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North Carolina

Davis buyout puts financial strain on UNC athletic department

By Aaron Schoonmaker

Aug 1, 2011

When it was announced Wednesday that Butch Davis was not going to be the head coach of the University of North Carolina football program for the 2011 season, many people asked if the dismissal of the coach was with or without “cause.”

The difference in the terminology as it pertains to Davis’ contract puts a $2.7 million dollar burden on the UNC football – and more accurately the UNC athletics – department budget.

Because the exit of Davis was deemed to be “without cause,” he is entitled to a buyout package that guarantees him $933,500 and could net him as much as $2,703,500.

UNC spokesman Kevin Best said that the expected 2011 salary for Davis has been budgeted for. Beyond this year, buyout payments to Davis are not yet budgeted and could potentially eat up nearly all of the $1 million that the athletic department has in reserve.

UNC athletic director Dick Baddour and Chancellor Holden Thorp were adamant in a press conference that formalized the head coach’s dismissal that all the money will come from the athletics department and not the school’s general fund.

The UNC athletic department, similar to many universities across the country, operate under a break-even model. According to the USA Today, the UNC athletic department posted a total profit of $140,072 in the 2009-10 academic year.

As it breaks down, Davis will assuredly get the remainder of his annual salary for 2011 ($1,122,000) plus a pro-rated portion of his annual retention bonus ($13,083) and the remainder of his annual supplementary compensation for the calendar year ($650,000). Davis will also command $590,000 each year from 2013-15 if he is not coaching elsewhere. The final payment is scheduled for Jan. 15, 2015.

Had UNC elected to keep Davis, they would have owed him a grand total of $6.7 million over the same time span before performance bonuses. The bonuses could have netted Davis $200,000 more had he attained them.

The big question now is if the school can afford to be paying two head coaches. Best said that a restructured deal for interim head coach Everett Withers is not yet done. UNC is also looking for a new linebackers coach after it was announced that Art Kaufman will be promoted to defensive coordinator.

Baddour said Monday that he is confident that the program will operate in the black this year but would not comment on the future. Best said that there are no plans for budget cuts at this point and said the athletics department is hoping for future income to come from strong ticket sales and television agreements.

According to the USA Today, ticket sales accounted for $23.3 million in 2009-10 which amounts to nearly 32 percent of the athletic department’s revenue. Television and other broadcast rights brought in an additional $11.1 million which is responsible for more than 15 percent of the program’s revenue.

The report indicates that salaries and benefits that go to the coaches, administration and support staff account for roughly 38 percent of the expenses.

One place the money is not coming from is the Ram's Club.

John Montgomery, the executive director of the Ram’s Club, said the club is not putting any money toward the buyout. He said that all monies from the Ram’s Club go to scholarships and facilities.

• Reporter: Adam Owens