We have the original contract provisions for TIARA, courtesy of the Los Angeles Times. And we have the extension provisions, courtesy of the Daily Bruin.
Let's see what changed. First, as we all know, TIARA's contract was extended by one year, from 4/30/20 to 4/30/21. Perhaps by coincidence, Doughnut turns 70 (retirement?) in 2021.
In the original contract, Doughnut provided a bonus of $10,000 to TIARA if UCLA Baskeball hit a target Academic Progress Rate (APR) score of 925. As it turns out (as was well documented before last year,) the minimum APR to avoid sanctions (loss of scholarships/postseason eligibility) from the NCAA is 930. So UCLA could have been thrown into the penalty box for academic failure, while TIARA cashed a check for a job well done. This has now been fixed. For TIARA to receive the academic bonus check, the basketball program will have to hit a target of ....930. We obviously can't expect the highest paid employee in the UC system to demand academic results in excess of the bare minimum to avoid sanctions. And we obviously can't expect the highest paid employee in the UC system to demand academic results in excess of the bare minimum as part of his base compensation. No, he needs a bonus to pay attention. So cash for 930, here we come.
We certainly would not want to face a TIARA-less future. What would happen to our basketball program? So, if TIARA bails, the buyout levels are extended one year under the new contract. For example, under the original contract, if TIARA bailed before 4/30/16, his buyout payment to the university would be $10.4 million. Now that $10.4 million is applicable if he bails before 4/30/17. Likewise for the $7.8 million payment (was before 4/30/17, now before 4/30/18) and the $5.2 million payment (was before 4/30/18, now before 4/30/19). Interestingly, there actually was more thought for this provision by TIARA if not by Doughnut. In the original contract, if TIARA walked after 4/30/18 and before 4/30/19 (one year before the original contract date), TIARA's payment to the university would be $2.6 million. This provision was not extended to 4/30/20. Instead, if TIARA bails after 4/30/19 and before 4/30/20, TIARA only owes whatever he makes above $2 million, with a max payment of $1 million. Like I said, TIARA thought this through, even if Doughnut may have missed it.
And, as would be expected with Doughnut at the helm, the amount to buy out TIARA just went up as well, under the contract extension. Before, TIARA would receive $10.4 million, payable in equal monthly installments through 4/20 if he was terminated before 4/30/16. Now TIARA receives the $10.4 million, payable in equal monthly installments through 4/21 if he is terminated before 4/30/17. The $7.8 million severance now applies to a termination before 4/30/18, instead of 4/30/17. The $5.2 million severance now applies to a termination before 4/30/19, instead of 4/30/18. The $2.6 million severance now applies to a termination before 4/30/20, instead of 4/30/19. In other words, for every year after 4/30/16, TIARA's severance payment just went up by $2.6 million. OUCH.
So Doughnut was able to squeeze TIARA by forcing UCLA Men's Basketball to hit minimum NCAA standards before he gets an incentive payment of $10,000 for academic achievement. And all TIARA got was an extra $2.6 million every year if he is terminated after 4/30/16, and an extra year on his contract. Well done, Doughnut.