More than five months after Texas A&M University football coach Jimbo Fisher was welcomed to College Station with a 10-year deal guaranteeing him a history-making $75 million, he still does not have a signed contract in hand.
Changes to the federal tax code and Fisher’s focus on recruiting players have slowed the signing process, A&M officials say. But they also say it’s not unusual for there to be a months-long period in which a college coach, like Fisher, is reeling in new talent and giving press conferences while still hammering out the details of his employment contract.
“Twenty years ago, the services of a coach were secured with a handshake,” said Robert Lattinville, an attorney who specializes in employment contracts for college- and professional-level executives and coaches. “Then the money got so much — it got so inflated — and the consequences of not having a coach under contract were heightened.”
Top university coaches now have employment agreements that can top 30 pages and include perks like complimentary flight time on private jets, complicated licensing deals, personal cars, membership in exclusive clubs and six-figure performance bonuses. At the same time, Lattinville said, those coaches are frequently hired during or on the eve of recruiting season.
The time pressure and the increasing complexity of the contracts has led more universities to use memorandums of understanding, which lay out the basic terms of employment, as placeholder agreements, Lattinville said. With that more skeletal agreement in place, school officials can hold a press conference and tell high school athletes and athletic staff, “'This is going to be our coach, and he's going to be here for the duration of your tenure here,” even if all the contract terms have yet to be worked out, Lattinville said.
A&M spokesperson Kelly Brown said Fisher has a memorandum of understanding with the university and is being paid at the rate announced in early December.
“There’s no disagreement over the contract and there’s nothing contentious going on behind the scenes,” she said in an email. The previously announced terms of Fisher’s contract — that he’ll earn a guaranteed $75 million over 10 years — will be unchanged in the signed version, which officials expect may be complete in the “next few weeks,” Brown said.
“Today, the Jimbo Fisher Era begins at Texas A&M.”
A&M lured Fisher, a championship-winning coach, away from Florida State University in 2017. On December 3, Fisher stepped off a private jet – emblazoned with A&M insignia – at an airfield in College Station and was met on the tarmac by a marching band and a maroon carpet.
The next day, A&M announced the terms of Fisher’s contract in a news release, and Chancellor John Sharp said, “Today, the Jimbo Fisher Era begins at Texas A&M.” The university system’s governing board authorized the flagship’s president, Michael Young, to negotiate and execute a contract with Fisher that day. The final contract won't go before the board for approval.
“The Aggie pride here, I feel it,” Fisher said at his first A&M press conference. A flurry of headlines since have observed Fisher has started to “put his stamp on the Aggies” and helped their team “load up on 4-star talent.” In February, Sharp presented Fisher with a national championship plaque that mischievously cited the year of the win as “20--.”
During those months, the Texas Tribune repeatedly requested copies of Fisher’s contract or memorandum of understanding with the university, which are public documents. A&M’s office for open records responded in January, March and May that no contract existed. They asked the office of the state’s Attorney General, Ken Paxton, if the memorandum could be withheld because its release would benefit possible competitors — an allowable exception to Texas’ open records laws.
The attorney general's office agreed A&M could withhold the information, explaining in its ruling: “You state the university is engaged in contract negotiations with the named individual [Fisher] and assert release of the information at issue would negatively impact the university’s ability to secure the most favorable terms.”
In an email, Brown enumerated the reasons for the delay in the signing of the contract: “Fisher wanted to get through recruiting before taking a deeper dive into the financial details and negotiations,” she wrote. “A&M and Coach Fisher were looking at alternative compensation strategies related to tax planning that could have advantages for both sides.”
She added that revisions to the federal tax code also slowed the contract-negotiation process down, as both sides were considering what its impact would be.
Changes to the federal tax code
Though college sports programs remain largely tax-exempt — they're part of universities, which often cite their educational mission — some departments’ budgets could be hit hard by the recent changes to the tax code.
One revision nixes a tax deduction that donors used to receive for getting certain tickets to games. Another imposes an excise tax of 21 percent on annual compensation over $1 million that’s paid to some employees at nonprofit organizations, like colleges. Fisher’s contract, which is a market leader at about $7.5 million a year, crosses that threshold – though it's unclear if the excise tax applies to public universities.
A&M declined to comment on if their contract discussions involved the excise tax or how to offset some of the financial burden it imposes. But Lattinville said there are ways universities and coaches — and the phalanx of attorneys often involved in contract negotiations — might try to do so. One way is to offload part of the coach’s salary onto third parties – for example, by renegotiating the sponsorship agreements schools have with vendors or licensing partners, so that those outside parties are paying the coach directly. College officials could do similarly with venues or production companies they work with for games.
"It takes a while to [upgrade] the memorandum of understanding to a full blown contract," Lattinville said. A&M's deliberateness is common, he said, and schools will likely be even more methodical going forward "as people try to wrestle with how to present a tax-efficient contract."
The changes are "probably going to add pages and time to the contracts,” he said.
Disclosure: Texas A&M University and the University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.
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