How Coaches Are Paid

“Money” is going to be discussed ad nauseum during the NC State coaching search. Unfortunately, like so many other topics, many people who don’t have a damn clue how the world really works are not going to be short on proclamations regarding the financial position of the NC State Athletics Department. Our goal today is to introduce some reality and clarity to these conversations so when idiots with their uneducated misinformation (this includes the local media and most radio talk show hosts) you can interject some reality into the situation.

To start to get your mind in the right frame, you need to take a look at the entry that preceeds this entry and uses Herb Sendek, Roy Williams, and Matt Doherty as specific examples of how coaches are paid.

Coaches’ pay should be discussed in terms of “total compensation” as opposed to “salary”. Many people talk about what schools “pay a coach” without understanding that schools don’t directly pay coaches all of their compensation. Schools are not the direct source of 100% of coaches’ compensation. Schools and their programs are platforms from which coaches generate “total compensation” – some of which comes directly from the school and some that does not. Much of what a coach gets paid is actually “market driven” by outside parties and sources (like shoe contracts). The more attractive the mix of the program and the coach, the more revenue that can be generated for the coach.

Coaches generally generate income from the following sources that comprise total compensation:

(1) Salary paid directly from the University (Athletics Department)
Private schools typically pay coaches more in direct compensation than public schools because of the increased public reporting (and therefore, scrutiny) of financial information of public institutionals. North Carolina schools have traditionally structured coaching packages differently and chosen to pay less direct salary than many schools to avoid public debates on the topic.

Salary is generally the only component of total compensation that is “guaranteed”. Unless otherwise defined in the contract, this is what usually constitutes the amount of “buyouts” in coaches’ contract . The obligated buyout is why Lee Fowler’s annual compulsion to reward Herb Sendek with 1-year contract roll-overs in each off-season was so frustrating as it continuously increased the amount of a potential buyout of Sendek’s contract.

(2) Media Contracts
Companies like Capitol Sports, ISP, and Learfield Communications pay Athletics Departments for the rights to the University’s media properties and pay coaches to appear in some of those media properties — like coaches’ radio shows, coaches’ television shows, signage at facilities that can then be sold for advertising, etc. These contracts are often called “personal services contracts”.

Athletics Department are not built to function as media companies, so this structure allows the Department to outsource media & marketing functions to a more efficient private entity – in NC State’s case this is currently Capitol Sports. Capitol Sports then goes to market selling advertising and signage they now “own”. They (hopefully) and make a profit on the spread between what they contractually pay the department and the coaches and what they can charge for advertising rates.

Think about this — the more popular your coach and the more successful your program, the more valuable the rights to your media properties become as there is greater demand for viewership and therefore greater potential for the media company to generate larger advertising revenue.

Media contracts are where some funky things can happen with accounting that is hard to trace. For example, what if the market value of the basketball program’s media rights is $1 million? Perhaps the department chooses to only accept $250k for the rights and allows Capitol Sports to ‘overpay’ the coach for said coach’s services. This is a creative way for the coach to earn more compensation that they can’t earn in direct salary because of state laws and political climates.

(3) Other Endorsements, highlighted by Shoe Contracts
Coaches often have contracts with various private industry entities. These can take the form of small local commercial endorsements or larger ones. (Can you say Jim Valvano?) This is where the “prominence” of the program &/or the personality is so important. The exact coach at school #1 may only be able to generate a fraction of the income of what the same coach could generate at school #2.

The primary income source from other endorsements is typically generated from contracts with shoe companies like Nike and Adidas. The market dynamics of shoe deals are similar to those of the media deals — the more popular the coach, the more successful the program, and the more national attention that generated by said program creates more lucrative opportunities for coaches to derive compensation from shoe contracts. As we highlight here, Adidas valued Herb Sendek’s market value at a piddly $80,000 a year compared to Roy Williams $500,000 a year from Nike. (Carolina’s shoe situation is unique because of their “all sports deal with Nike. But the theory remains the same and we aren’t going to deal in the specifics for the purposes of this discussion).

To be clear on this – this revenue is not paid by the University. It is market driven based on the prominence of the coach and the University. Because of the market-based nature of this compensation component, a school could theoretically hire a more nationally popular coach who would immediately make more money than the previous coach simply because of their shoe deal.

(4) Private Supplements / Personal Services Contracts
Additional private services contracts generate extra money for coaches that is usually provided by booster(s) to supplement a compensation package. For example, Herb and Sendek and Matt Doherty had no such supplement and Roy Williams gets almost $800,000 a year from the Ram’s Club.

These funds are usually raised through a booster clubs in the form of restricted gifts. Booster clubs are non-profit entities set up for the administration of scholarship money; boosters must stipulate that these pledges are earmarked for private payments to said coach when contributing. These contributions are usually made by the larger donors in booster clubs and take the form of large dollar figures because of the inefficiencies caused by administering a fund with thousands of donors contributing small numbers. Of course, the booster gets no “club credit” for such a payment.

In the coming days, we will be taking a closer look at the “money situation” related to NC State’s Basketball program. Until then, we thought it would be prudent to set the table on the mechanics of how this works before too many people said too much that wasn’t true about the general topic.

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37 Responses to How Coaches Are Paid

  1. Only One 04/03/2006 at 10:07 AM #

    a little off topic. but is anyone else sick of all the unc and dook fans coming out of the woodwork to bash on state and deny our bball heritage?

  2. Jim 04/03/2006 at 10:18 AM #

    I love it when ECU grads come by my office to tell me who we can afford.

  3. UNCFan 04/03/2006 at 10:22 AM #

    General question for the wolfpack nation:
    Could you please explicitly define what the new coach must accomplish for your satisfaction?

    SFN: Shawn, is this you? Let’s don’t hijack topics. We’ll get to that in the coming days/weeks. Thanks

  4. Waxhaw 04/03/2006 at 10:24 AM #

    That is a great analysis. Based on that what can we determine we could pay a top notch coach?

    University pay — similar to slightly higher
    Capital sports — slightly higher initially with %
    shoe deal — significantly higher
    alumni — depends

  5. Dan 04/03/2006 at 10:25 AM #

    The article is more proof that NC State will go as far as the Wolfpack Club is willing to take it.

    There is no doubt in my mind that the big ego coached like Rick Pitino wouldnt love to be part of something historic. And that is what this era of Triangle Basketball would become if Rick Pitino came to State. If the money and the sales pitch are on target, he’ll come.

  6. RickJ 04/03/2006 at 10:28 AM #

    It is interesting what a small percentage the school actually pays. I believe Doherty’s buyout was around $350,000 from UNC. This seemed really low at the time but these figures give it some explanation.

    So much of a coaches pay is actually linked to their own marketability as well as the school. I think the biggest thing a coach looks for is – “Can I be successful at this school? If that is true, the money will follow.�

    Where does the money from a coach’s summer basketball camp fit in? How much has Sendek made on his camps?

    From my view, we have plenty of money to pay a coach. It is a matter of finding the right fit who is at this time ready to make a move.

  7. site admin 04/03/2006 at 10:37 AM #

    “So much of a coaches pay is actually linked to their own marketability as well as the school. I think the biggest thing a coach looks for is – “Can I be successful at this school? If that is true, the money will follow.â€?

    Bingo! The market does not lie.

    All the State people in the world can scream and yell about how wonderful Herb Sendek was. In the end, Adidas deemed him wonderful enough to not be deserving of squat in compensation.

  8. jason 04/03/2006 at 10:38 AM #

    well if you look at herb’s old contract with us it states he must have our permission to look for other jobs! Does this mean that we gave him the right or did he do this behind our back? If this happened to be illegal what will be state’s stance in the situation?

  9. Only One 04/03/2006 at 10:40 AM #

    well jason, it would be the first time that slimeball Herb has shown no class or ethics.

  10. lumberpack 04/03/2006 at 10:42 AM #

    For the right coach at NCSU, $1.8 to $2.2 million is not out of the question.

  11. lumberpack 04/03/2006 at 10:44 AM #

    Herb and Ethics-

    I have bashed herb a great deal and made many dispariging comments, but a man with minor children to support has only one ethic-his family.

    Make the most he can for his family.

  12. Trout 04/03/2006 at 10:55 AM #

    Does a coach bring his “shoe contract” with him? In other words, is that figure really outside the control of the University?

  13. Jim 04/03/2006 at 10:55 AM #

    It is not illegal to breach a contract.

  14. JeremyHyatt 04/03/2006 at 11:01 AM #

    I wonder if Sendek would have left if the fans didn’t put as much heat as was put on him. If more people were happy, he probably would have at least let Fowler know and see what he could get if he stayed.

    Well State Fans Nation, you got your wish: if the replacement does not perform above Sendek I hold you personally responsible (tongue in cheek).

    From here, it appear we MUST shell out the money and steal someone great from a good program, or else we will end up in the same boat. how about Rick Pitino? Calipari? Barnes? — Quinn Synder? Cremmins? LOL

    Who is on your short list??


  15. will 04/03/2006 at 11:04 AM #

    I want to know why the Wolfpack club does not have a salary set up for our coaches similar to the one that Roy has. I’m sure if they asked donors to donate for a new coach they would have no problem raising funds. Seems to me like we have a bunch of can’t do’s runing the wolfpack club rather than can do’s. Anyone know why we don’t do this? Is it just pride? Do we really think this is below us?

  16. class of '74 04/03/2006 at 11:11 AM #

    ^^Herb decided to leave after asking around what kind of support he had beyond the hand full of high rollers. Several people told him the same thing, that his support was weak at best and not likely to improve. After weighing this he opted to see what other possibilities my be interested and ASU bit quickly. The rest is history.

  17. GAWolf 04/03/2006 at 11:34 AM #

    Bwahahahaha. Herb was at best th third choice for ASU. It’s not like he said “here I am… come get me” and ASU tripped over itself to throw money at Herb. There is a fine line b/n spin and an untruth. Watch yourself….

  18. Jim 04/03/2006 at 11:38 AM #


    Seems to me like we have a bunch of can’t do’s runing the wolfpack club rather than can do’s.


    You can’t be serious. The Wolfpack Club and the Athletic Department are not the same thing.

  19. SethEsquire 04/03/2006 at 11:43 AM #

    It is most definitely illegal to breach a contract; however, you have to be willing to sue and able to prove monetary damages in order to get anything out of suing over a breached contract. Even if Herb did seek other jobs without permission, it’s doubtful that the University would try to sue him; not only would they have a tough time proving money damages, it would make the University look really bad.

    The problem that this very informative post raises is that the same big boosters who we would need to pony up to supplement a coach’s salary the way the Rams Club supplements Roy Williams’ contract are those who were Sendek’s staunchest supporters. It may be tough for us to scrape up enough money to lure a big name for that reason.

  20. Gugs 04/03/2006 at 11:54 AM #

    Sendek bit quickly…for big bucks. Smart move. The MARKET for Sendek was quite high despite this website’s comments to the contrary over the last month or so. Wright’s gone; Werner is thinking about going; and the price for a great coach just got higher with the reasons Sendek is listing for leaving.

  21. class of '74 04/03/2006 at 12:03 PM #

    ^^^^Herb was definitely no better than ASU’s third choice if that but when he had someone contact them they supposedly bit immediately. That’s all I meant by the comment. So far as I know Herb was never anyones first choice. This is the report on local radio that seems to be backed up by the facts.

  22. Jim 04/03/2006 at 12:25 PM #


    It is most definitely illegal to breach a contract; however, you have to be willing to sue and able to prove monetary damages in order to get anything out of suing over a breached contract.


    Thanks for the legal lesson, sport.

    It is not illegal to breach a contract. You may have to pay damages for breach, of course, but breaching does not make you a bad person or a crominal. Many contracts have liquidated damages clauses that spell out the penalties for a breach. Many times it makes good business sense to breach and pay damages.

  23. VTPACKFAN 04/03/2006 at 12:30 PM #

    This should be a wake up call to the AD. Their future is now more uncertain since they have to shift from a state of complancency to one of action. No matter how the media or public portray this, the direction we move in will be on their permenant record. If they hadn’t looked to the Wolfpack Club to play a more meaningful role before, they should be now. Even if the booster money is not there initially to lure a big name, it will need to be ready if we hire a mid-major, or assistant coach in the event that it works out and we want to keep him. Without the change we have as good a chance as the Reds do in baseball of rekindling the days of old.

  24. BJD95 04/03/2006 at 12:31 PM #

    Jim is exactly right re “breach” vs. “illegal.” Here, there are no damages, despite any technical “breach.”

    I have criticized Sendek’s record, and by no means think Sendek is come kind of “saint.” However, he’s no slimeball. IMHO, he’s handled the entire Arizona State situation like a professional.

    We didn’t owe him anything, and he didn’t owe us anything.

  25. SethEsquire 04/03/2006 at 12:42 PM #

    I’m afraid you missed my point, Jim. It is true that it’s not criminal to breach a contract, but that doesn’t mean it is lawful, either. “Illegal” is an imprecise term.

    I think we are in agreement on the real issue, which is that whether it’s illegal, a breach of contract, or anything else, it would be very difficult for the University to prove damages if it were to try to sue Herb for breach of contract. Thus, whether Herb technically breached his contract in talking to another school without permission or not, the practical result will be that nothing will happen.

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