IU basketball: The real cost of Archie Miller’s buyout would be tied to his next job

Here we go again with the B word.

IU basketball has lost four of its last five games, with the losses coming by an average of more than 13 points per contest.  In the month of February, when good college basketball teams find answers, Archie Miller’s Hoosiers are once again struggling.  Miller is now just 12-17 during this critical month during his time in Bloomington, and he is 33-42 overall in Big Ten games.

Now four years into his tenure, Miller has yet to finish above .500 in the Big Ten in any season, and understandably, many are seriously questioning his continuing viability as the leader of the Indiana program.

When former IU head coach Tom Crean was on the hot seat, at the time Director of Athletics Fred Glass said repeatedly that Crean’s contract buyout terms would not play a meaningful role in any retention or fire decision.  That is a position Glass has restated on multiple occasions since he pulled the plug on the Crean tenure as well.

Once again, the buyout clause of the Indiana men’s head basketball coach’s contract has become a hot topic.

Based on our review of the terms of Archie Miller’s contract, he is entitled to a roughly $10.35 million buyout if he is fired at the end of the 2020-21 season.  That is a large number that you have probably seen in the headlines recently.  If Indiana were to fire Miller after the 2021-22 season, the buyout figure can drop to approximately $3.475 million both because he would have just two years left on his contract, and the buyout clause only requires that IU pay Miller 50 percent of his total compensation still due under the contract if he is terminated without cause after March 31, 2022.

While those are the headline figures you have likely seen, they do not represent the actual amounts Indiana would ever reasonably expect to be required to pay Miller under his contract.

Directly following the buyout clause in Miller’s contract is a mitigation clause.  Under the terms of that section, Miller is required to seek out comparable employment upon termination, and Indiana’s buyout obligations to Miller shrink dollar-for-dollar for everything he earns during the remaining life of his IU contract, which ends on March 31, 2024.  A comparable employment position includes employment as a head or assistant basketball coach, as well as media, athletic department, or similar athletics related roles.

It is important to also note that any buyout payment to Miller would not be made in a lump sum upon termination.  The contract calls for monthly payments over the remaining life of the contract.

So a $10.35 million obligation would be an annual $3.45 million hit for the University before any mitigation.  But again, any income earned by Miller during the next three years would be offset against that obligation.  So if hypothetically, Miller returned to his home state and took the Penn State job at a $2 million per year rate, IU’s annual obligation would drop to $1.45 million per year, and $4.35 million in total.  Still not an insignificant number, but obviously less than half of the headline number.  Miller could obviously earn more — a salary like Crean’s $3.2 million at Georgia would nearly wipe out IU’s entire current obligation — and he could obviously earn less.

If Indiana were to wait until after the 2021-22 season to terminate Miller, his obtaining a new coaching contract worth just over $1.7 million per year would completely wipe out IU’s buyout obligation.  Obviously there is still less overall cost and risk if Indiana waits another year.  But the mitigation terms help explain why Glass wasn’t overly concerned about Crean’s buyout, and why Miller’s buyout likely is relevant but not determinative for current IU AD Scott Dolson.  And of course Dolson, who is well connected in fundraising circles, could likely find some assistance with the eventual cost.

One risk to IU is that, like Crean, Miller could decide to take a year off from coaching and take a lower paying media job in the interim.  While possible, that is an isolated financial risk that IU faces whether it terminates Miller now or next year.

Another important consideration is the current economic climate and Indiana’s appetite for incurring additional costs.  Once again, whatever cost IU would ultimately incur to pay a buyout, that amount would be paid out in monthly installments through March 31, 2024.  So while the economic conditions and financial strains on athletic departments today during the pandemic are very real, much of the actual cost most likely would not be incurred during such challenging times.

Find us on Facebook:  thedailyhoosier