ASU's New Football Coach Receives Bonus Laced Contract

ASU wants to give Dennis Erickson five-year guaranteed contract valued at $5.6 million to be their head football coach.

   $450,000 base pay per year
   $ 50,000 extra base pay 2007    (1st year)
   $825,000 extra base pay 2008-11 (years 2-5)

Erickson will be financially rewarded if his team wins eight or more games during a season.

   $ 50,000 bonus    8 wins  PLUS
   $100,000 bonus    9 wins  PLUS
   $200,000 bonus   10 wins  PLUS
   $300,000 bonus   11 wins  PLUS
   $400,000 bonus   12 wins

Example: If ASU wins nine games, Erickson's bonus will total $150,000 (i.e. $50,000 plus $100,000).

Erickson will be financially rewarded if ASU is invited to a bowl game.

   $ 25,000 for a bowl game  OR
   $ 50,000 for a Bowl Championship Series berth OR
   $100,000 for a BCS national championship game appearance

Erickson could earn up to 10% of his salary if his players are actually student athletes (GPA or graduate rate, which ever is highest).

Just like CEOs, Erickson has a "golden parachute." If he stays "legal" and ASU fires him, he will receive 50% of any remaining salary.

Erickson also receives "tickets to ASU sporting events, use of two automobiles or a stipend and playing privileges at Karsten Golf Course."

Exercises
  1. Erickson's base pay for the 2007 season will be $____________.

  2. Erickson's base pay for season 2008 through 2011 will be $___________ per season.

  3. If ASU wins 12 games, ignoring the post-season bowl game, Erickson will receive a $______________ bonus.

  4. Pretend that during the 2009 season ASU has 10 wins and gets invited to a non-championship bowl game. In addition, Erickson gets a 10% bonus because his players have outstanding GPAs. Erickson's salary for the 2009 season will approximate $__________________.


Creator: Gerald D. Thurman [gthurman@gmail.com]
Created: 01 March 2007

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