II.   The NCAA's Case Against Sampson

Indiana's decision to sever ties with Sampson in a quick manner likely reflects the university's desire to restore its basketball program's once-clean image after a string of embarrassing incidents involving the coach.  Two months after he was hired in March 2006, the NCAA imposed sanctions on Sampson for making 577 impermissible phone calls to recruits while he coached at the University of Oklahoma.[7]  In October 2007, a university investigation found that Sampson and his staff made over 100 impermissible calls while still under recruiting restrictions.[8]  Sampson himself took part in ten three-way calls during the time when he had been expressly prohibited from participating in calls made by his staff.[9]

The NCAA's subsequent investigation found further violations that it deemed substantial.[10]  Its report stated that Sampson had impermissible recruiting contact with attendees of a two-day sports camp in Bloomington and that he made twenty-five phone calls that would have exceeded NCAA limits even if no sanctions had been in place.[11]  Most damaging, however, was the NCAA's assertion that Sampson repeatedly gave false or misleading information to investigators and that he "failed to deport himself . . . with the high standard of of honesty."[12]  When questioned about the report, Sampson denied he ever knowingly acted contrary to his sanctions or provided false information to investigators.[13]

Sampson's history of impropriety justifies Indiana's desire to part ways with the coach in a timely fashion.  The decision to offer Sampson a buyout allows the basketball program a chance at a fresh start, even as it awaits further proceedings relating to the investigation.  Under the NCAA's version of due process, Indiana will have to file a written response to the allegations by May 8, and hearings are likely to occur in June.[14]  The NCAA is expected to make its final decision on further action against Sampson and the university sometime in July.[15]  Ultimately, Indiana concluded it could not keep Sampson around that long.

III.   The O'Brien Precedent

The decision to negotiate a buyout rather than fire Sampson outright was likely influenced by recent litigation involving Ohio State University and its former men's basketball coach, Jim O'Brien.  Ohio State fired O'Brien in 2003 shortly after he admitted to giving a $6,000 loan to a potential recruit.[16]  O'Brien's contract specified that he could be terminated for cause if he materially breached the agreement or committed a "major" NCAA violation.[17]  The Ohio Court of Appeals ruled in favor of O'Brien because he had substantially performed his contract and was fired before the NCAA held hearings and formally ruled that his conduct constituted a violation.[18]  Thus, Ohio State was judged to have breached the contract for firing O'Brien without cause.[19]  As a result, the court ordered Ohio State to pay its ex-coach nearly $3 million in damages.[20]

Sampson's contract was similar to O'Brien's.  It contained a termination provision for violations of university and NCAA rules, in addition to instances of moral turpitude and conduct prejudicial to the university.[21]  Indiana officials, conscious of the O'Brien ruling, knew they could not fire Sampson without incurring liability until the NCAA conducted its hearings over the summer.  The latter two termination provisions are broad, however, and could arguably have been invoked in an attempt to fire Sampson outright.  Faced with the prospect of years of litigation and an uncertain outcome, Indiana chose to offer Sampson the buyout.

IV.     Conclusion

In a business context, Indiana's decision to offer Kelvin Sampson a $750,000 buyout serves as a pragmatic, if expensive, solution to a difficult situation.  The university was able to swiftly oust its coach, while avoiding a potentially lengthy and costly legal battle.  Additionally, the countervailing interests of due process in NCAA proceedings and a university's ability to act rapidly for its own interests have been sufficiently maintained.

Nevertheless, there remains a visceral unease when assessing the fairness of the situation from Indiana's perspective.  It seems counterintuitive that the university cannot immediately fire a man who has repeatedly run afoul of NCAA rules while coaching at two major institutions.  Less  than two years after being entrusted to lead one of the nation's most stroried college basketball programs, Sampson has resigned in a cloud of scandal after incurring university and NCAA sanctions, with more potentially forthcoming. 

In the future, universities may seek to better protect themselves from the situations faced by Indiana and Ohio State by negotiating broader termination clauses in contracts.  The O'Brien court stressed the fact that Ohio State, a sophisticated entity, freely bargained away its "unfettered discretion" to terminate O'Brien by agreeing to equate cause for termination with NCAA rule violations.[22]  These attempts may be fruitless, however, as coaches are high-profile figures who often hold a great deal of bargaining power in the increasingly competitive world of college sports.  Investigations are not uncommon in college athletics, and most coaches will try to contractually insulate themselves from termination until the NCAA has a made a formal determination that its rules have been violated. 

Another alternative to the Indiana dilemma would be for the NCAA to institute expedited proceedings in necessary circumstances.  Though the five-month process in Indiana's case is not particularly long, the school may have refrained from offering Sampson the buyout if the NCAA's ultimate decision could have been made sooner.

It remains to be seen how schools, coaches, and the NCAA will adapt to the issues raised by the Sampson  situation.  Just as the O'Brien decision has had the effect of discouraging universities from immediately terminating coaches accused of rule violations, it will be noteworthy to see whether the Sampson buyout changes the dynamics of contract negotiations and termination clauses.

Sources

1 Andy Katz, Indiana Gets List of Alleged Violations Related to Phone Calls, ESPN, Feb. 15, 2008, 2008, http://sports.espn.go.com/ncb/news/story?id=3243325 (last visited Feb. 23, 2008).

2 Skip Myslenski, Kelvin Sampson Accepts $750,000 Buyout to Step Down at Indiana, Chi. Tribune, Feb. 22, 2008, available at http://www.chicagotribune.com/sports/cs-080222-kelvin-sampson-indiana,1,1109826.story.

3 Id.

4 Id.

5 Associated Press, Sampson's Future Remains in Limbo at Indiana, ESPN, Feb. 22, 2008, http://sports.espn.go.com/ncb/news/story?id=3257218 (last visited Feb. 23, 2008).

6 Id.

7 Espn.com News Service, Indiana, Sampson Reach $750,000 Settlement to Part Ways, ESPN, Feb. 23, 2008, http://sports.espn.go.com/ncb/news/story?id=3258506 (last visited Feb. 24, 2008).

8 Id.

9 Id.

10 Espn.com News Service, NCAA Lists 5 Major Violations; IU AD 'Profoundly Disappointed,' ESPN, Feb. 15, 2008, http://sports.espn.go.com/ncb/news/story?id=3243793 (last visited Feb. 24, 2008).

11 Id.

12 Id.

13 Id.

14 See Associated Press, supra note 5.

15 Id.

16 Ed Matisik, Jim O'Brien v. Ohio State: The Battle Continues, Collegehoopsnet.com, Dec. 20, 2007, http://www.collegehoopsnet.com/new/story/jim_obrien_vs_ohio_state_battle_continues41490 (last visited Feb. 24, 2008).

17 O'Brien v Ohio State Univ., No. 06AP-946, 2007 WL 2729077, at *14 (Ohio Ct. App. Sept. 20, 2007).

18 Id.

19 Id.

20 Rusty Miller, High Court Declines to Hear Ohio State Appeal of Coach's Lawsuit, Yahoo Sports, Feb. 20, 2008, http://sports.yahoo.com/ncaab/news?slug=ap-ohiost-coachlawsuit&prov=ap&type=lgns (last visited Feb. 24, 2008).

21 See Espn.com News Service, supra note 10.

22 See O'Brien at *14.