The attachment to this post is a legal paper and it is 93 pages long, so you have been warned. But, I think it's a pretty interesting subject that should start a good conversation on this board...even if you don't read the whole thing. Pro sports leagues have "no tampering" clauses that keep teams from poaching people from other organizations, but the NCAA claims it is powerless to stop it at the college level. The main question in this paper is: In the absence of a buyout payment (either agreed to pre-breach in the contract or agreed to post-breach), how does the university prove its financial loss if it elects to sue the coach and interfering institution for damages instead of equitable relief?

Here is how it begins:

INTRODUCTION
At the end of each college football and basketball season, coaches in the early years of multi-year term contracts (under which they agreed to perform exclusively for the school for the entire contract term) consider more lucrative offers from other schools that freely solicit them to fill their coaching vacancies, causing the coaches to break their existing contracts with their schools, and leaving vacancies for the jilted schools to fill in the same manner. This is known as the “college coaching carousel” in big-time intercollegiate athletics, and it has been causing coaches’ salaries to spiral out of control into the $2, $3 and $4 million dollar ranges and climbing, which some critics have characterized as “eye-popping, mind-boggling” and which “[s]ort of takes your breath away in this economic environment.” While the “have nots” continue to complain about cost containment and too much commercialization in intercollegiate athletics and the NCAA asserts it is powerless to do anything, the “haves” are the ones pushing the carousel because they generate the revenue to offset the huge financial liability created by buyouts and lucrative coaches’ salaries.

College coaches are not at-will employees; they promise to perform exclusively for the school for a period of years in exchange for an exorbitant guaranteed salary for the duration of that period. The problem is that these contracts are a one-way street from an enforcement standpoint. The schools continue to reward coaches with contract extensions and salary raises after one winning season, and schools remain liable for the coach’s guaranteed salary for the remainder of the term when they terminate him without cause; the schools also, however, let coaches walk away at will and go work for, and be solicited by, their competitors with impunity. To be certain, this is not representative of free market competition, but rather unfair competition. The purpose of this paper is not to criticize how much money coaches make, but to encourage our public academic institutions, which owe a moral and ethical duty to their student bodies, their student-athletes and society at large, to exercise fiscal responsibility and restraint by simply deterring their coaches from breaching their contractual obligations and their competitors from interfering with contractual relations. This paper analyzes the economics of college coaches’ contracts and uses it as justification and support for universities to look closer at their legal options, rights and remedies.


SSRN-id1502699.pdf