Reaping the benefits of being a college football coach

From 1986 to 2010, professors' salaries at major football schools rose 32 percent. College presidents at those institutions received raises of 90 percent. And football coaches' compensation grew 750 percent, according to an inflation-adjusted study of 44 schools by Duke University economist Charles Clotfelter.

There has never been a better time be a college football coach.

In 1981, Danny Ford led Clemson to the national championship. He made $50,000. Adjusted for inflation, that would be $140,000 today.

Dabo Swinney, whose Clemson team lost more than it won last season, will receive $1.75 million in compensation this season. And Swinney's pay check is only in the middle of the pack for Bowl Championship Series-conference coaches.

At South Carolina, Steve Spurrier will make $2.8 million this season; Alabama's Nick Saban will receive $4.7 million.

The salary spike is linked to the increase in television revenue.

In 1996, the SEC became the first conference to sign its own lucrative television deal, agreeing to a five-year deal worth $85 million with CBS. In 2008, the SEC inked a pair of 15-year deals with ESPN and CBS totaling $3 billion.

Coaches are not taking in a substantially greater percentage of athletic funds, the pie simply is exponentially larger.

For example, in 1991 South Carolina generated $8 million in football revenue, Clemson $11 million.

Then-South Carolina coach Sparky Woods earned 1.2 percent of football revenue, and Clemson coach Ken Hatfield earned 1 percent.

Steve Spurrier's pay was equal to 3.8 percent of football revenue ($58.2 million) in 2009. Swinney's compensation was 2.9 percent of revenue at Clemson ($30.9 million), down from the 5 percent Tommy Bowden took in 2000.

Clemson economist Raymond Sauer has written extensively about the sports marketplace and says television rights fees are the main driver of compensation growth.

"The main thing is the media income," Sauer said. "It's the size of those contracts that is driving coaching salaries. Trace the money over the last 30 years to the growth in revenues in revenue-generating sports, it has just been enormous. This has spilled over into compensation for the best coaches."

Player proxies

Athletics directors justify the huge contracts for coaches by saying the market determines salaries. Economists like Clotfelter agree, but he notes it is an unusual market in which the labor - the players - are not compensated.

"The only participants in this whole enterprise that don't get market wages are the players," Clotfelter said. "Studies have (revealed) the value of draft-quality football player is $500,000 to a university, the value of a draft-quality basketball player is $1 million.

"That money has to go somewhere."

That money helps funds non-revenue sports, but it also makes coaches rich.

"No coach is much better than his players," Sauer said. "You put (NFL Hall of Fame coach) Vince Lombardi on a (lousy) NFL team and you are going to get a (lousy) NFL team and the same thing in college.

"So the ability of the coach to attract recruits is going to be priced into the coach's salary in college but not the pros" where players are acquired through the draft.

"The coach is being paid as a proxy for the amount of talent he is able to bring into the program."

Saban underpaid?

In the NFL, the faces of franchises are the players.

For example, fans think of Peyton Manning when you mention the Indianapolis Colts. But in college the face of the programs are the coaches, said Sports Business Journal reporter Michael Smith.

Because players have only four years of eligibility in college, the coaches have more control over their roster. More power is consolidated in the office of a college head coach.

Because of these factors, Smith said you can argue Alabama's Saban, one of the country's highest-paid coaches, is underpaid.

In the 2009-10 fiscal year, when Saban led Alabama to a national title, the Alabama athletic department's revenue increased 24.4 percent ($129.3 million) leaping Florida and Ohio State for the No. 2 spot behind Texas ($143.5 million).

Sauer equates the coaching pay increases to that of investment bankers' compensation.

"It's the superstar phenomenon," Sauer said. "These are the best at what they do. They are getting rewarded for it."

Emotional investments

Of course, coaches are sometimes overpaid. Clemson signed Bowden to a lucrative extension after the 2007 season only to fire him six games into the next season, paying Bowden a $3.25 million buyout.

South Carolina athletics director Eric Hyman said board members and powerful boosters are not immune to becoming emotionally invested and over-paying for a brand name.

"We work in a profession of emotion," Hyman said. "When I became the AD at VMI, I went to a (booster club) meeting and at the time they had five boosters who were among the wealthiest 400 people in the country. They came in three-piece suits and left their brains at home. You're dealing with passion. I said to the boosters, 'You wouldn't run your business this way.' "

Curbing the spending

Hyman and others said compensation simply cannot keep increasing at its current rates. But what will stop programs from bidding, knowing what a Saban-type coach can do for revenues?

"If the media boom stops, then the coaching salary train will stop because they are intrinsically tied together," Sauer said. "It could be some schools decide to opt out, saying 'Whoops, we see what's happening and we don't want to continue with that.' "

The Knight Commission - a group of academic and athletic officials, as well as journalists, whose mission is to ensure athletic programs operate within the educational mission of their universities - recently polled 95 presidents at Football Bowl Subdivision schools and found the majority consider coaching compensation "excessive" and the "greatest impediment to sustainability."

But Knight Commission executive director Amy Perko does not foresee any regulatory means to control compensation levels in the near term.

"Securing an exemption from the antitrust laws for any reason, including trying to regulate coaching salaries, is a complicated, time-consuming and an expensive endeavor," Perko said, "and by no means is assured of success."

To slow spending, the commission recommended in June to have greater transparency with financial data and to tie financial incentives to academic performance.

The losers

While the current system is great for coaches, it does not benefit everyone.

The compensation numbers have led to increased discussion about paying players. Athletics departments like Clemson have cut 10 percent of costs in their departments while the football staff has received substantial raises.

"The cart is in front of the horse for many institutions," Sauer said.

"Ninety percent of Clemson's budget goes to academics, but what makes Clemson get in the newspapers? It's the football team and the media spotlight that has grown more intense.

"It distorts the image of the institutions and reflects the institution in ways that it might not want."

For example, North Carolina is still dealing with the fallout from an NCAA investigation of its football program.

"If you are at North Carolina you are saying `Holy cow, what did we get into? Academic dishonesty being paraded in the pages of the New York Times?' " Sauer said. "Is it worth it?"

This story was originally published September 27, 2011 at 12:00 AM with the headline "Reaping the benefits of being a college football coach."