John Heuser’s piece in the Ann Arbor News, discussing this week that Rich Rodriguez’s compensation tallied up to $6.6M, was thoroughly blasted in the blogosphere– see Brian Cook’s posts on mgoblog and AOL, and the gang at Wolverine Liberation Army.

Heuser was defended by his former colleague Jim Carty on his blog. JC called it a “meaty little story” and after acknowledging Brian Cook’s greatness took a few shots across the virtual bow.

If you read this site regularly you might recall my October 2008 interview with Dave Shand where he reveals the scuttlebutt that Michigan was going to pay the taxes on the buy-out:

Shand:…So it cost Michigan, they say $2.5 million. But I’ve heard, through back sources, that Rich Rodriguez did not realize that the $2.5 million that Michigan is paying on his behalf is taxable, so Rodriquez is going to have to pay taxes on that. Plus there’s the million and a half out of his own pocket.

That was indeed scuttlebutt at the time, but then a couple weeks later Rodriguez’s contract was FOIA’d and the terms of the buy-out were revealed. Those terms included the language on the tax neutralization [from my post on October 27, 2008]:

Thanks to the contract being available via FOIA, we know that this is true (here’s the full contract), see section 3.02, part (g):

So I, maybe you, knew this was going down. Carty suggests in the comments thread on his site that this October post was news and deserved some credit, but that the specifics revealed by Heuser make this news. Says JC:

See the difference – $4.1 million versus the initially reported $2.5 million?
That’s reporting. New reporting. Actual numbers and stuff. Journalism.

That’s fair, I agree the numbers and the terms matter and are interesting, but I also see the point of a few commenters on mlive and Paper Tiger who basically say that any dope with a calculator could have figured this out. Maybe so.

I was able to find a dope with a calculator and it confirms that last little detail that Shand mentioned when discussing the taxes, (“Plus there’s the million and a half out of his own pocket”). I’m pretty confident Michigan paid the taxes on the entire $4M, not just U-M’s portion. Heuser didn’t break out the detail of how we arrived at $6.6M and I think Carty may have missed this, he writes: “Now – thanks to the FOIA – we see that Michigan also stepped up and paid the taxes on the $2.5 million, which brings the total compensation number to $4.1 million.”

To the dope, calculated assuming Michigan compensated Rich Rod for the tax burden of the full $4M:

This assumes the highest tax brackets of course, and it assumes he had to pay for 12 months in West Virginia. If he claimed one month residence in Michigan these figures would be reduced to $6.65 or so. I don’t if the final figure reported was exactly $6.60M, but it makes sense that Michigan would cover Rodriguez at something under that full tax rate after factoring for various deductions.

Update: Yes, I hath understanding and I reckon the number of the beast, for it is a human number, and its number is six hundred and sixty-six (not six million six hundred and sixty thousand).

Related:
Jim Carty Interview – Three Parts
Dave Shand Interview – Four Parts

5 Comments

  1. Greg,

    I agree that “any dope COULD HAVE calculated the taxes” but no one – in the blogosphere or MSM took that step and DID calculate the taxes, and even if they had, the MSM still have a responsibility to actually do so once the money is paid.

    The fact is Rich cost Michigan $6.6 million last year, and no one – absolutely no one – had reported that before the News did this week. There’s no disputing that, which is why the story was a good one.

    If the paper didn’t have a bad headline on the story, I’m not sure we’d even be having this conversation (and if we did, it would be a sure sign that this isn’t really about the story, but the fact a certain strain of Michigan fans are SUPER sensitive these days to anything that could possibly cast Rich in a bad light).

    IMO, of course.

  2. Greg (MVictors)

    JC – I agree with what you say here. I agree that the final figure was news. It wasn’t clear, even in October, what the final figure was. I or someone else could have come to $6.6 like I did above, or just ran the numbers iagainst just the U-M portion and tax burden of the buy-out, it would have been less.

    I also agree with a point you made in the comments of your post, that this isn’t a zero-sum game (MSM or blogs).

  3. And I agree with you that this story, and the figure, should have been done sooner by the MSM. It’s almost amazing the way they ignored the taxes issue, and it’s hard not to wonder if the reason why is because a blogger broke it (and broke it using a traditional journalism tool). I mean, even know, only the News has even acknowledged it, at least as far as I see.

  4. Greg: Can I get MVictors Tax Advisers, GmbH to work on mine?