Football Clubs Need to Think About Prenups for Managers

By: Daryl | November 2nd, 2009

6a00d83451b82d69e200e54f8f58ca8834-800wi Is it just me, or are football clubs digging deep deep holes for themselves every time they sign a manager to a big money multi-year contract? News broke over the weekend that former Inter coach Roberto Mancini had finally reached a settlement with his old club. A settlement that apparently made him €8m richer.

The headliney part of the the story is that the settlement makes Mancini a free agent, which means various managers can now feel Mancini breathing down their neck. Gabriel Marcotti wrote a decent story in the Wall Street Journal, explaining why his is bad news for Rafa Benitez and Manuel Pellegrini (though Pellegrini now seems safer than when the WSJ story was published). But more interesting than the potential managerial switcheroos that may or may not be about to happen is (to me anyway) the fact that managers can still demand their wages after being fired. Who don’t clubs take steps to guard against such a situation?

Inter are definitely not the only team doing this. Chelsea apparently paid Big Phil Scolari and his backroom staff £10m in severance after getting rid of him last season, and seems that even if Liverpool wanted to fire Rafa Benitez, they couldn’t afford the £20m it would cost them.

In what other profession can you get fired and still receive your paycheck? If a club has decided to replace you because you’re not meeting their expectations, it seems utterly bizarre that you continue to get paid even after you’ve cleaned out your desk. So maybe the big clubs should start including some very simple prenuptial agreements in their coaches contracts: If you perform poorly enough that we need to replace you… then we no longer have to keep sending you our money.

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y3 shoes

You made some good points there. I did a search on the topic and found most people will agree with
Paul Da-silva

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Best Regard.
Daryl

I suppose one thing I hadn't considered when writing the above post is that when coaches/managers get fired, it's kind of an arbitrary decision. It's not like they're being fired because they were embezzling the club's money or something (not the majority of them anyway)

So if managers received zero money after being fired, then they could possibly sue for unfair dismissal. Mancini is a great example, as he'd just won Serie A when Inter got rid of him.

But would it be too outlandish to suggest there should be some sort of clause in a manager's contract that says "if the club fires you because the club thinks the team is under-performing, then you only receive %10 of the remaining wages on your contract." Or something.
vespo

This is pretty common with major sports contracts. The Cleveland Browns (NFL) are paying millions to their general manager, Phil Savage, that they fired last year. Major college football programs routinely have rich boosters (supporters) put up the money necessary to buy out the remaining years on a coach's contract if they wish to fire him.
alex w

or they could just sign one year deals. which i'm sure the coaches would not like, but the teams are the ones paying the salaries, so they could just force them to take that kinda contract.
Sarah

Adding performance standards is an interesting contractual condition-- and they are frequently used with football clubs in the form of bonuses (win this trophy and you get X amount of money, etc). Performance standards are really annoying to deal with in litigation though-- both sides go back and forth on the costs of measuring X, (2) the accuracy of estimating X, (3) the extent to which managers can influence the level of X and what should be used to establish a base line measurement.

Plus-- managers would be less likely to agree to those contractual standards, and if they did they would argue that the higher risk means they should get a larger salary, etc. My point being is that these cause other financial tradeoffs.
Sarah

Severance packages are typical in most high-end job markets. They typically some with several strings and conditions-- such as confidentiality clauses and restrictions on where they can work in the near future (typically geographic restrictions-- i.e. you can not be our competitor in this state or county). When the original contract is signed, the contract is used to protect both the employer and the employee-- if the manager wanted to leave to pursue another job opportunity he would also have to buy out his contract (which is basically what the club is doing-- buying out the coach's contract). Ultimately, you hope that the new deal will bring in more revenue (or trophies) to justify the expense of ditching the previous coach. In a lot of ways, these situations are better for the club than the manager-- in most situations, the manager would never be able to buy out their contract (too much for an individual), but bearing that expense is easier for the club. In these situations, the manager would most likely ask their new employer to buy out their contract for them (or at least a portion).

You see this in the context of business agreements a lot. Such as when teams may decide to buy out their deal with one shirt company in order to accept a more lucrative deal with another sponsor.