Billy Gillispie, like many college basketball coaches, was hired —and fired —in a hurry. But the contract negotiations that dragged on for nearly two years while he coached the University of Kentucky's men's basketball team showed little of the same urgency that defined his entrance and exit.
Mr. Gillispie worked for Kentucky under a memorandum of understanding, a legal document that he says served as his employment contract. But when the university fired him in late March, the murky details of the agreement left the university in a precarious position. Mr. Gillispie sued in federal court late last month, claiming Kentucky owes him $6-million. The university has countersued, claiming the agreement was not valid.
The risky combination of big money and hastily written employment agreements can pose a major problem for colleges. In the intoxicating whirlwind of nabbing a name-brand coach, many of the safeguards used in high-level hirings elsewhere on the campus are often shelved.
While it's no fun to talk about divorce during the honeymoon, an exit strategy that is acceptable to both the coach and the university must be put in writing, experts say. Universities that fail to spell out the specific conditions of a coach's employment and termination run the risk of costly and uncomfortably public contract disputes if the relationship sours.
Several universities have had all they can handle. In spats with departing coaches at Oklahoma State University, Ohio State University, and Texas A&M University, the question hasn't been whether the institutions will owe the coaches money, but how many millions they'll have to pay.
In many cases, a memorandum of understanding, or an MOU, is all there is. But the casual documents —"an agreement to agree," as Kentucky dubbed Mr. Gillispie's MOU in its lawsuit against him —should ideally serve as only a placeholder.
"MOU's are great when everything is going well," says Michael S. Garrison, a former president of West Virginia University, who helped the university win a $4-million legal battle with a former head football coach, Rich Rodriguez, last year. However, Mr. Garrison says, a contract is needed "when the marriage goes bad."
The West Virginia victory was a rare triumph for a university in a contract dispute with a coach, but Mr. Garrison sees no reason why it can't be replicated. Now a lawyer in private practice, he has had contacts with major sports programs and anticipates more in the future.
If the speed of the courtship doesn't allow university lawyers to take all the precautions they otherwise would, Mr. Garrison says, then maybe universities need to do what coaches have done for years: Call in reinforcements.
Big sports programs need the legal safeguards because many get star-struck going after a top hoops or football coach, E. Gordon Gee, Ohio State's president, told The Chronicle last year.
"What I think happens is the fact that, gee, we lost our coach," he said, "and so we've got to get someone the next day, and so we panic."
72 Hours or Bust
Many colleges hire coaches in a matter of days. That's a stark contrast from the methodical and lengthy search for other top university officials.
Searches for new presidents, vice presidents, and provosts can go on for many months or even years. When presidents are hired by major research universities, more than two-thirds sign formal contracts, according to a 2007 Chronicle survey. The Association of Governing Boards of Universities and Colleges recommends that boards review and approve those agreements. And compensation experts say the university's chief financial officer and general counsel should see the document before it goes to the board.
At many colleges, the football and basketball coaches make more money than the president, making the stakes just as high —or higher.
The coach courtship plays out during the peak hiring seasons of late December and early January for football, and late March and early April for men's basketball. The process is intricately choreographed, and timing is everything. An athletic director who can't make an offer right away can lose his top prospect in an instant.
The pace makes many people nervous. The process is "ludicrous" and completely inappropriate for higher education, says Raymond D. Cotton, a Washington-based lawyer who specializes in presidential compensation.
"The panic leads to overpaying and lack of adequate negotiations," he says. "It leaves the university exposed."
The MOU is a commonly used legal document that can serve as a contract if its wording is strong. It is often used by athletic directors and presidents to hire coaches quickly and spell out the major financial terms of the agreement. Unless the parties agree otherwise, MOU's do not typically set deadlines for formal contracts to be signed.
But many lawyers and athletic directors say they prefer the security of complete contracts and like to see them signed within weeks, or a couple of months, of hiring a new coach.
Kentucky says its lawyers sent no fewer than six offers of written employment contracts to Mr. Gillispie's lawyer over a period of 20 months. Each proposal was met with a counteroffer, including one made just a month before the coach was fired.
The contract that never came to pass at Kentucky should have described compensation and terms of separation. Good contracts leave little wiggle room.
Cautionary Tales
In the past month, two separate contract disputes illustrate the rocky road institutions can expect to travel if they let negotiations languish for too long or allow them to happen behind closed doors.
In the federal lawsuit Mr. Gillispie filed against the University of Kentucky Athletic Association, he claims the university owes him millions because it fired him without cause with five years remaining on a seven-year agreement.
In most cases, if a university fires a coach with cause —that is, for a specific reason spelled out in the terms of a contract —it does not have to pay a dime. But terminating a coach for no reason often triggers payments, and those details are usually worked out in a contract.
Mr. Gillispie's MOU called for payments of $1.5-million annually for each of the years remaining on the contract for up to four years, if he were fired without cause. Kentucky claims in its countersuit that the MOU was not an enforceable contract and that it doesn't owe Mr. Gillispie anything.
A more extreme example is unfolding at Kansas State University. Last month university officials discovered, much to their surprise, that Kansas State's former athletic director, Robert Krause, signed a secret deferred-compensation agreement nearly a year ago with the former football coach, Ron Prince, for $3.2-million. The money was to be funneled to a limited-liability corporation Mr. Prince created called In Pursuit of Perfection.
Mr. Prince was fired in late 2008 after three lackluster seasons, taking a $1.2-million buyout with him. Several months before the firing, while Mr. Prince's lawyer negotiated with Kansas State's lawyer over the terms of a new employment agreement, he was also conferring secretly with Mr. Krause over a separate MOU authorizing payments to the coach's corporation.
The scandal has tarnished the final weeks of the tenure of the university's longtime president, Jon Wefald, who broke down in tears at a news conference announcing the discovery. No payments have been made, and Kansas State is challenging the validity of the signed agreement in court. But the damage has been done, and has left many in college athletics wondering what other rocks have yet to be overturned.
Negotiating the Prenup
As coaches demand bigger compensation deals, one question looms: Are university lawyers outmatched? Most top coaches come armed with high-powered agents, many of whom also represent professional athletes and coaches. But the college coaches who choose to negotiate for themselves can be just as flinty.
Coaches "are much more business-oriented than the schools," Mr. Cotton says. It's about "cold, hard cash" for high-profile coaches, and "that attitude is paying off for them."
It is extremely rare for universities to use outside lawyers to handle their contract negotiations. Most large public universities that stand to face serious scrutiny during the hiring process have large legal staffs accustomed to the various moving parts of a university and familiar with its culture and mind-set.
But these lawyers also shoulder a heavy workload in many other areas. Their top priority is not to draw up coaches' contracts and haggle over how many courtesy cars a coach gets.
Given the workloads of many university lawyers and the hardball nature of contract negotiations, some in college sports think universities may have to turn to outside help.
But for now, some colleges continue to hire coaches without airtight deals.
In April, Jim Livengood, athletic director at the University of Arizona, hired a new basketball coach, Sean Miller, in typically swift fashion. The contract has yet to be finalized. But Mr. Livengood says he is well aware that athletic directors and university lawyers need to have the tough conversations early on, even at the risk of throwing a wet blanket on the hopeful tone of a new coaching regime.
"If it's not known at the front end what could be a huge issue on the back end," Mr. Livengood says, "look at the potential damage to the university."
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