Penn State's Potential $50 Million James Franklin Buyout Could Be Nearly Eliminated by Offset Clause

Following the recent termination of head coach James Franklin, Penn State University faces a substantial contract buyout estimated at nearly $50 million. However, a critical "offset clause" in Franklin's 2021 contract could significantly reduce, or even eliminate, the university's financial obligation if he secures new employment. As one social media user, LandonTengwall, clarified, > "If Franklin takes a job at Virginia Tech (or any other school), PSU would owe him virtually nothing from that buyout due to offset clauses in his contract."

The 10-year contract, which was set to run through the 2031 season, stipulates that any salary Franklin earns from a subsequent position in coaching, scouting, or broadcasting will directly offset the payments Penn State owes him. This contractual language also includes a "duty to mitigate," obligating Franklin to diligently search for a new role appropriate for his skill set and to seek the maximum reasonable salary. This structure stands in stark contrast to other high-profile coaching buyouts, such as Jimbo Fisher's $76 million payout from Texas A&M, which lacked such mitigation clauses.

Reports from Front Office Sports, which obtained a copy of the 2021 contract, indicate that Franklin's buyout, estimated between $48 million and $50 million, covers his base salary, additional compensation, and a life insurance policy through the contract's original end date in 2031. Should Franklin secure a new position, his new earnings would be deducted dollar-for-dollar from Penn State's annual buyout payments. Athletic Director Pat Kraft has publicly stated that the athletic department will absorb any costs associated with the buyout, underscoring the significance of this offset clause in managing the financial impact.

Franklin's tenure at Penn State, which began in 2014, included notable achievements such as a Big Ten championship in 2016 and a College Football Playoff appearance last season. However, his final season saw the Nittany Lions start 3-3, leading to his dismissal. The availability of several prominent coaching vacancies across college football, including at Arkansas, Oklahoma State, UCLA, and Virginia Tech, presents opportunities for Franklin to potentially mitigate a significant portion of the university's financial commitment, as he is contractually obligated to seek new employment.