When the University of Texas at Austin made the formal decision to end the employment of former athletic director Steve Patterson in September of 2015, the institution found itself at an interesting crossroad – one that would bring about a phenomenon in the business of college athletics that is rarely seen at the highest level, if ever.
During his 22 month tenure at Texas, Mr. Patterson identified several key improvements to boost the University’s athletic profit margin, and took aggressive steps to provide solutions; however, many of his decisions were heavily resisted and ultimately led to his dismissal. After the separation, Mr. Patterson was owed approximately $5.6 million of a guaranteed employment contract, which was originally valued at approximately $8.2 million over 5 plus years; however, Texas negotiated a settlement for the reduced amount of $2.8 million. This additional cost to the University, though not ideal, was apparently determined to be acceptable given the overall athletic department revenue strength ($10,272,895 total revenue minus expenses in 2014-15), which was, and continues to be, among the best in the nation.
In the wake of Mr. Patterson’s exit, Texas turned to a former Longhorn athlete and longtime Houston-based attorney, Mike Perrin, as the interim athletic director on September 16, 2015; who was quickly promoted to full-time athletic director several months later on December 3, 2015. Mr. Perrin initially agreed to a one-year salary of $750,000, which was later extended through the 2017-18 academic year on the same financial terms, with one notable exception: there is no employment contract for his services to the University. This structure of a high-level employee working for a major NCAA institution on a verbal agreement is almost unheard of in the profession of college athletics, but the unique dynamics of this particular situation demonstrate its reasonableness in this limited context.
Initially, Mr. Perrin will likely not be leading the University athletic department for many years to come; he is 69 years old and has experienced a highly successful career as an attorney. Further, Mr. Perrin bleeds burnt orange, and is performing the functions of athletic director as a service to his university and its future – his true passion to see Texas succeed is readily apparent. In fact, Chuck Neinas, an influential college search consultant and longtime athletic administrator recently noted: “[t]he situation with Mike [Perrin] at Texas is not normal…He’s basically doing the university a favor. He’s an outlier.” Finally, Mr. Perrin’s professional background is well-suited to position Texas for future success, as he recently negotiated the largest shoe and apparel contract in college sports history, a $250 million deal with Nike, and has ardently protected the Longhorn Network, which nets Texas an average of $15 million per year.
Given Mr. Perrin’s affinity to Texas, and some of the University’s recent struggles in hiring key employees, it is not entirely surprising that Texas would look to secure this type of business arrangement with one of its own. Though this situation is unlikely to set a new trend in college athletics, it will be worth monitoring to see if similar deals are attempted when institutions struggle to fill key employment positions with individuals, who satisfy the requirements of the job, from inside the applicable university’s alumni network.
About Matthew Baldwin
Matthew Baldwin is Chair of the Sports & Entertainment Law Group of Silverman, Thompson, Slutkin & White, LLC. Mr. Baldwin’s practice has focused on the representation of collegiate and professional coaches and sports executives in the National Collegiate Athletic Association (NCAA) and National Football League (NFL), among other sports leagues. He has negotiated complex employment, marketing and broadcasting contracts in both collegiate and professional athletics, and he has developed several unique strategies to benefit his clients in their employment relationships. Mr. Baldwin graduated from the University of Toledo College of Law (JD) and Rice University (BA), and is a member of the Board of Advisors for the Center for Sport and the Law at the University of Baltimore School of Law.
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