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January 31, 2020

Board of Trustees of the University of Arkansas v. John Scott, Jr.: Drafting Buyout Clauses Reflecting the Economic Realities of Today’s College Football Game

By Daniel A. Cohen, Jeffrey R. Daniel

Sports Litigation Alert

Reprinted with permission from Sports Litigation Alert

On Nov. 18, 2019, the Board of Trustees for the University of Arkansas (“UA”) filed a lawsuit against former defensive line position coach John Scott, Jr., seeking to recover $187,862.32 in liquidated damages under his employment contract’s buyout clause, as well as attorneys’ fees and prejudgment interest.

Scott entered into the employment contract on Jan. 18, 2018, earning an annual salary of $340,000 over the contract’s two-year term ending on Feb. 28, 2020. Under the buy-out clause, however, if he terminated the contract before that date, he became obligated to pay UA 50 percent of any remaining salary to which he would have been entitled under the remaining term, within 30 days thereafter. The only exceptions were if Scott left to become a college head coach or a full-time NFL coach, or if he had the written approval of certain UA officials.

The buyout clause states that, if Scott terminated the contract prematurely, UA would suffer damages in an amount difficult to determine, including expenses incurred in searching for and hiring a replacement coach, as well as other “tangible and intangible detriment” to the football program and its fans and donors. In exchange for this amount, UA agreed it would release any claims it might have against Scott’s new employer. Both parties also recite that the payment was “not a penalty.”