Wake Forest paid $14.7 million buyout to men's basketball coach Danny Manning after 2020 firing

Wake Forest University gave former men’s basketball coach Danny Manning a nearly $14.7 million buyout payment in 2021 after firing him in April 2020, the school’s new federal tax returns show.

The document — provided by the school this week in response to a request from USA TODAY Sports — stated that the amount “reflects a payment that was … in full satisfaction of all obligations under his contract of employment” with Wake Forest.

The buyout is among the largest paid to a men’s basketball coach, according to data collected by USA TODAY Sports, which has been tracking buyouts that prospectively would be owed to coaches since 2017. When Indiana fired Archie Miller after the 2020-21 season, he was scheduled to be owed about $10.3 million. But the contract required Miller to make efforts to offset at least part of that of that amount by finding another coaching job, and Rhode Island hired him as head coach in March 2021.

As a private school organized as a non-profit organization, Wake Forest also likely had to pay at least $2.6 million more in federal excise tax due to a 21% levy that applies to the pay of non-profit organizations’ most highly compensated employees and, under certain circumstances, also applies to buyout payments.

Wake Forest’s tax records that covered Manning’s pay for the 2020 calendar year make no mention of an amount connected to a separation or severance arrangement with Manning. It is not clear why Manning was paid the entire buyout in 2021.

"As a matter of University personnel policy, we will not share further details“ beyond the comments provided in the return," Wake Forest athletics department spokesman Will Pantages wrote in an email to USA TODAY Sports.

In 2021, in addition to the money from Wake Forest, Manning ended up making $250,000 while working for the University of Maryland.

After being out of coaching for the 2020-21 season, Manning became an assistant at Maryland in May 2021. He was due to be paid an annualized amount of $275,000, but when Mark Turgeon stepped down that December under what the school called a mutual decision, Manning became the interim coach and was paid an additional $700,000 to serve in that role through early April 2022.

Manning then became Louisville’s top assistant, his current position.

Manning, who was one of men’s college basketball’s top players at Kansas and had a lengthy NBA career, became Wake Forest’s head coach April 2014. In six seasons, he had a 78-111 overall record (30-80 in Atlantic Coast Conference play). After recording what turned out to be his only winning season and only NCAA tournament appearance (a loss in the First Four) in 2016-17, he received a contract extension from then-athletics director Ron Wellman.

Wellman retired in March 2019, and was succeeded by John Currie. A little over a year later, Currie fired Manning after the Demon Deacons went 13-18 (6-14 ACC) in 2019-20.

The excise tax on the buyout comes from law changes passed in December 2017. The changes were intended to cover all non-profits, including all colleges. However, a hole in their drafting by Congress resulted in Treasury Department and IRS regulations that say some public universities don’t have to pay while all private schools do.

The tax is applied to compensation above $1 million that goes to any of a non-profit’s five highest-paid employees in a year. It is applied against buyouts if those payments equal or exceed an amount that is three times the fired employee’s base salary. The base salary amount used for this determination generally is the average of the employee’s base salaries over the five years prior to their firing.

However, if the buyout amount is equal to, or greater than, an amount that is three times the base salary, the tax is applied to the difference between the buyout and one year of the base salary.

Using only the greatest base salary amount Wake Forest reported having paid Manning — $2.3 million — the school still would have been facing a tax assessed on the difference between the nearly $14.7 million buyout and $2.3 million.

The difference is nearly $12.4 million, and 21% of that is $2.6 million.

This article originally appeared on USA TODAY: Wake Forest paid Danny Manning a buyout of $14.7 million after firing