Tom Allen, IU reduce buyout to $15.5 million; payment will be made sooner
BLOOMINGTON – Forgoing the original terms of the buyout built into a contract amendment signed in 2021, Tom Allen agreed to reduce the amount Indiana owes him by more than $5 million in exchange for more immediate payment terms.
According to a news release from the school Sunday afternoon formally announcing Allen’s departure after seven years as Indiana’s football coach, the university confirmed Allen will receive $15.5 million across two equal installments ($7.75 million each) in a financial settlement. Initially the buyout was $20.4 million. He will instead receive one installment this year and the other in 2024. Allen will receive the full amount; it will not be reduced through mitigation if he is hired to coach by another team.
Per the release, IU will pay for Allen’s agreed-upon severance through “department of athletics donor funds.”
Allen had been due to receive approximately $20.8 million across the next four years, the remaining balance of the terms of his current contract. Had the university elected to give Allen one more season, its financial obligation upon dismissal would have reduced to less than $8 million.
That’s because, per the language of his original buyout, Allen would have been owed 100% of remaining guaranteed compensation — base pay, deferred compensation, and outside, marketing and promotional income — through Nov. 30, 2024. Had Indiana employed him until Dec. 1 of next year, the buyout would have reduced to just 50% percent of remaining guaranteed income, accounting for the dramatic dip in buyout terms.
In the end, the department negotiated with Allen to a midpoint between the two. Indiana will save more than $5 million in buying out Allen’s contract, while Allen will receive his severance in larger installments. The agreement announced Sunday afternoon also dismisses any mitigation language that would have subtracted Allen’s future earnings coaching football from IU’s obligation to him moving forward.
Follow IndyStar reporter Zach Osterman on Twitter: @ZachOsterman.
This article originally appeared on Indianapolis Star: Tom Allen fired: Buyout reduced to $15.5 million
