Incentive Clauses and Performance Among Head Coaches at NCAA Football Bowl Subdivision Public Universities

This week’s EXSS Impact post represents the work of one of our Sport Administration graduate students, John Dougherty, which was performed under the direction of Dr. Barbara Osborne.  The work examines whether or not the use of incentive clauses in coaches’ contracts actually leads to improved team performance.  The study reveals impactful results which may provide guidance for administrators on the use of incentive clauses in the future.

signed contract1) Why did you do the study?

There have been a number of excellent studies investigating the frequency and attributes of incentive clauses in football coaching contracts, but I felt there was a lack of research considering whether incentive clauses were linked to actual increases in performance success. Simply, I wanted to determine whether academic and athletic incentives in coaching contracts contributed to positive results.

2) What did you do and what did you find?

Mainly through public records requests, I attained copies of head coaching contracts from 78 Football Bowl Subdivision schools for an 11-season span from 2002-2012. I then analyzed the contracts to determine the presence and size of select athletic and academic incentive clauses, as well as guaranteed annual compensation. The compensation and incentive attributes were compared to academic and athletic performance results from each season to determine the relationship between the contract features and performance outcomes.

Generally, I found that incentive clauses became more common and larger from 2002-2012. Over the course of the study, schools offered larger sums through incentives compared to total guaranteed compensation, but the proportion of total compensation that was offered in incentives did not vary significantly between athletic conferences. In terms of performance, positive outcomes were more likely when only a handful of incentives were present. More often, the presence of an incentive did not impact the likelihood of its desired result, and in some cases incentives were coupled with significantly poorer performance outcomes. Similarly, I did not find many significant effects due to the size of incentive offerings. Although some positive outcomes were more frequent as incentive amounts increase, many were not impacted by incentive amount and others, paradoxically, were less frequent as incentive offerings rose.

negotiating3) What’s the impact of these findings on the public?

I believe these findings can be beneficial during contract negotiation between schools and head coaches. Understanding the likely impact of incentive clauses should lead to more accurate expectations when incentives are employed. In turn, monetary and nonmonetary resources that are exchanged during negotiations can be allocated more appropriately and efficiently to achieve both parties’ goals. This study suggests that incentives have been offered too liberally considering their likely effectiveness. A more thoughtful philosophy regarding incentives might allow both schools and coaches to better focus their negotiations and commit resources to other areas, which might be more highly correlated with successful outcomes.