Tennessee’s first athletics coaching contracts executed since the onset of the COVID-19 pandemic include a force majeure clause that did not previously exist in Vols contracts.
Force majeure clauses pertain to unexpected circumstances that prevent a party from fulfilling the contract. It is not equal to a get-out-of-jail-free card, though.
If Tennessee exercised its force majeure clause to void a coaching contract, it could find itself in the middle of a legal tussle.
“I think we’re entering into what I would call litigious territory, especially if it is going to be used (to terminate a deal),” said Martin Greenberg, an expert sports lawyer and law professor at Marquette, who has served as an agent for coaches.
Nonetheless, including a force majeure clause affords Tennessee a new avenue to nix a contract – or, at least gives the university ammunition to try to negotiate a voluntarily pay cut with that employee or a modified deal.
“It does give them more leverage,” Nashville-based contract lawyer Skip Hindman said.
The force majeure clause is included in Tennessee’s contracts for football assistant coaches Shelton Felton, Joe Osovet and Jay Graham and strength coach A.J. Artis, all hired or promoted to a contracted position during the offseason. The contract for assistant Jimmy Brumbaugh, also hired this offseason, is not finalized.
College athletics finances are under the microscope because of the pandemic’s impact on revenues. Force majeure clauses are uncommon in college coaching contracts, and Tennessee’s addition of force majeure language could be on the frontend of an industry trend.
LSU’s Ed Orgeron is the only SEC head coach with a force majeure clause in his contract. Florida defensive coordinator Todd Grantham is among the SEC assistants whose contract includes a force majeure clause.
Tennessee’s pre-existing contracts for other athletics employees, including football coach Jeremy Pruitt, men’s basketball coach Rick Barnes and athletics director Phillip Fulmer, do not include force majeure clauses.
“We are always looking for ways to improve our coaching agreements in a manner that protects the university’s interests, while being fair and equitable to our coaches,” University spokeswoman Tyra Haag said in a statement to Knox News. “We monitor best practices and trends in the contracts used by our peer institutions and make changes to our standard contract language when appropriate.”
Coronavirus finances Phillip Fulmer requested 15% pay cut as part of Tennessee’s budget reduction in athletics
John Adams: Phillip Fulmer’s request for a pay cut sends a message to us all
What a force majeure clause does and doesn’t do
The force majeure clause of Tennessee’s 2020 nonconference game contracts offered protection when the Vols canceled those games because of an SEC edict that its members would play only conference games this season. In three of its four nonconference contracts for 2020, Tennessee had specific force majeure language tied to a pandemic or a conference decision that prevented the game from being played. That language could save UT millions.
Using force majeure to avoid payment to a long-term contracted employee is trickier than exercising force majeure to terminate a contract for an event or a single-day service, like a wedding vendor.
Without a force majeure clause in an employee contract, to cancel the contract, Tennessee would need to lean on common law principles of frustration of purpose or impossibility of performance. That is a difficult road, Hindman said.
Dive deeper: How Tennessee football’s game contracts offer strong protections in case of cancellation
Even with a force majeure clause, Tennessee shouldn’t expect an uncontested path to terminating a contract.
Simply citing a loss of revenue caused by a force majeure event isn’t enough for the university to cancel an employee’s contract, Hindman said.
The force majeure clause in Tennessee athletics contracts signed this summer lists 15 specific reasons, along with “any other reason that is generally regarded as force majeure,” for which either party may terminate the contract, if the coach is unable to perform his job duties or his ability to perform is delayed for more than 60 days.
The duties outlined in Tennessee’s coaching contracts are broad. Osovet’s contract, for example, lists 16 duties, most of which don’t hinge on a season occurring. As such, even if a force majeure event occurs, it’s possible that Tennessee coaches still would be able to perform most, if not all, of their duties.
During the pandemic, for example, Tennessee’s coaches recruited prospects, conducted digital meetings, managed the roster, and otherwise prepared for the season, albeit with their players absent from campus for more than two months.
Additionally, a force majeure clause does not allow a university to cut an employee’s pay, Hindman said.
“Force majeure clauses, generally, and this one in particular, don’t really contemplate (reductions in salary),” said Hindman, a shareholder and head of the government contracts group for Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., and an adjunct professor of law at Vanderbilt Law School. “It’s pretty much an all-or-nothing choice.”
But the clause’s existence, and the possibility of the school exercising it, affords the university leverage that it could use to encourage a coach to accept a voluntary pay cut or agree to renegotiate or restructure his contract.
How Tennessee could have afforded itself more protections
Athletic departments nationwide are cutting expenses. Tennessee reduced its athletics budget by 20%. Fulmer last week announced he will take a 15% pay cut. Tennessee has not announced any other athletics pay cuts, and it has not had furloughs or layoffs.
Fulmer projected at least $30 million in lost revenue because of pandemic-induced football attendance limitations. Those losses could increase to $80 million if the football season is canceled. In the 2019 fiscal year, Tennessee athletics generated $143.8 million in total revenue and had $143 million in expenses.
If Tennessee’s goal was to create the option of cutting an employee’s pay in times of economic hardship, it would have been better off specifically writing that into the contract, Greenberg said.
Football coaches’ six- and seven-figure salaries are a byproduct of the revenue football generates via media rights deals, ticket sales, donations and sponsorships.
“When that disappears, it makes it very difficult to underwrite a football program, and especially these very high salaries,” Greenberg said. “So, if that’s what you’re trying to protect against, then you need to be right up front and contractually negotiate that if these set of circumstances occur, there’s either some reduction in the salary or there’s some postponement of the salary.”
Tennessee’s latest contracts list force majeure events to include war, hostilities, revolution, or civil commotion; accident; fire, wind, flood, or other natural disaster; state or national declaration of emergency; requirement of law, legislative enactment, or executive order; and an act of God.
Notably, the clause includes epidemic, but not pandemic, among the reasons.
Greenberg said Tennessee should have included pandemic and could have afforded additional protection by adding words and phrases such as: plague, outbreaks of infectious diseases, public health crises, quarantine, lockdown, movement restrictions, shelter-in-place, cancellation of games, people not being able to attend games, performance would endanger health and safety, and other governmental orders dealing with the same.
“If you want to construct a clause that basically cancels your obligation to pay some guy millions over (the duration of the contract) – and that’s what I think they’re intending here – you had better have perfected language in there,” Greenberg said.
Why would a coach allow a force majeure clause in a contract?
Contract negotiation is all about leverage.
A successful, long-tenured coach like Nick Saban, for example, could balk if Alabama tried to slip a force majeure clause into his contract.
But assistants like Osovet, Felton and Artis are climbing the coaching ladder, and they would have had less standing to push back on contract language.
“If you don’t have a whole lot of leverage and something like this is in here, you just kind of shrug your shoulders and you just have to make sure that you’re aware of what the change was, but you don’t really push back on it too hard,” said Bryan Blair, Osovet’s agent. “Now, if you’re being recruited by a school, you have a little bit more room to be aggressive on, why is this in here? Why is this change here?”
Even for a veteran assistant like Graham, objecting over force majeure language in a contract can be challenging. When Tennessee hires an assistant, the assistant signs a memorandum of understanding, a document that is a few pages long and covers specifics like salary, contract length and buyout information. Graham’s 35-page contract, in which the force majeure clause first appeared, was executed months later, after he already was on the job and the coaching carousel had halted.
Blair described Tennessee as a fair school to negotiate with.
Blair said that if UT exercised a force majeure clause amid this pandemic, it could expect a legal challenge, because its coaches continued to perform job duties, such as full-throttle recruiting.
As Blair noted, the force majeure clause doesn’t only afford the university a path to canceling a contract. A coach, too, could argue that a force majeure event prevented him from performing his duties, in a move to depart his position and pursue a new job without paying a buyout for breaking the contract.
“That’s something I don’t think they really thought through when they put it in there,” Blair said.
Blake Toppmeyer covers University of Tennessee football. Email him at firstname.lastname@example.org and follow him on Twitter @btoppmeyer. If you enjoy Blake’s coverage, consider a digital subscription that will allow you access to all of it. Current subscribers can click here to join Blake’s subscriber-only text group offering updates and analysis on Vols football.