,” said Roger Noll, a Stanford professor emeritus of economics who has testified against the NCAA in an antitrust case. “Thus, a coach who can attract top prospects adds value equal to the difference between the value of the players and their scholarship costs.”
Sterk and Graham said the Porter family case is different from other package recruiting deals because the family has roots in Missouri.
Unfortunately for the Tigers, Porter Jr. suffered a back injury in the first two minutes of the season opener and hasn’t played since. He might leave for the NBA after this season, too.
Investment returns on that part of the deal were never guaranteed. Only coaches’ contracts are.
Despite Porter Jr.’s injury, the Tigers appear headed to their first NCAA tournament since 2013.
“We need to be successful; we need to support ourselves,” Sterk said. “And this was a strategic investment to move the program forward.”