Muschamp took decreased buyout

TheReelEss

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Jay (107.5) TODAY was giving it to the school for this horrible contract and allowing someone to walk away with $13M for running the program into the dirt. I wasn't in the car for long, so I don't know what else he said. But Jay is a bit of a barometer for the program and USC sports. He was criticizing Ray whether se said his name or not. It makes me wonder if Ray's not on good footing anymore.
 
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Balwiles

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No Dibble. I am not sure if he came out ahead. Depends on the discount rate (opportunity cost). The payments are staggered, so you have to see what the discount rate was. If I have the exact structure of the staggered payments to Muschamp, I can provide a very accurate answer as to whether Muschamp or USC came out ahead.
I can. We're printing trillions of dollars each year out of thin air (since '08) and that's been ramped up for COVID.

The dollar is being debased at a rate of anywhere from 10-15% per year. (variance dependent on the amount of funny money infused into the economy in any given year.)

Muschamp wins again.
 

USCBatgirl21

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Let me pose this question to everyone out there who has had their home broken into or their car stolen: did the criminal leave a thank you note? In addition to not leaving a note, I don't think many hang around to say what a beautiful home you have or compliment you on how well you maintained the car they boosted.
He did not. But thankfully he was considerate enough to put the chain on the door so I wouldn't walk in on him, and the brass knuckles/knife combo he had.
 

Legendary Cock

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Jay (107.5) TODAY was giving it to the school for this horrible contract and allowing someone to walk away with $13M for running the program into the dirt. I wasn't in the car for long, so I don't know what else he said. But Jay is a bit of a barometer for the program and USC sports. He was criticizing Ray whether se said his name or not. It makes me wonder if Ray's not on good footing anymore.
Heard that too. Jay said what I've been saying for several years: Ray was negotiating against himself. There was NO ONE looking to hire Muschamp after that smoke and mirrors 9-win season. And there was definitely no one calling on him after an underwhelming 7-win season the next year.

It just felt -- to me -- like Ray knew he was awful at coaching searches and contract negotiations and did his damndest to try to ensure he could ride out Muschamp until retirement. The termination was forced on him.

He is supposed to be on the Halftime Show next Wednesday. I hope Jay grills the hell out of him.
 

cocknjax

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Heard that too. Jay said what I've been saying for several years: Ray was negotiating against himself. There was NO ONE looking to hire Muschamp after that smoke and mirrors 9-win season. And there was definitely no one calling on him after an underwhelming 7-win season the next year.

It just felt -- to me -- like Ray knew he was awful at coaching searches and contract negotiations and did his damndest to try to ensure he could ride out Muschamp until retirement. The termination was forced on him.

He is supposed to be on the Halftime Show next Wednesday. I hope Jay grills the hell out of him.
Please. I hope he doesn’t frighten Ray Ray too much.
(Sark.)
 

TheReelEss

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Please. I hope he doesn’t frighten Ray Ray too much.
(Sark.)
It's not that Ray would be intimidated by Jay in the least. But Jay has his sources in the university system. When Jay ramps up the criticism of a coach or whoever it may be in the system, there's a reason. I observed it with Jay and Heath over the last year or so with BOOM!. They were totally supportive, until they weren't.
 

USCBatgirl21

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Ray has sounded a lot more defensive lately. Jay doesn't let him get away with his rosy, stock answers so easily anymore.
Because I'm certain he sees the writing on the wall with regard to his own position. As much as I wanted him to succeed, I dare say the experiment has not gone as planned.
 

JGH 35

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No Dibble. I am not sure if he came out ahead. Depends on the discount rate (opportunity cost). The payments are staggered, so you have to see what the discount rate was. If I have the exact structure of the staggered payments to Muschamp, I can provide a very accurate answer as to whether Muschamp or USC came out ahead.
The discount factor is probably minor compared to the tax savings he will achieve, once Biden repeals the Trump tax breaks and jacks up tax rates, especially on large income taxpayers.
 

SOSUSC

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The discount factor is probably minor compared to the tax savings he will achieve, once Biden repeals the Trump tax breaks and jacks up tax rates, especially on large income taxpayers.
Yes. The tax consequences are important. The discount rate is not minor.

It is not unreasonable to think of an opportunity cost (discount rate) of around 10% (the return on conservative equity indexes). The $12.9 quickly exceeds $ 15 million in two years at this opportunity cost pre-tax. What is important in terms of taxes is to see the changes in the incremental rate (subject to Biden's tax changes actually becoming legislation. After al he would have been taxed anyway, so the change is what is important). I am not sure how anyone can say anything definitive until you see the original payment structure and the revised one. If someone sends it to me, I can make a very accurate inference.

Knowing RT I would not be shocked to learn that this another screw up. It looks that way. But at this point I cannot say that definitively.
 

JGH 35

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Yes. The tax consequences are important. The discount rate is not minor.

It is not unreasonable to think of an opportunity cost (discount rate) of around 10% (the return on conservative equity indexes). The $12.9 quickly exceeds $ 15 million in two years at this opportunity cost pre-tax. What is important in terms of taxes is to see the changes in the incremental rate (subject to Biden's tax changes actually becoming legislation. After al he would have been taxed anyway, so the change is what is important). I am not sure how anyone can say anything definitive until you see the original payment structure and the revised one. If someone sends it to me, I can make a very accurate inference.

Knowing RT I would not be shocked to learn that this another screw up. It looks that way. But at this point I cannot say that definitively.
Maybe, but I think 10% would be an extremely high discount rate. Probably more like 5-6% range. You also have to consider the fact that he would have the entire after tax balance to invest on day 1, in what is now a hot market that is not likely to remain so over the 5 year annuitized payment period. He would only have 20% of the balance to invest initially in a hot market vs 100%. That initial investment balance infusion is likely to create a higher IRR vs the annuitized payments. So it's really the difference between his after tax rate of return at the end of the 5 years vs the after tax annuitized payments he would receive at the end of the 5 years. It is basically a gamble with the market, but I like his odds of a decreasing market along with an increasing tax rate structure.
 

SOSUSC

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Maybe, but I think 10% would be an extremely high discount rate. Probably more like 5-6% range. You also have to consider the fact that he would have the entire after tax balance to invest on day 1, in what is now a hot market that is not likely to remain so over the 5 year annuitized payment period. He would only have 20% of the balance to invest initially in a hot market vs 100%. That initial investment balance infusion is likely to create a higher IRR vs the annuitized payments. So it's really the difference between his after tax rate of return at the end of the 5 years vs the after tax annuitized payments he would receive at the end of the 5 years. It is basically a gamble with the market, but I like his odds of a decreasing market along with an increasing tax rate structure.
Well, you bring up interesting points. Returns have averaged much more than 10% in the last several years in many sectors on the market. Broad indexes too, like the S&P 500 have done very well in the last 5 years. Of course if you stick with the bond and money markets you are looking at near-zero returns (maybe even negative real rates after inflation). From that perspective a 10% looks too high (yes, in a finance class we can discuss risk premiums and that 10% may be too high, given historical premia and models like the CAPM). But, in terms of opportunity costs, the better metric at this point (given that the money was paid in December 2020) is the return on a less volatile equity index (like the S&P 500: 1Yr return 18.70%; the 5 YR HPR was more than 98%) because we are in a low interest rate environment. I am very confident that investors in ETFs (or mutual funds) will easily average more than 10% annualized if they mimic this index.

Yes, you have to take into account the differential taxes (that too depends on Biden tax hike). Like I said, this is why you cannot make a good guess unless you have the exact payment schedule on the original contract. I don't have it. But, I can then tell you with great accuracy what would be the better option if I had it. Anyway, RT is clueless and probably made the wrong call.
 

JGH 35

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Well, you bring up interesting points. Returns have averaged much more than 10% in the last several years in many sectors on the market. Broad indexes too, like the S&P 500 have done very well in the last 5 years. Of course if you stick with the bond and money markets you are looking at near-zero returns (maybe even negative real rates after inflation). From that perspective a 10% looks too high (yes, in a finance class we can discuss risk premiums and that 10% may be too high, given historical premia and models like the CAPM). But, in terms of opportunity costs, the better metric at this point (given that the money was paid in December 2020) is the return on a less volatile equity index (like the S&P 500: 1Yr return 18.70%; the 5 YR HPR was more than 98%) because we are in a low interest rate environment. I am very confident that investors in ETFs (or mutual funds) will easily average more than 10% annualized if they mimic this index.

Yes, you have to take into account the differential taxes (that too depends on Biden tax hike). Like I said, this is why you cannot make a good guess unless you have the exact payment schedule on the original contract. I don't have it. But, I can then tell you with great accuracy what would be the better option if I had it. Anyway, RT is clueless and probably made the wrong call.
I can certainly agree with that. I think Muschamp will do well with this. USC should have negotiated better.
 

rogue cock

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Because I'm certain he sees the writing on the wall with regard to his own position. As much as I wanted him to succeed, I dare say the experiment has not gone as planned.
I think he steps down the later of him getting the aesthetic and other improvements to the baseball stadium he wants complete...or whenever he has his qualification for SC retirement complete.

NC and SC are not reciprocal, so one state's retirement can't be added to the others UNLESS you have taught in a state (like OH) that is reciprocal to both.
 

USCBatgirl21

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I think he steps down the later of him getting the aesthetic and other improvements to the baseball stadium he wants complete...or whenever he has his qualification for SC retirement complete.

NC and SC are not reciprocal, so one state's retirement can't be added to the others UNLESS you have taught in a state (like OH) that is reciprocal to both.
It pains me to say so, but I am not certain we can wait that long.
 
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rogue cock

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It pains me to say so, but I am not certain we can wait that long.
Someone has to raise the necessary money. And we don't have anyone with any authority that knows how to do that...except Tanner.

Wouldn't be looking for money for the university from several large donors anytime soon. Those relationships have been harmed greatly.
 

CarlUSC

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WOW! Can't wait now until spring practice or the next three or four coaches to jump to the NFL or Auburn so we can get off this Finance Discussion. I am a Certified Public Accountant and I come on GC to get away from taxes and other accounting issues. I feel like I am at a SCACPA meeting. LOL!!