I know many are excited about the fact that Mike let three go and will be letting more go. It had to happen (and it sucks on a personal level) but it's not assured to fix things. I think we are in a nasty spot now where coaches we get are going to to awesome because they have giant balls to step in here when Mike could be gone in a few years and they do that because they are so confident. Great. The others are those who may not really be that great and their schools don't fight too hard to get them. But either way, the issue of how long Mike is here comes into play.
I have tried to narrow down the *real* cost if we let Mike go. It's not as simple as counting years and multiplying his salary.
Mike moved to $9.875M for this year. His salary bumps a little each year and his last year (31) is around $10.835M. I think it's fair to consider his salary average from next year to end at around $10.5M.
His deal ends in 31, so he coaches through the 31 season if I have that right. He's already paid for this year, so any buyout would be based on 7 years still due if he was fired this year. He won't be, but I want to do the math anyway. Many just assume it's around 73M by simple multiplication, but it's not. We don't pay him the full value. Our deal is that he gets 85% of what's due if he's fired. That means it's really more like $8.925M a year. Not firesale, but better.
We also don't pay a lump sum. We owe him his 85% of it paid over the years as if he was an employee.
This triggers some present value analysis. I am NOT a math/econ guy so had to rely on web calculators. But if I put in 7 years of the 85% salary number I get 62.475M total, and if I apply a seven year PV calc at 4% (no idea if that is close), I get $47.475M as the value today. And I would surely imagine they'd negotiate from there.
It's still really bad, but I do think at all steps here we have to look at that number as we bring in more coaches and commit to more buyouts if this does not work.
I have tried to narrow down the *real* cost if we let Mike go. It's not as simple as counting years and multiplying his salary.
Mike moved to $9.875M for this year. His salary bumps a little each year and his last year (31) is around $10.835M. I think it's fair to consider his salary average from next year to end at around $10.5M.
His deal ends in 31, so he coaches through the 31 season if I have that right. He's already paid for this year, so any buyout would be based on 7 years still due if he was fired this year. He won't be, but I want to do the math anyway. Many just assume it's around 73M by simple multiplication, but it's not. We don't pay him the full value. Our deal is that he gets 85% of what's due if he's fired. That means it's really more like $8.925M a year. Not firesale, but better.
We also don't pay a lump sum. We owe him his 85% of it paid over the years as if he was an employee.
This triggers some present value analysis. I am NOT a math/econ guy so had to rely on web calculators. But if I put in 7 years of the 85% salary number I get 62.475M total, and if I apply a seven year PV calc at 4% (no idea if that is close), I get $47.475M as the value today. And I would surely imagine they'd negotiate from there.
It's still really bad, but I do think at all steps here we have to look at that number as we bring in more coaches and commit to more buyouts if this does not work.
