Oil Market Madness Hits Coaches’ Pay
Compensation ▶ Bonuses at the University of Arizona are paid in energy stocks ▶ “In this case, it hasn’t worked out for the coaches” Sean Miller
Like many big-time sports schools, the University of Arizona gives its football and basketball coaches longevity bonuses to reward them for staying in their jobs a certain number of years. These can be worth millions of dollars. In a twist unique to the Wildcats, those incentives are tied to the price of oil.
That means , whose men’s basketball team was set to play in the opening round of the NCAA tournament on March 17, and Rich Rodriguez, who led the football team to the Gildan New Mexico Bowl, are in a strange situation for successful coaches: Their bonuses have been losing value. Crude, which reached more than $90 a barrel in 2014, has crashed to $36. The first part of Rodriguez’s longevitygevity payout, due in mid-march, is likely worth about $907,000, 41 percentcent less than the paper value of thehe bonus in 2014. In full, the bonus planlan for each coach is probably worthh $3.6 million, down from $6.2 million.
Arizona isn’t a major oil pro-producer, so how didd a public univer-university’s coaches’ payay end up linked to energy prices?? The bonus structure was putut into place two years ago afterter the school received an anonymousnymous donation of 500,000000 shares of a master limiteded part-partnership. An MLP isis a tax-advantaged, pub-publicly traded companypany that operates pipelineses and other energy indus-ustry equipment. Miller and Rodriguez eachach received 175,000 shares, worth $6.2 million at thee time. Athletic Director Greg Byrne got 100,0000 shares, worth $3.5 million.on.
The name of thehe donor is redacted from publicublic records and wasn’t releasedased by the uni-university. However,r, the records show a price of $35.36 for the donated shares on May 12, 2014, which stronglyongly sug-suggests one company:any: Western Refining Logistics.tics. Jeff Stevens, the company’smpany’s pres-president and chief executiveexecutive officer, is an Arizonazona alumnus, and in 2009 he donated $10 million to help fund the school’s facilities plan, at the timee the largest athletics gift in the school’sl’s history. Thethe MLP traded at $20.74 on March 15. Stevens declined to comment.
Arizona had good reason to get creative with its pay plan. Athletics departments are typically among the richest corners of public universities, but salaries are growing faster than