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Perverse incentives for Mullens

10/2/2010: Ron Bellamy of the RG and Rachel Bachman of the Oregonian write on Mullens’s contract. Full version here. There’s an extra $50K in deferred compensation and a list of perks not included in the original stories, based on the term sheet. Whatever. There are also incentives for bowl games, the Directors cup, and graduation rates.

The key is that there are *no* incentives for fixing the financial problems UO athletics has, short term or long term. And as Bachman notes:

If Mullens is terminated without cause (the most common form of firing), he will receive one-half his base salary for the remainder of the contract. But if Mullens is fired without cause and Lariviere is no longer president, the university must pay Mullens his guaranteed salary for the entire contract. If Mullens terminates the contract prematurely, he has to pay the university the balance of his base salary. But if Lariviere is no longer president, then Mullens owes nothing.

“Termination with cause” never happens. Bellotti got his $3.1 million payoff because Lariviere refused to say he’d been fired for cause, even after his mismanagement put the department in the hole. Even Melinda Grier, nailed in a Oregon Department of Justice review as having “provided deficient legal representation” to UO, was fired “without cause”. So all the action in a contract like this is on the incentives.

We now have an AD with plenty of incentives to keep expensive sports, spend more money on football, and increase the current subsidy from regular students to the jock box. He has no explicit incentives to do what he was ostensibly hired for: fix the serious financial problems his department faces. And boy there will be a lot of pressure from the boosters to ignore these issues.

What leverage will Lariviere have when pushing for an end to the subsidies, or maybe even a little money for the academic side, as happened at Kentucky? Not much – if Mullens doesn’t deliver, he’s locked in anyway, no worries. I wonder who wrote this deal?

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