How much would it cost Michigan to drop Brady Hoke? - Part 3
As discussed earlier, Michigan's and Hoke's actions implicate different provisions. I am not Dave Brandon, but if I were him, I would give Hoke at least one more year. Keeping Hoke through the 2015 season would give him four years with his first class of recruits and a year without his predecessor's remaining recruits, and that should give a better image of where Michigan Football under Hoke's leadership could go. When you apply the background and governing provisions from the previous parts to the following fact patterns for this exercise, these are the calculations. "How much would it cost Michigan to drop Brady Hoke?"
Note: Compare these figures to the total compensation Hoke would receive at the conclusion of the 2016 season when the contract period is up. [Excluding payments at the end of the previous contract years, total payment to Hoke at the conclusion of the 2016 season = $2,500,000 (2016 base & additional compensation) + W (bowl appearance) + $1,950,000 (Deferred Compensation Account credit) + $1,500,000 (Stay Bonus) = $5,950,000 + W]
1. Michigan fires Hoke at the conclusion of the 2014 season.
Total payment to Hoke = $3,000,000 (buyout) + $2,300,000 (2014 base & additional compensation) + X (bowl appearance) + $550,000 (Deferred Compensation Account credit) = $5,850,000 + X
Under section 4.01(a) of Hoke's employment contract, Michigan has the right to terminate Hoke's contract without cause before the contract term expires on December 31, 2016. If Michigan chooses to fire him without cause, "then (in addition to any compensation otherwise accrued by but not yet paid to the Head Coach under this Agreement) it will pay the Head Coach the applicable amount" according to the table set forth in subsection (a). Once the athletic director gives notice to Hoke, Hoke is required to mitigate (i.e., to make less severe) damages by finding other "football related employment." If Hoke's employment is terminated during Contract Year Four, then Michigan must buyout Hoke's contract and pay him $3,000,000. "Any compensation otherwise accrued" by the conclusion of the 2014 season includes Hoke's base plus additional compensation for Contract Year Four, any compensation due for a bowl appearance, and the deferred compensation amount then credited to the account with no right to further payments. Remember, since he received the first payment of deferred compensation on January 1, 2014 for the first three years, the amount credited would be what has been credited since that date.
2. Hoke resigns at the conclusion of the 2014 season.
Total payment to Hoke = $2,300,000 (2014 base & additional compensation) + A (bowl appearance) = $2,300,000 + A
Article 4's multi-million dollar buyout would not be implicated at all if Hoke leaves voluntarily because it is not termination by Michigan without cause. Also, Hoke's voluntary resignation constitutes employment not as a result of "termination by Head Coach for cause or termination without cause by the University." So, under section 3.02(g)(iv), Hoke would forfeit his right to any amounts then credited in the Deferred Compensation Account. Based on Hoke's press conference earlier this week, this seems like the least likely situation.
3. Michigan fires Hoke at the conclusion of the 2015 season.
Total payment to Hoke = $2,000,000 (buyout) + $2,400,000 (2015 base & additional compensation) + B (bowl appearance) + $1,200,000 (Deferred Compensation Account credit) = $5,600,000 + B
This figure excludes the figure from Scenario 2, which is the total compensation Hoke would receive the previous year and is an expense Michigan would obviously incur. The same provisions apply as in Scenario 1. The buyout decreases by $1,000,000, but that decrease is almost negated by the $100,000 increase in the base plus additional compensation figure plus the $650,000 increase in the amount credited to the Deferred Compensation Account.
4. Hoke resigns at the conclusion of the 2015 season.
Total payment to Hoke = $2,400,000 (2015 base & additional compensation) + B (bowl appearance) = $2,400,000 + C
The same figure, $2,300,000 + A, is excluded from this figure. The same provisions apply as in Scenario 2. There is no buyout payment, and Hoke would forfeit any accumulated deferred compensation.