After 15 years coaching the University of Georgia football team, we learned this past weekend that Mark Richt is stepping down from this position. There are mixed emotions from UGA fans about this news, but we’ve decided at Wela (where we have plenty of UGA football fans) to take a rumor-fueled look at the numbers behind this move to see what this change will likely cost Richt and the UGA football program.
When most coaches are let go (i.e. fired) we hear about the big payouts they'll receive. That is not the case here, though. From our understanding, back in January of 2015 when Richt and the Athletic Association were negotiating his contract extension, the buyout was lessened on both sides to a nominal amount. What did change was that he received a raise of $800,000 bumping him from $3.2 million to $4 million. During this negotiation, he also signed a two-year extension through 2019 when previously his contract only went through 2017.
Richt’s buyout (i.e. what the University is on the hook for should they let him go) is about $4.1 million based on what we can tell. Representing just one year of salary, this pales in comparison to buyouts like Les Miles at LSU which is in the $15 million range. It is unclear as to whether he would receive the buyout should he stay at UGA in a different capacity, which is certainly something many fans believe could happen. Considering that over this 15 years at UGA Richt earned roughly $35 million, along with his clear love for UGA and Athens, we doubt that losing the buyout money would sway him from saying no to another position at UGA.
So now that we better understand how this sudden change in position is likely to financially impact Mark Richt, let’s take a look at the financial implications for the University.
The Georgia football program’s profit and loss statement from 2013 shows that it was the third most profitable program in the country. They had revenue of $77.6 million and only $26.3 million in expenses leaving them with a profit of $51.3 million for the year. Not too shabby. Typically excess profits go to fund other athletic departments and donations to the university for non-athletic purposes.
With such a profitable program, it's easy to assume that Richt was not let go because his performance or salary were greatly impacting the bottom line of the balance sheet. There are a lot of rumors floating around, though, that the big donors were a major reason for letting Richt go. Supposedly, they were threatening to withhold their donations if he wasn't let go.
While it's unlikely that we'll ever hear if this was the actual reason for the change, looking at the numbers it does seem to make sense. Of the $77.6 million revenue in 2013, ticket sales accounted for just $22.5 million while donations made up $27.7 million. It stands to reason that the threat of impacting roughly one-third of their annual revenue would cause this program to bend to the will of the donors.
Looking forward now, the Georgia football program will likely have new costs associated with finding the replacement coach.
There are already rumors that they've decided on Kirby Smart, the current defensive coordinator at Alabama to be the next coach. This would certainly keep the cost to recruit a new coach at a minimum. As far as the new coach's salary, though, there are a lot of factors that will come into play. Considering that we paid Richt over $4 million each year which ranked #12 on the list for highest paid coaches, we doubt that the new coach's salary would need to top $5 million.
Taking a step back to look at this complete picture, it's easy to see that Georgia is one of the most profitable programs in the country. While Richt was at UGA, he collected nearly $35 million while in 2013 alone the UGA football program generated twice that amount in revenue. Clearly, UGA had an excellent ROI on Richt's salary. Now we'll be curious to see how the next coach performs, both on the football field and on the balance sheet.