By December 2025, universities had committed nearly a quarter-billion dollars in buyouts to football coaches they no longer employ — a record high that reflects structural flaws in how coaching contracts are negotiated. Long guarantees and broad termination language leave athletic departments vulnerable to enormous mid-contract costs. From Brian Kelly’s $54 million payout at LSU to Mark Stoops’ $38 million buyout at Kentucky, the message is clear: Unless universities change course, buyouts will keep climbing, diverting money from athletes, facilities, and operations.
A new competitive reality
Many of today’s buyout obligations trace back to pre-NIL contracts, when schools couldn’t legally pay student athletes directly. Back then, the clearest ways to invest in program growth were by hiring marquee coaches and building top-tier facilities. The landscape shifted with the advent of NIL and revenue sharing in the aftermath of the House settlement. Schools can now funnel resources directly to athletes, making player investment a central competitive lever.
Nevertheless, athletic departments are still bound by pre-NIL contracts that commit tens of millions to coaches. These legacy agreements collide with new demands, forcing painful trade-offs between honoring outdated deals and fueling the areas that now most directly drive success.
Why high buyouts hurt more now
The cost isn’t just the payout. Terminating a coach mid-contract with $10 million, $20 million or $50 million buyouts disrupts budgets and strategy:
- Funding Trade-offs: Dollars spent on buyouts can’t bolster NIL programs, training facilities or support staff.
- Public and Political Pressure: At many state schools, the head football coach is already the highest-paid public employee. Multimillion-dollar buyouts draw taxpayer and donor scrutiny.
- Donor Influence: Booster-funded buyouts often carry expectations in hiring and firing, undermining leadership discipline and encouraging short-term choices.
This combination creates what some administrators quietly call the “buyout trap” — once a school pays big to remove a coach, pressure mounts to spend big again to secure the replacement.
Smarter contract strategies
Beating the buyout trap starts at the negotiation table. Universities have multiple tools to limit exposure without sacrificing competitiveness.
1. Aggressive mitigation and offset clauses: Mitigation and offset clauses require a fired coach to seek comparable work and apply new earnings against the buyout. Qualifying employment should be defined broadly to include college or professional coaching, media work, consulting, or NIL-related roles, with clear obligations to document job searches and quickly disclose new compensation.
Penn State’s contract with James Franklin illustrates the benefits of enforcing these provisions. His agreement obligated him to “make a good faith effort to obtain another position appropriate for his skill set (i.e., coaching, scouting or broadcasting)” and to provide documentation of that effort upon request. After leaving Penn State, Franklin interviewed for and accepted the head coaching job at Virginia Tech. His $50 million buyout obligation fell to $9 million after factoring in his new salary. That single clause kept more than $40 million in Penn State’s budget.
2. Clear, enforceable “for cause” standards: Traditional “for cause” definitions cover criminal acts, serious NCAA or institutional violations, or material breaches of contract. In the era of massive guarantees, schools should negotiate to expand these to include reputational harm, persistent underperformance, failure to address issues after notice, conflicts of interest, or acts of disloyalty.
Sherrone Moore’s firing at Michigan shows the impact of a broadly drafted “for cause” provision. Michigan fired Moore “for cause” after an investigation found an inappropriate relationship with a staff member, violating university policy and his contractual obligation to represent the university positively. Because Moore’s contract included misconduct and reputational harm in its “cause” provision, Michigan is better positioned to avoid paying his remaining salary or $14 million buyout.
By contrast, LSU’s contract with Brian Kelly underscores the danger of narrow or ambiguous “for cause” clauses. His agreement required LSU to pay a $54 million buyout if termination was “without cause” and defined “for cause” narrowly, covering criminal conduct, major NCAA violations or other specified breaches, but not general underperformance. When LSU fired Kelly, it initially asserted “for cause” without identifying a contractual violation. Kelly sued, arguing that none of the contract’s defined “for cause” conditions applied to his dismissal and seeking a ruling that it was “without cause.” Under litigation pressure, LSU reversed its position, triggering the full $54 million obligation. The lesson: “For cause” definitions that do not clearly encompass the grounds a school intends to rely on can turn a coaching change into a costly legal defeat.
3. Additional buyout-reduction tools: Beyond offsets and for-cause provisions, schools can also deploy other contractual tools to limit risk. For example, a reverse buyout requires a coach who leaves early to pay a fixed fee, thereby discouraging premature departures and helping recoup costs. Other approaches include: (i) shorter four- or five-year contracts with performance-based extensions to reduce long-term guarantees; (ii) structuring buyout payments in installments, rather than in lump sums, which can ease cash-flow strain; and (iii) periodic legal reviews to ensure agreements remain aligned with current market norms and institutional priorities.
Policy and regulatory pressures
Lawmakers have taken notice of ballooning buyouts, and in theory, Congress could legislate controls. A recent example is the COACH Act, proposed by Rep. Michael Baumgartner (R-Wash.), which would cap total compensation for any athletic department employee at ten times in-state tuition. Measures like this could directly curb excessive guarantees and payouts.
In practice, congressional appetite for college sports legislation appears minimal. Absent a major scandal or public uproar, bills such as the COACH Act are unlikely to advance. That leaves the NCAA and conferences to consider their own limits — but such action also seems unlikely. Any unilateral NCAA-imposed cap on pay or buyouts would almost certainly face antitrust scrutiny pursuant to various federal court precedents.
Toward systemic change
The legal and political realities mean lasting change must come from universities. The perpetuation of escalating buyouts is not inevitable; they result from contractual choices. Taking more measured steps in drafting and negotiating contracts can slow buyout inflation, reduce financial volatility, and protect the long-term stability of college athletics.
Jon Israel is a partner at Foley & Lardner LLP and co-chair of the firm’s Sports & Entertainment Group. Zack Flagel and Mackenna Dunn are associates at Foley & Lardner LLP and members of the firm’s Sports and Entertainment Group.
