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By EconMatters
Free Market at Work: Two Competing Offers on Table
The rumor has it that Nick Saban has two offers on his desk, and he is contemplating his future, sign the contract extension offered by Alabama in reply to the supposed offer on Saban`s desk to coach the Texas Longhorns as Mack Brown is being shown the door. Mack Brown will probably be reassigned to ambassador of the program status for public relations type activities – at a hefty salary of course.
Reports are all over the place on this story but supposedly Texas which is the highest grossing revenue producing sports program in the country, worth more than many NFL teams, has offered in the range of $10 million a year for Saban to jump ship to Austin, Texas. There is even talk of offering him a percentage of the Longhorn Sports Network, a deal with ESPN.
Texas Would Reap a Bargain at $10 Million for Saban
Saban has jumped ship before, and make no mistake his track record is best in class, and even at $10 million a year, he would be a net revenue generator for the University of Texas – just look what he has done for the Alabama Football program before he got there, and his tenure at the helm. Yes Saban is just that good at what he does. This is why Alabama is worried and has feverishly put together a lucrative contract extension for Saban.
Good for Collegiate Athletics?
The interesting fallout for all this from a business and market perspective is the following: Basically there were a lot of very good college football coaches in the 2 million dollar range, and Mack Brown and Nick Saban were way up there in the $5.5 Million stratosphere which has started bringing some other coaches paychecks up to near this $5 Million threshold as well. However, this is rarified air for collegiate athletic programs, who have to sell these large salaries to the University Administration, which can be quite a task given the internal politics of Universities – especially from the academic contingent.
Academia Up in Arms
The real fallout will be if Saban all the sudden re-sets the pay scale bar with a $10 million a year salary, this cannot sit too well with the newly tenured PhD Professor who is making $50-60k a year starting out. Sure many professors earn above $100k, but usually after multiple seniority raises, and yes the cream of the crop at Universities can make in the millions with Books Deals, Speaking fees, and Rock Star salaries – but most of academia are not in this category. Not to mention the other issue of rising tuition costs for students the last two decades.
Accordingly the resentment within the University System could be quite loud if football coaches start bringing home $10 Million a year at what are supposed to be academic first institutions – some will say things have gone too far with respect to collegiate athletics, and that this is becoming a professional level, marketplace salary and contrary to the supposed amateur athlete notions put forward by the NCAA.
Players Finally Get Paid Officially?
This could open up some serious discussion about whether the players should get paid if collegiate sports are going to generate this kind of revenue, and necessitates that college coaches get paid more than NFL coaches. The highest paid NFL coaches make in the 8 million dollar range.
After all, the 4 and 5-star recruits are what helps these coaches and programs win at the highest rate (Alabama has routinely ran away with number one recruiting classes under Nick Saban), and reap the rewards of these huge paydays. Without the players, none of this is possible!
The Best Athletes are already Getting Paid – Under the Table
I am sure we will know by Monday what Nick Saban has decided to do, but whatever decision he makes – one thing seems clear collegiate athletics has taken the next final step into professional athletics, and market forces will eventually force the NCAA to adjust to paying players officially at the Division 1 level.
Sure building state of the art facilities is nice for players, but market forces seem to be too big at this point to keep hidden under the table for very much longer with regards to improper benefits. Let`s call a spade a spade, collegiate sports is big-time business in this country, and these are professional athletes playing on Saturdays!
Article Update
At the time of publishing this article Nick Saban had yet to make his decision. Friday night news broke that Nick Saban has decided to stay at Alabama incentivized by his second contract extension in less than a year (his extension in March raised his salary to $5.62 million) reports are that the new extension pays Saban more than $7 million. Some reports put the number at $7.5 million.
Obviously the press release downplays the money angle saying how they want to continue to build on the tremendous success that they have enjoyed to this point both in the community and on the football field. It looks like Saban took less to stay at Alabama not wanting to start another rebuilding program at this stage in his career. All things considered it has been quite a nice year for Nick Saban with two salary raises in the calendar year without even winning the SEC this year. He can thank the University of Texas for this latest contract extension. It will be interesting to see what the Texas Longhorns next move is given the fact that Nick Saban has decided to stay put at Alabama.
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