Coaching Buyouts and Contract Extensions Thread

[CatsbyAZ]

Kevin Sumlin's buyout at Arizona is $7Mil.

Gus Malzahn's is $21.5Mil which sets all records.

I heard this on the radio this morning though am unable confirm through online sources, but it sounds like both buyouts are being handled from the personal budgets of several wealthy boosters, which in turn, can be claimed as a tax credit. News to me, but yes, personally paying off the buyout for your favorite college's just-fired football coach can be claimed as a tax-credit by the super wealthy.

[847badgerfan]

That is a crazy number for Gus. Just nuts.

[Cincydawg]

I don't think it can be a tax CREDIT.  Deduction maybe, the CARES Act had some verbiage in it about that.  It's not normally a deduction, I did read that changed this year only.  But a credit is a different kettle of fish.

[OrangeAfroMan]

So instead of keeping that money (prudent) or maybe donating it (altruistic), they're spending it on replacing a HC.  



Fantastic.

[Cincydawg]

So instead of keeping that money (prudent) or maybe donating it (altruistic), they're spending it on replacing a HC. 
Fantastic.

I tend not to criticize how wealthy people spend their money, given it's their business, and I presume they have plenty more.  I'm sure someone could criticize me for how much I spend dining out and on wine, I even ponder this myself at times.

If CFB is an important item for me and I judge that spending $X will enhance my enjoyment, so be it.


Athletic Department Fundraising Likely to Take Big Hit Long Term (frontofficesports.com)


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[betarhoalphadelta]

It's trickle-down economics.

The hyper-rich are spending their money on the merely rich (head coaches), who will certainly spend it buying yachts. Don't the yacht builders need business in our economy? 

[Cincydawg]

I think of the hyper rich as multibillionaires, Bezos and their ilk.  I figure not many of them like CFB.

The "merely rich" I figure are in the hundred million dollars of net worth range, a lot of it tied up, but they can pass out $20 million and not miss it.

We like to use the term "comfortable" of course, not rich, better connotations.

[CatsbyAZ]

I don't think it can be a tax CREDIT.  Deduction maybe, the CARES Act had some verbiage in it about that.  It's not normally a deduction, I did read that changed this year only.  But a credit is a different kettle of fish.

Thank you for the clarification. These two sports radio meatheads were going back and forth calling it a CREDIT. But maybe they meant DEDUCTION? Since I don't know much more than them, what exactly is the difference? Both went on to talk about how these particular boosters who were bankrolling the buyouts were paying it off in order to lower their taxable income, say, from $20Mil to $15Mil. Which, isn't that a CREDIT?

And that raises another question - they were able to claim this for tax purposes because it counted as donation to the SCHOOL? How - since, aren't Athletic Departments financially separated from the schools? Or are Athletic Departments somehow considered non-profits?

[Cincydawg]

Let's say you have $50,000 in TAXABLE income so you owe say $5,000 in income tax (Federal, making up figures).  If you get a tax credit of $1,000, you will only ow $4,000 in taxes.

If you get a tax deduction of $1,000, you now owe tax on $49,000 of income, or $4,900.

Tax CREDITS are comparatively rare things, you might get one for buying an electric car for example.  Tax deductions are dime a dozen today.

[betarhoalphadelta]

I think of the hyper rich as multibillionaires, Bezos and their ilk.  I figure not many of them like CFB.

The "merely rich" I figure are in the hundred million dollars of net worth range, a lot of it tied up, but they can pass out $20 million and not miss it.

We like to use the term "comfortable" of course, not rich, better connotations.

You mean like Phil Knight (Oregon) or T. Boone Pickens (OkSU)?

Maybe billionaire is "hyper" rich, but hundreds of millions is not "merely" rich... That's still very, very rich. 

If I had a net worth of $5M right now I'd consider myself rich--I could tell my boss to GFY and even if I never worked again, could live a VERY nice life off of passive income on that $5M. 

If I had a net worth of $150M right now, there'd be no boss to tell to GFY and I could live like a king for the rest of my life off just the passive income there. 

Anyone who has spent a few years as a P5 HC is rich, not just comfortable. Comfortable is upper middle class with a high salary, relatively flush 401K, and enough of a nest egg to weather 6-12 months of being out of work. A P5 HC is someone who will often get paid millions of dollars a year for several years after being fired for poor performance--that's more than comfortable. 

Let's say you have $50,000 in TAXABLE income so you owe say $5,000 in income tax (Federal, making up figures).  If you get a tax credit of $1,000, you will only ow $4,000 in taxes.

If you get a tax deduction of $1,000, you now owe tax on $49,000 of income, or $4,900.

Tax CREDITS are comparatively rare things, you might get one for buying an electric car for example.  Tax deductions are dime a dozen today.

Excellent explanation, and perfectly concise. 

[Cincydawg]

The term "comfortable" is one of lore, basically, all these terms are qualitative, and just how I usse them.

There are a few "hyperrich" in the game, yes, and probably a consortium of "merely rich" who act in concert.

My definition of "wealthy" is a person who has no need for any income to sustain his lifestyle.  Ever.

[betarhoalphadelta]

Then anyone who has spent a few years as a P5 HC is wealthy. Their egos cause them to keep wanting to work though, or their lifestyle is so extravagant that they need to. 

Pretty sure if Jeff Brohm was fired tomorrow, his previous earnings and the rest of what's owed on his contract would keep him in late-model Honda Accords for the rest of his life lol...

[Cincydawg]

I think you need close to a hundred million to meet my definition, depending on age, and lifestyle.  A person can spend a lot of money on personnel, chefs, trainers, household staff, G5s of course, and wine cellars.  There is a private club a block from us that apparently is very expensive, but just money doesn't get you invited.

[MrNubbz]

My definition of "wealthy" is a person who has no need for any income to sustain his lifestyle.  Ever.

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