Additional Insight on Tom Crean and His Contract With Indiana

Additional Insight on Tom Crean and His Contract With Indiana

It reminded me a lot of the political theater I used to be part of

— Indiana Athletic Director Fred Glass on announcing Crean’s extension to a packed Assembly Hall

The media is again struggling to get the specifics of the buyout provisions correct, so we’ll step in. In this article we’ll also discuss a few other angles of interest related to this topic.

What is the amount of Tom Crean’s buyout?

His buyout depends on the timing of termination. If he were to be terminated at the end of this month (March 2015), the buyout would be a minimum of $11.1MM and could be as high as $12.0MM.

From now through June 30, 2015, the buyout is the lesser of $12MM and the remaining “outside, marketing and promotion income” payable under his contract. $11.1MM represents the buyout total if there have been no annual merit increases. However, such merit increases are allowable under the employment agreement and just a 5% increase would push the buyout figure as of the end of this month to $11.6M.

On July 1 of this year the buyout drops to $7.5MM.

How is the buyout paid?

The buyout is paid in equal monthly installments through June 30, 2020. Under a scenario of the buyout being $11.1MM late this month, this would mean monthly payouts of $176k – or $2.1M annually.  [$11.1MM / 63 months = $176k].

On July 1, the monthly and annual amounts would decline to $125k and $1.5M, respectively.

Will Indiana have to pay all of it?

It depends. Crean would be required to make “reasonable and diligent efforts” to obtain a comparable employment position of paid services opportunity. For purposes of the agreement, such jobs would include “media commentator with a national or regional network, broadcast station or cable company; professional basketball assistant or head coach; head men’s basketball coach at a Division I college or university.”

Total compensation earned from any of the jobs above would offset, dollar-for-dollar, Indiana’s responsibility to Crean.

The ultimate payout from Indiana, therefore, is difficult to estimate.

We can also envision a scenario of a “mutual agreement” to go separate ways with a one-time fee paid to Crean with no future right of offset. Somewhere in the ballpark of $3.5MM – $5.0MM might be agreeable to both sides. The coach pockets a nice parting gift and the Crean chapter is closed.

Late Night Hoops had the facts on the Crean contract long before traditional media folks did. How is that possible?

You’d need to ask the traditional media. A simple answer may be that it’s the nature of traditional media. They are often not much more than regurgitating entities who take in information and spit it right back out without understanding it. In addition, media gets things wrong with great regularity. That’s true not just with sports, but news and information of all types.

Media usually glosses over topics to get people talking. Understanding the topic or real analysis by the media is not required. In this example, media seems to have (a) had Indiana tell them something and then (b) repeated it. Done. “Must be fact!” is what the masses conclude.

There could be other reasons why only Late Night Hoops talked about the true amount of the Crean buyout long before others, though.

What was the reaction to your article on Crean’s buyout starting at $16 million?

Indiana fans particularly didn’t like it, but they also didn’t believe it. The University had stated in public and in media releases that Crean’s buyout was $8 million for three years before dropping to $1 million. No way were they going to believe otherwise. Some of them asked Indiana media – they got either no answer or “confirmation” of the $8 million.  A sampling of feedback:

  • “Fred Glass would be stupid to say $8 million if that wasn’t really the amount!”
  • “According to people to whom I have spoken in the athletic department, that graph [on LateNightHoops.com] is incorrect. The amount IU owes Crean for a buyout is $8M through 2015.I haven’t seen the contract with my own eyes, but believe the information to be correct.” –Kent Sterling, KentSterling.com
  • “I think your 14mm number is widely off the mark…I have spoken to a couple of beat reporters who both said it was $8mm.  Additionally the original buyout in the 2008contract was only $3mm which makes the $14mm number even harder to believe.”
  • “There is no way his buyout is 14mm.  AD said at time of the deal it would be 8mm”

People are often confused by contracts; what’s most interesting about this story?

Most Indiana fans seem to have given the school and AD Fred Glass a pass on this one. It’s interesting because at the time of the announcement – moments before tipoff of the season-opener when the Hoosiers were ranked #1 in the nation – Glass stated something that wasn’t (or at least three weeks later wasn’t) true.

Announcing an agreement before it is finalized usually results in putting yourself in a bad spot. Perhaps $8 million was the expected buyout when the extension was announced, but with the leverage given to him by the early announcement, Crean and his people negotiated a better deal.

But even that wouldn’t clear up the questions.  The school said they would release further details of the contract when finalized. The final document was signed just a few weeks later. Things could have been corrected at that time, but they weren’t. Why not?

Perhaps Glass and others at the school hoped the $16 million (or $11 million, or $12 million, etc.) buyout would never become an issue. Maybe there’s more to it – maybe there’s not.

At a minimum, the school’s reporting of the buyout amount was incorrect and not fixed. The real story hasn’t been reported or publicly questioned and what’s most interesting is that the Indiana faithful doesn’t really seem to care. Were they simply told something by mistake? Was not correcting the bad information another simple oversight? Were they intentionally misled? Is ignorance bliss?

At the end of the day, Indiana has great fans and a lot of talent in the program. Perhaps the year finishes out well and Crean and Indiana stay together for many happy years. Regardless, our hope is you now understand the buyout provision just a little bit better than you might have previous to reading this.

Related:

CREAN’S BUYOUT SUGGESTS HE’S AT IU FOR THE LONG-TERM  [link] (2013 – LateNightHoops.com)

Indiana announces Crean agrees to extension through 2019-20 season [link]  (Associated Press via NCAA.com)

Other:
Is Indiana in the NCAA tournament with a loss to Maryland tonight? Too close to call at this point. One of a million angles to consider is adjusted winning percentage (AWP – the only piece of the RPI that a team truly has total control over – winning and losing games). Below is a look at the lowest seeded teams from power conferences a year ago… along with Indiana’s AWP and projected RPI for this year:

RPI Region Seed S-Curve Team AWP
48 11 42 Nebraska 0.6068
40 11 43 Providence 0.6733
42 11 44 Tennessee 0.6119
56 11 45 Iowa 0.5852
47 12 46 Xavier 0.6061
55 12 47 NC State 0.5833
RPI Region Seed S-Curve Team AWP
~56 ? ? Indiana 0.5547

 

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