OSU hitches wagon to Smith with new deal
It's clear that athletic director Scott Barnes is hitching his wagon to Jonathan Smith's fortunes as Oregon State's head football coach.
Barnes went to extraordinary lengths to ensure that Smith stays at Oregon State with the six-year contract the coach signed last week.
In essence, Barnes tore up the final three years of the five-year, $9.5-million (plus bonuses) contract Smith signed in December 2017 and replaced it with a six-year, $15.9-million (plus bonuses) deal that runs through the 2025 season.
This despite an accrued debt in the OSU athletic department that amounts to more than $40 million.
On Monday, I asked Barnes why he chose to give Smith what amounts to a three-year extension.
"I have great belief in Jonathan's plan, passion and commitment to this place," Barnes said. "It's a long-term proposition rebuilding a football program. He is absolutely the right man to do that."
Was Barnes concerned that Smith — 7-17 in his first two seasons as the Beavers' coach — might be pursued and hired by another school?
"We were very proactive in the process," Barnes said. "I went to him and wanted to show him our commitment long-term. That really was the priority rather than worrying about losing him to somebody else.
"We're going to do this together. It is going to take some time. He is doing it the right way."
Smith will make a minimum of $2.4 million next season, $500,000 more than his base salary for the 2019 campaign. Based off of last year's salaries, that puts Smith in the pay neighborhood of Colorado's Mel Tucker ($2.4 million) and Arizona State's Herm Edwards ($2.38 million) and ahead of Arizona's Kevin Sumlin ($2 million).
"Our desire is to be more competitive in everything we do, and that includes coaching salaries," Barnes said.
The contract Nick Rolovich signed last week to become Washington State's head coach was reported to be worth nearly $3 million a year. Washington's Chris Petersen led Pac-12 coaches in payroll at $4.625 last season. Stanford's David Shaw ($4.661 million) and Utah's Kyle Whittingham ($4 million) followed. Oregon's Mario Cristobal was eighth at $2.6 million, but he earned more than $1 million in bonus money.
Smith's base salary and non-salary compensation go up each year, to $2.5 million in 2021, $2.6 million in 2022, $2.7 million in 2023, $2.8 million in 2024 and $2.9 million in 2025. The coach will receive a bonus of $50,000 for every year he wins eight regular-season games, $75,000 for nine regular-season wins and $100,000 for 10 regular-season wins. (If that happens, the bonus will be well-deserved).
Smith's previous contract had a rollover clause, where six wins in a season gains an additional year of contract. That will remain in place for the next three seasons, then be "sunsetted" (no longer applicable) from that point, Barnes said.
Barnes included a $200,000 annual budget for private air transportation for recruiting purposes, allowing Smith to fly out of the Corvallis Airport and save time on recruiting trips. The OSU AD said the expense will be handled largely through private contributions.
If Smith leaves to take a job elsewhere, his buyout is higher now — $3 million after next season, $2 million after the 2021 or '22 seasons and $1 million thereafter.
New contracts for the 10 assistant coaches, plus strength and conditioning coach Mike McDonald, haven't been completed, Barnes said. But there will be an increase from the $3.3 million pool they received last year, when defensive coordinator Tim Tibesar made $550,000, offensive coordinator Brian Lindgren $500,000, Jim Michalczik (offensive line) $425,000, Legi Suiaunoa (defensive line) and Trent Bray (linebackers) $300,000 each, Blue Adams (secondary) $250,000, Michael Pitre (running backs), Kefense Hynson (receivers) and Jake Cookus (special teams) all $200,000 and Brian Wozniak (tight ends) $150,000.
Barnes said each of the assistant coaches will begin a two-year contract this year.
I asked Barnes how much consideration he gave to the athletic department's considerable accrued debt when extending the contract offer to Smith.
"We are always mindful of our financial situation," he said after a pause. "We're continuously balancing between that and making investments (that will help) toward (trimming) the accrued deficit."
Barnes said the annual deficit for the OSU athletic department was more than $8 million in 2017, the year he was hired.
"It was down to $1.3 million in 2019," he said. "We're projecting in the $1 million range for the 2020 fiscal year. Our five-year plan moving forward has us balancing the budget in the next few years."
In 2018, Barnes explained to me an "eat-what-you-kill" model that was being authorized through a financial sustainability plan for the athletic department.
"I took three initiatives back to the financial sustainability plan committee," Barnes told me then. "One, refinance our debt, which we did to save us $2.5 million a year. Two, create a contingency fund so when something unexpected happens, we're not creating debt; we take care of it from the fund. Three, when we get to even (annual) budget, for every dollar over our budget, 90 percent goes back to reinvest in growing our program for a few years. Eventually, that figure goes down to 75 percent. The remaining percentage goes to pay off the debt."
Basically, it means Oregon State doesn't have to use every bit of net revenue to pay down the accrued debt, that funds can be used to strengthen programs so it can have more success, with increased revenue as a result.
It makes sense, especially for an athletic program that is at a serious disadvantage on many levels to its Pac-12 brethren. There is no Uncle Phil to bail the Beavers out of financial situations or pay for athletic facility improvements. They have to handle those obligations themselves, and a winning football program is the ticket to success.
I like what Smith has done to turn things around in his first two years at Oregon State. The rebuild, though, is far from complete. In fact, there are no guarantees that the Beavers — who lose six starters from their offense, including quarterback Jake Luton and receiver Isaiah Hodgins — will improve on their record next season. The defense returns almost everybody and there are seven home games, but there are strong opponents on the schedule that desperately want to win, too.
I like that Barnes has added an air transportation budget to get Smith where he needs to be on the recruiting trail. That's a wise expenditure in a small city that requires driving to Eugene or Portland to catch a commercial flight. I also like phasing out the "rollover" clause. Six wins should be the expectation, not the standard of excellence.
I'd have waited a year, though, to give Smith a contract extension. He still had three years left on his initial deal. Let's see what kind of steps he makes in Year Three before going out on a limb and committing an additional $6.4 million and three years to a coach who hasn't yet had a winning season.
Especially when money is very much an object.
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