Unexpectedly Intriguing!
September 14, 2016

The University of Kentucky's football team is off to a bad start this year on the heels of two lackluster seasons. With zero wins and two losses, there is a serious discussion underway at the university of whether or not it ought to buy out head coach Mark Stoops' contract, which is guaranteed through 2018, to clear the way for a replacement head coach.

Buying out Stoops' contract would cost the University of Kentucky \$12 million, but if the university waits until the end of the season to effectively fire him this way, it would pay a higher price.

Were UK to change its coaching staff following the 2016 season, it could cost far more than \$12 million, however.

All of Stoops’ assistant coaches except one have contracts guaranteed through June 30, 2018. Assistant head coach for offense Eddie Gran is the exception; his deal runs through June 30, 2019.

So if Kentucky removed Stoops and assistants following the current season, the university could be on the hook for some \$17.898 million in payouts.

UK alumni Tim Haab did some back of the envelope college football economics math to see under what kind of conditions it would make sense for the University of Kentucky to pull the trigger on buying out the rest of Coach Stoops' contract.

Actually, to this alumni, losing doesn't justify paying a coaches \$18 million not to coach ... unless the lost gate revenue over the next several years is greater than \$18 million. Let's say attendance falls to 30,000, about a 50% reduction. If tickets cost \$40 each then each game results in lost revenue of \$1.2 million. If there are 6 home games per season the revenue loss is \$7.2 million. If there are two seasons left on the coaches' contracts then the total loss is \$14.2 million. You'd still want to keep the coaches. The only way an \$18 million buyout makes financial sense is if the recovery in ticket revenue begins sooner, rather than later, you'll break even sooner (maybe they should fire the athletic director that set up the \$18 million buyout).

That's the kind of math we like to turn into tools here at Political Calculations! Tools where you can swap out the numbers that apply for this scenario with those that apply for other scenarios to be named later!

In this case, we're just going to focus on the considerations that would justify buying out the head coach's contract, but if you want to consider the scenario that applies for the assistant coaches, just increase the cost of buying out the head coach's contract from \$12 million to \$18 million.

Which you can do in the tool below. If you're accessing this article on a site that republishes our RSS news feed, please click here to access a working version of the tool at our site.

Input Data Values
Regular Attendance at Home Games
Number of Home Games per Season
Average Ticket Price for Home Games
Percentage Drop in Home Game Attendance for Losing Season
Number of Years Left on Head Coach's Contract

Does It Make Sense to Buy Out the Coach's Contract?
Calculated Results Values
Attendance Revenue for Regular Team Performance Over the Guaranteed Term of the Coach's Contract
Attendance Revenue for Losing Teams
Total Revenue Lost for Losing Team
The Bottom Line

It's not quite as simple as that, because the university would also have to consider the potential performance of a successor head coach, where they would need to at least deliver a "typical" win-loss record that would restore the team's lost attendance revenues.

And since there are quite a lot of head coaching candidates who are currently available in the market for a job, the math in this hypothetical attendance scenario would argue in favor of buying out the coach's contract.

In playing with the default numbers, we find that a projected home game attendance decline of 42% compared to a regular season's attendance would be enough to make it worthwhile to axe the head coach sooner rather than later, but if the decline in attendance is less than that figure, it would seem unlikely that Coach Stoops will be shown the door, unless there are other factors that would influence the University of Kentucky's decision of whether to continue his coaching tenure or not.

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