The second thought most had after Penn State fired head coach James Franklin was to consider that they just opted to pay him almost $50 million to not coach. Leaving many to think Franklin might go the way of Ed Orgeron. Orgeron’s LSU buyout was only a shade over $17 million. The result of that significant buyout is that no one has ever heard Ed Orgeron’s name associated with a potential future coaching hire since. That is due in large part to how the buyout is written in the contract. If a fired coach receives a large buyout, the buyout's scheduled payments can stop when the coach in question gains new employment in excess of a certain amount. Depending on the contract language.
If Franklin were to take on a new job in the field (coaching, scouting or media), there is a high probability that his new salary would cancel or diminish future payments from Penn State. The University and Franklin could have negotiated a settlement prior to paying the buyout clause. That did not happen, leaving the sports world to believe Penn State is on the hook for the full $49 million. The terms of his 2021 contract extension were obtained by Front Office Sports and reveals in interesting detail in regard to the Franklin buyout.
“Should Coach obtain such applicable employment prior to the date this Contract would otherwise have expired, the University’s obligation to make payments to Coach … will be offset by the total compensation earned by Coach from such applicable new position through the end of the otherwise unexpired term of this agreement.”
To put it plainly, if Franklin were to start a new job, his earnings from that salary would impact how much of the scheduled payments Penn State is required to pay. Once earning a significant paycheck elsewhere, Penn State could be left to only pay the difference between his current salary and terms of his buyout. If he is scheduled to make $7 million from Penn State, but earns $5 million from said new employer, Penn State only has to pay the difference. If Franklin chose to not seek gainful employment, theoretically Penn State would be required to pay the full amount. Just wait, there’s more. Choosing not to pursue gainful employment pertaining to his skill set is not permitted under the terms of the deal. Per the language of the contract, “Duty to mitigate” states very clearly:
“Once terminated, Coach is obligated to diligently search for and make a good faith effort to obtain another position appropriate for his skill set (i.e., coaching, scouting, and broadcasting only) and to provide the university upon request with evidence that he is seeking such employment.”
In addition to the above clause, the contract also stipulates that Franklin is required “to make good faith efforts to obtain the maximum reasonable salary” with said new employment. The terms of Franklin’s buyout consist of three primary aspects. A base salary of $500,000, additional compensation of $6.5 million, and a $1 million insurance policy to be paid out on a schedule from now until the end of the 2031 college football season.
An additional report that surfaced earlier this week suggested that incoming brand Adidas would help bankroll the buyout amount. Penn State strongly denied that claim in a statement to Front Office Sports. Athletic Director Patrick Kraft also declined to comment on that report in his Monday press conference.
James Franklin faces a job hunt ahead per the details of the contract. With a handful of coaching vacancies currently available and any number of sports media jobs he could find interest in, alleviating Penn State of a bulk of the buyout burden seems very likely in the upcoming future.
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