The Contract, the Money, and the Termination of Mike Leach

Texas Tech head football coach Mike Leach was fired today by the university.  As first reported by the Associated Press , the school handed a termination letter to the coach’s attorney, Ted Liggett, prior to the scheduled hearing to enjoin the university from enforcing the suspension.

In light of the firing, the media is reporting all sorts of information on the legal implications, but some of it is not factual.  Let's take a look at what's really going on, legally speaking, by looking at a copy of his contract with the university.   

The Five-Year Contract: Getting Paid

Mike Leach and Texas Tech University entered into a five-year employment contract on Feb. 19, 2009.  Pursuant to the contract, Leach accepted employment as the head football coach for the entire term of five years.  In exchange, Texas Tech agreed to pay Leach generally as follows:

• Base salary of $300,000 per year;
• Health, retirement, vacation, and other leave;
• Two courtesy vehicles;
• Use of facilities and Texas Tech trademarks for summer camps;
• A guarantee of outside athletics related personal income of $1.6 m (2009), $1.9 m (2010), $2.2 m (2011), $2.2 m (2012), and $1.7 m (2013);
• A bonus of $100,000 per year if Leach himself earns up to 90 percent of outside athletics related personal income;
• Supplemental compensation for merit achievements (lots of $$);
• Contract completion bonuses of up to $1.6 million (including $800,000 for being head football coach on Dec. 31, 2009);
• Country club membership expenses; and
• 20 home game suite tickets (with food and drinks) and 20 away game tickets.

Understand that since Leach has been fired, he loses some of these things.  However, if Texas Tech improperly terminated the contract without a contractual basis, one of his options will be to sue for breach of the employment contract seeking monetary payment of everything he's now lost.  But let’s take a step back slightly. 

Leach Has Some Rules to Follow

According to the contract, Leach is "directly responsible to and under the supervision of the Director of Intercollegiate Athletics."  Also, in performing his head coaching duties, Leach is required to "assure the fair and responsible treatment of student-athletes in relation to their health, welfare, and discipline.”  Leach is obligated to follow all “applicable University policies and procedures,” as well as “any of the rules and standards of the Big 12 Conference, the NCAA, youth, collegiate, and master’s amateur athletics as well as other associations or agencies to which the University adheres.” 

Was it fair or responsible to place Adam James in a shaded equipment garage or media room after the doctor says the player has some sort of a concussion?  Was Leach insubordinate during the investigation for—allegedly —not apologizing or not signing a letter?  Depends on how you interpret the contract, but if there's a performance problem, Leach can be disciplined. 

University President Has Discretion to Discipline

According to the contract, if Leach breaches any of these rules or standards, whether negligently or intentionally, the coach “may be subject to disciplinary action and penalties ranging from termination, public or private reprimand to monetary fines or adjustments in compensation, or adjustments in the term of this contract as determined by the President following consultation and review with the Director of Intercollegiate Athletics.” 

Importantly, this language is permissive as opposed to mandatory (i.e. , words like “shall” or “will”).  The President doesn’t have to do anything.  He can let it go.  He can merely talk to the coach. 

Also, the disciplinary options described in the contract do not refer to “suspension” or removing a coach from coaching prior to a major college football bowl game.  A suspension effectively removes the coach from his position as head football coach, which is precisely what he bargained for by signing the contract. 

This is the essence of Leach’s emergency motion for temporary restraining order and injunction.  Leach argued in his motion papers that the suspension was a breach of the employment contract, and he asked the court to enjoin or prevent the university from enforcing the suspension. 

In filing this motion for temporary restraining order and injunction, Leach forced the court to have a mini-trial in short order.  The issue: Whether Texas Tech breached the employment agreement by suspending Leach indefinitely days prior to a major college football bowl game.  However, Texas Tech decided not to fight this battle and declared war by terminating him prior to the hearing. 

How Can Leach Be Terminated with a Five-Year Deal?

The employment contract describes different situations that could lead to a termination of the relationship.  Or, stated differently, the employment agreement can be terminated as follows: (1) For cause termination by Texas Tech, (2) termination for inability to perform, (3) termination as decided by Coach Leach, (4) without cause termination by Texas Tech, and (5) termination by mutual agreement.  According to reports , Leach was terminated by the university for cause, which is the first option above.

In order to exercise the “for cause” option, Leach has to violate a material provision of the employment contract (i.e. , start thinking about insubordination and the fair and responsible treatment clause in the performance section of the contract).  If there is no such violation, the university can terminate Leach for cause only if he does any of the following:

• Commits a major NCAA violation or accumulates excessive secondary NCAA violations;
• Condones NCAA violations by any staff;
• Fails to take action against staff that commit NCAA violations;
• Fails to take appropriate disciplinary action against football student-athletes; or
• Is indicted of criminal felony or misdemeanor involving moral turpitude. 

Arguably, the only applicable provision in this list is “failure by Coach to take appropriate disciplinary action against football student-athletes.”  Indeed, the word “appropriate” is vague and subject to interpretation.  Who determines what is “appropriate” and what is not?  Is this a university policy?  Is this based upon NCAA rules? 

Even after reading the termination letter provided by Texas Tech to Leach’s attorney, it’s hard to speculate as to the precise basis for the for cause termination.

That said, prior to terminating the coach for cause, the university has to give the coach 10 business days or a reasonable time to cure violations of the employment contract.  It’s hard to tell if any such opportunity was given in this case.  There are reports that the University—allegedly —wanted Leach to sign a letter and/or apologize to Adam James and family.  Maybe this is the where they argue that they gave Leach an opportunity to cure his violation, if any, of the contract.  Maybe this is where the university finds a for cause breach. 

For Cause Termination Is About Money

In any event, if the university terminates Leach for cause, its sole monetary obligation to him is to pay base salary through the date of termination, Dec. 30, 2009, and any earned supplemental compensation based upon merit-based specifics (for example, how many conference games did they win, did the Coach win any awards, did the team go to a bowl, etc).  

Most importantly, Leach does not get any of the guarantee of outside-athletics related personal income.  By contract, at some time after Jan. 1 in the year following each contract year, Coach Leach is supposed to submit a report with documentation showing his outside-athletics related personal earnings, and the university potentially pays a $100,000 bonus, or any shortfall of the guarantee.  Depending on how much Leach made in 2009, he has the potential to lose a guarantee of something up to $1.6 million.

He also loses the cars.  He loses the camps.  He loses the $800,000 contract completion bonus.  He loses the country club membership.  In short, for all his work last year, he gets $300,000, minus one day, plus earned merit increases through the date of termination, and any outside athletics related personal income already received.

Termination Without Cause is Different

If the university terminates Leach under the without cause provision in the employment contract, Leach takes home $400,000 per year for all the years remaining on the contract.  This is paid within 30 days.  He also gets the earned supplemental compensation—the merit based stuff—but nothing else. 

If Leach was terminated by the university without cause today, he’d get about $1.6 million.  However, Leach wasn't terminated without cause.  The university is basically saying they're not going to pay this $1.6 million.

What About the $800,000 Due Dec. 31?

Again, the $800,000 that is being talked about is only due if Leach is the head football coach on Dec. 31, 2009.  He is not going to be that.  There will be no $800,000 paid to Leach, according to the contract.

In conclusion, this football incident is being discussed in the court of public opinion, and the fact is, there’s a lot to be determined and learned.  The facts are absolutely hazy.  Also, although the author here is an attorney, he’s not one in Texas and definitely not giving out any legal advice.  Take this information for what it’s worth: One person’s analysis of Mike Leach's employment contract based upon today’s news reports.