Photo from Icon SMI

In December 2008 the headline on the sports-and-dong website Deadspin blared, “Auburn Hires Gene Chizik; Big 12, SEC Laugh Together.” It was a preposterous hire, according to all conventional wisdom. As Deadspin writer Clay Travis snarked, “Auburn just confirmed what Auburn fans have always feared: their athletic department is run like a breakaway republic, a living testament to what the South would have ended up looking like had they won the Civil War — a bunch of rich guys who live in large mansions and think they’re all the boss.”

Travis confidently predicted that Chizik would be gone in two years. Things didn’t quite go as expected, to put it mildly. It’s two years later and Chizik is still coaching Auburn after, um, winning the national championship last season. In fairness, Travis and other critics were understandably skeptical of Chizik’s scant head coaching record, a combined 5–19 in two seasons at Iowa State. Still, it’s Chizik and the “bunch of rich guys” in the Auburn athletic department who are now laughing at all the doubters.

Chizik’s success in 2010–2011 wasn’t just about proving critics wrong on the field. It was also a major boon to his bank account. Chizik earned a slew of contractual bonuses that effectively doubled his salary. On top of that, he received his second contract extension in as many years from Auburn, one that puts his salary on par with the other bigshot coaches of the SEC. Even if last season proved to be a one-hit wonder, Chizik will be financially secure for a long time to come.

From Iowa State to Auburn

In February 2007, Chizik signed a six-year contract with Iowa State (effective as of the previous November) that guaranteed him $1 million annually — $250,000 in base salary and $750,000 for “secondary services,” including media appearances and apparel endorsements. There were also a number of “performance incentives,” such as $10,000 for every regular-season win after the seventh win, $100,000 for making the Big 12 Championship game, and $100,000 for finishing the year in the top ten of the USA Today/ESPN Coaches poll. Chizik never achieved any of these incentives; his two Iowa State teams finished 3-9 and 2-10, respectively.

Had Iowa State fired Chizik without cause — that is, for poor performance as opposed to, say, committing major NCAA rules violations — the school would have owed him $500,000 in damages for each year remaining on the contract. Conversely, Chizik would owe the school “liquidated damages” (i.e., a buyout) of no more than $750,000 if he left for another head coaching job.

Twenty-two months later, Chizik signed a letter with Auburn accepting the school’s head coach job with guaranteed annual compensation of $1.9 million for five years —nearly double what Iowa State had paid. The final contract, signed in June 2009, provided a base salary of $500,000 and $700,000 for a predetermined number of media and fundraising appearances. The remaining compensation would come through football camps, outside speaking engagements, and equipment and apparel endorsements.

Like Iowa State, Auburn’s 2009 contract provided a number of performance incentives, most of which Chizik achieved during the 2010–2011 national championship season. This included $200,000 for winning 14 games (he was guaranteed at least $75,000 for winning ten games); $100,000 for playing in the SEC Championship; another $200,000 for winning the conference championship; $100,000 for finishing in the top five of at least one major poll; $100,000 for being the Associated Press SEC coach of the year; and $500,000 for winning the BCS Championship. In total, Chizik received $1.2 million in performance bonuses this past season, nearly doubling his original base compensation.

Unlike Iowa State, Auburn also provided Chizik financial incentives based on the academic performance of his players. These incentives were not as lucrative as the on-field bonuses. Under the 2009 contract, Chizik would receive up to $150,000 tied to the NCAA’s Academic Progress Rate, an index that measures player eligibility and retention. The minimum APR necessary to trigger a bonus is 930. Auburn’s APR in 2009–2010 was 970, good enough for Chizik to earn a $75,000 bonus (a perfect score of 1,000 was necessary to earn the full $150,000).

Raising the Stakes — and the Risks

Chizik’s original Auburn contract provided that raises and extensions “will be determined at the University’s discretion” based on four primary factors: academic success, competitive success, compliance with NCAA rules, and fiscal responsibility. After Chizik’s first season, when Auburn finished 8–5 (3­­–5 in the SEC), the university increased his guaranteed compensation from $1.9 million to $2.1 million. As noted above, this was entirely at Auburn’s discretion (unlike former coach Tommy Tuberville, who had guaranteed raises written into his contract). Auburn also extended the contract’s term for an additional year, keeping the remaining length at five years.

Auburn’s 14–0 championship run this past year, fueled largely by now-departed quarterback Cam Newton, further accelerated Chizik’s contractual guarantees. In his second extension, announced last week, Chizik’s guaranteed compensation rises to $3.5 million. His base salary remains the same as his original 2009 contract, $500,000. The remaining $3 million will come from the usual litany of guaranteed media appearances, football camps, outside engagements, etc. The bonus structure that provided over $1 million in additional income last season also remains in place with a few minor alterations. And as with last year’s extension, Auburn added an additional year to the end of the deal, continuing the five-year term.

Raising the Risks?

Obviously, Chizik earned a healthy reward for last season’s achievements. But what about the potential risks for Auburn? The question here is not whether Chizik is “overpaid,” but rather whether Auburn has sufficient protections if the coach is unable to replicate a single season’s success over a longer period of time.

The 2009 contract said that Auburn would only be liable for unpaid base salary — the $500,000 per year — if it fired Chizik for poor performance. Before last week’s extension, that amounted to $2 million for the remaining four years. Under the new extension, the university would now owe Chizik $10 million in the event of termination without cause before the end of 2011. That amount will decline for each season elapsed — barring, of course, yet another contract extension before 2015.

For Chizik’s part, he would owe Auburn liquidated damages equal to one year’s compensation — $3.5 million — if he quits before the end of 2014. Keep in mind, Auburn also “loaned” Chizik the $750,000 necessary to pay the liquidated damages provision of his Iowa State contract; Auburn forgives one-fifth of that loan each year that Chizik remains the school’s football coach.

The buyout numbers for both sides suggest Chizik is safe as Auburn’s coach for at least the next four seasons. It’s unlikely Chizik will be in such demand that another university would help him pay the $3.5 million he would owe Auburn for quitting before 2014. And Auburn — and its boosters — will probably balk at a buyout of over $3.5 million, a figure that won’t apply until after 2014.

All of this, of course, is subject to Auburn and Chizik staying out of trouble. Like any school, Auburn is free to fire Chizik with cause — that is, without a buyout — if there is personal misconduct on the coach’s part or any major NCAA violations. Of note, Chizik’s new contract eliminated a provision in the 2009 agreement that allowed Auburn to “suspend” payments above base salary — the media and outside income — if and when the program was under investigation by the NCAA. Any suspended payments would have been repaid, with interest, if the NCAA ultimately found there were “no major rules violations.” The new contract has no provision for suspending or withholding Chizik’s pay.

Despite this change, there’s no additional risk to Auburn if things somehow go bad and Chizik becomes the next Jim Tressel. The real risk is if Chizik can’t replicate his success over the next four years, a tall order given that he won a national championship in his second year playing in the nation’s most competitive conference. Recent college football history is littered with coaches who showed early promise, received quick extensions from eager universities, and then died the slow death of mediocrity. Tressel was a successful cheater. Charlie Weis and Ralph Friedgen were honest mediocrities. Auburn probably wants to avoid the former. It definitely wants to avoid the latter.

And it’s that desire to avoid slipping back into SEC irrelevance, more than anything, which drove Auburn’s decision to give Chizik (and his staff) this most recent raise and extension. It’s less about rewarding and retaining a coach — who still has a minimal track record — then it is about broadcasting to the rest of the SEC, and potential recruits, that Auburn is willing to spend and compete on par with its rivals. In a market where you can’t (openly) spend on players, spending on coaches is the easiest way for recruits to see how committed a school is to football.