Did WSU have to pay Gregg Marshall $7.75 million? What lawyers say about his contract
Gregg Marshall’s resignation on Tuesday morning marked the conclusion of a nearly three month investigation into allegations that the coach physically and verbally abused Wichita State men’s basketball players.
WSU told local media on Tuesday that the findings of the investigation conducted by Tueth Keeney, a St. Louis-based law firm hired by the university in August, would not be made public because they are considered “confidential personnel records.”
What the school did acknowledge was the fact it had come to an agreement with Marshall, who had a $15 million buyout clause in his contract, to pay the coach $7.75 million over six years.
So did WSU save more than $7 million by reaching a settlement with Marshall or was the $7.75 million payment to Marshall an exorbitant amount for a coach with the allegations Marshall faced? The Eagle asked two sports attorneys for their professional opinion.
For starters, Marshall’s contract with WSU was unique because it was a seven-year rolling contract that automatically renewed after each season. That means when Marshall completed the 2019-20 season, his contract was renewed at $3.5 million annually for another seven years in April 2020 and he would be entitled to a liquidated damages payout of $15 million if he was terminated without cause.
Since he was not paid that full amount, it’s reasonable to assume that the investigation turned up evidence against Marshall, according to the attorneys.
So why did WSU have to pay Marshall? Could the university have fired him with cause and paid nothing?
“Firing coaches like Gregg Marshall for cause is tricky for a number of reasons,” Curry Sexton, an associate for the Kansas City law firm Seigfreid Bingham, wrote in an email to The Wichita Eagle. “First, it is tricky because whether the ‘for-cause’ threshold has been satisfied is rarely ever clear.
“Thus, when a college terminates a coach for cause, and attempts to relieve itself of any obligations under the contract, including buyout negotiations, the college is almost certainly exposing itself to a high risk of litigation. These coaches generally have deep pockets and good legal teams in their corners, so they will not typically go down without a fight.”
An example of this was the legal battle Kansas faced when it fired football coach David Beaty and refused to pay the coach a $3 million buyout after discovering potential NCAA infractions. Instead, Beaty sued KU and the public back-and-forth lasted nearly two years before KU finally settled with Beaty this summer for $2.55 million. KU also paid legal fees nearing a half-million dollars.
That’s why firing coaches for cause without a direct admission of guilt is rare, according to veteran sports attorney Williams Robers, who is a partner at Sparks Willson, P.C. in Colorado Springs and represents college coaches in multiple sports. Marshall outright denied the allegations and did not acknowledge any wrongdoing in his statement announcing his resignation Tuesday morning.
“Cause is usually the most negotiated portion of a coaching contract and now you know why,” Robers wrote in an email to The Eagle. “That definition is limited and hard to prove.
“While you’re trying to prove that, you have to pay him until you can make your case. In addition, if they terminated him for cause, they would have had to give him a hearing. (WSU) likely didn’t want that publicity. If there are other parties in the athletic department with any guilt on their hands, his hearing would have flushed those out. My guess is they wanted this to go away as quickly as possible.”
Sexton agreed that WSU was motivated to resolve the situation sooner rather than later.
“Any litigation that ensues from a for-cause termination of a college coach is almost always high-profile, in that it is constantly dissected by the media and fans,” Sexton wrote. “This is not good for recruiting, for the bottom line of the athletic department, or for the general operational functionality of the athletic department. Instead of focusing on raising money and putting winning teams on the playing field, these departments are forced to expend a ton of time and resources on an intense, drawn out legal battle.”
So even if WSU felt like it had enough evidence to potentially win the battle in court, Sexton said there are likely too many unknowns for WSU to feel 100% confident.
“The case does not appear to be a slam dunk in the court of law, as litigation is almost always unpredictable,” Sexton wrote. “There is almost never a clear winner and loser. Thus, by firing Marshall for cause and attempting to avoid any buyout obligations, WSU would be exposing itself to a massive amount of risk. There would have been a possibility that Marshall would be successful in a lawsuit, which could have awarded him his full buyout, plus WSU would have likely expended legal fees in an amount north of $1 million. So in the end, WSU could have been on the hook for a total amount well in excess of $7.75 million.”
Another key point for WSU in saving money is that it can pay Marshall the $7.75 million over the next six years. That is approximately $1.3 million per year.
Sexton says while that’s a hefty amount, the school still could come out ahead in the long run. With his $3.5 million annual contract, Marshall was one of the highest-paid coaches in college basketball.
“Sure, this is a large amount that no athletic department would voluntarily choose to pay, but there are some considerations that make it more palatable,” Sexton wrote. “WSU will almost certainly go out and find a new coach who will be much cheaper than Gregg Marshall. That coach will likely make somewhere at or below $2.2 million, which would be near or equivalent to Marshall’s salary when you factor in the $1.3 million settlement payment over each of the next six years.
“So even if WSU could have potentially avoided making any settlement payment, the ability to pay it over six years gives them a chance to keep their overall spending at or below what they were spending on Gregg Marshall’s salary.”
This story was originally published November 17, 2020 at 5:02 PM with the headline "Did WSU have to pay Gregg Marshall $7.75 million? What lawyers say about his contract."
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