Monday, December 20, 2010

Bobby Petrino's New 7-Year Deal With Arkansas Contains Only In-Term Non-Compete Restriction

As the University of Arkansas prepares to play The Ohio State University (my alma mater) in the Sugar Bowl after the New Year, it apparently does not need to worry about perennial navel-gazer Bobby Petrino looking for greener pastures.

It was reported a few weeks ago that Arkansas locked up Petrino to a new employment agreement that runs through 2017, a move clearly necessitated by high-profile job openings at Florida and Miami. One aspect of Petrino's original deal that was somewhat controversial was his non-compete agreement, which was limited to the SEC's Western Division. As any college football fan well knows, the SEC is somewhat of an incestuous conference, with several coaches - Nick Saban and Houston Nutt, to name a few - jumping from one conference rival to another in a relatively short time-frame.

Notably, Florida is in the SEC's Eastern Division. Had Petrino been offered and taken the Florida job (which went to Texas' high-profile assistant, Will Muschamp), the non-compete would not have applied. Florida would have been on the hook only for the buyout payment to Arkansas, but Petrino likely would not have faced an injunction to prevent him from taking the position altogether.

Petrino's new contract contains a significant pay raise and a non-compete that extends to the entire SEC. The long form of Petrino's new deal with Arkansas is not yet final, but should be within several weeks. His letter agreement contains a total compensation package averaging $3.56 million per year. The non-compete clearly applies during the term of his employment with Arkansas only. So if Petrino reaches the end of his current 7-year deal with Arkansas, and an SEC job is open, he is free to take it. As we all know, coaches almost never reach the end of a deal. They are either extended or fired. On this score, if Petrino were fired without "cause", the SEC non-compete would not apply.

Most courts consider in-term non-competes like the one Petrino has to be far less problematic than post-termination non-competes. They are viewed as a reasonable exchange for those individuals offering unique personal services, and there is little concern about loss of livelihood or income. In fact, the interest that an employer like the University of Arkansas is seeking to protect through its in-term non-compete is the loss of Petrino's services, not irreparable harm from an ex-employee through direct competition.

I don't know how Arkansas courts have construed in-term non-competes, but the law of other states clearly demonstrates that such covenants are enforced much more broadly.

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