Negotiating The Coach’s Contract

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First, a tip of the cap to Tony Dungy. In a business that consumes most people’s time, energy, focus and ability to help others, Dungy appeared intent on not allowing that to happen. In the frenetic, fast-paced world of the NFL, Dungy had a serenity about him that resonated with everyone. In the politically correct world of sound bites and coachspeak, Dungy had an openness, sincerity and grace that were admirable. When I saw him at league meetings and saw faces light up when they met him, I was always impressed how he actually spent time talking to people who approached him and made them feel better as they walked away. In a world where there is increasing attention to style over substance, Dungy had both. And in a world where too much coverage is given to someone like Pacman Jones, not enough is given to a man like Dungy.

With the coaching interviews and coaching changes going on in the headlines, there are also behind-the-scenes negotiations involving coaching contracts in which the team and the agent, as in player contracts, look at reliable reference points in the marketplace: the competition, or lack thereof, for the coach’s services and the level of risk in losing the coach through aggressive negotiations. Like all negotiations, one primary concept rules: the concept of leverage, whether perceived or real.

In 2000, I negotiated a contract with Mike Sherman to be our head coach with the Packers. Sherman, as all clients of Bob LaMonte do, came in with a detailed book explaining what he was going to do as head coach on a week-by-week basis for the next year; who he was going to hire and why; how he was going to structure his side of the organization, etc. I negotiated Mike’s contract in an hour, using comparables of recent first-time hires such as Jon Gruden in Oakland.

Two years later, Ron Wolf retired and Sherman was given the position of general manager in addition to being head coach. With that title, of course, came significantly more responsibility and, consequently, more money. On cue, LaMonte came to town and requested a meeting to upgrade the contract. We were prepared to double Sherman’s compensation, which was just above $1M annually at that time.

Unfortunately for my negotiating position, on the exact same day I was to negotiate this deal, the Cleveland Browns finalized a contract with Butch Davis to become head coach for $3M per year. Ouch! This gave LaMonte leverage in seeking even more as Sherman now had both titles. To his credit, LaMonte did not exploit this leverage, and we were able to reach a deal we were all comfortable with.

Four years later, we negotiated another head coaching contract, that of Mike McCarthy. The market at the time was in the process of being set by Brad Childress in Minnesota.

Because they had a scheduled interview with the Packers, Childress and his agent – Bob LaMonte – were able to create the impression that if the Vikings allowed Childress to travel to Green Bay and perhaps wind up as head coach there, they would regret it for years. The Vikings did not let Childress board a plane and signed him to a five-year, $10M deal on the spot. In truth, Childress had simply been one of many candidates for the Packers job, but he used perceived leverage to cause the Vikings to move impulsively to sign him.

That market for McCarthy at that time (he has since secured a new and upgraded contract) settled in a bit below $2M a year, with similar deals for Sean Payton of the Saints and Dick Jauron of the Bills, and now, two years later, for Josh McDaniels of the Broncos.

An example of true leverage is the situation involving a former coach, Bill Parcells, one year ago. With his name and much-desired bravado in the industry, Parcells created great leverage by staying away from football while teams suffered losing seasons (as Bill Cowher is now doing), prompting two billionaires – Wayne Huizenga of the Dolphins and Arthur Blank of the Falcons – to ask him, “What would it take for you to come in and run our franchise?” That’s the kind of question every agent dreams of hearing.

Leverage, though, can be fleeting. The game of negotiating is a long horse race, and there will be times when the same person you are negotiating with – someone with no leverage — will be back with all the leverage. In the examples above with Sherman and Parcells, LaMonte and Jimmy Sexton (Parcells’ agent) could have easily wrangled more out of their deals. By not doing so, they gained more respect and trust from the other side.

There are negotiations for coaches going on throughout the league as we speak. At the end of the day, leverage – perceived and real – and the ever-changing marketplace will govern the parameters of the deal, but there are a lot of tense moments along the way.

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