Document Type

Article

Publication Date

2007

Abstract

The next few months will be busy ones for moving companies that have NCAA basketball coaches as customers. In the past few months, several men's college basketball coaches have accepted jobs at different schools. Several of those coaches, who were still under contract at their former institution, had buy out provisions that allowed them to terminate their relationship for a set price. John Beilein is a prominent example of this since his buy out price was so high. Last season, Beilein was the head basketball coach at West Virginia University where he was under contract with the school until 2012. On April 3 of this year, the University of Michigan hired Beilein to become the head coach of its men's basketball team. Under his contract with West Virginia University, if Beilein left that position before the contract term expired, he was required to pay a specified amount to the university. Initially, it was reported that the amount to be paid was in the vicinity of $2,000,000 to $2,500,000. Subsequently, it was reported that West Virginia and Beilein agreed that Beilein would pay the university $1,500,000 over a five-year period in full settlement of his obligation. Prior to Beilein's hiring, there was speculation in the media that the University of Michigan would pay West Virginia University the amount owed under Beilein's contract. The question then arose as to the tax consequences to Beilein that such a payment would engender.


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