Penny Hardaway's 3-year contract at Memphis worth $4.8M, includes attendance incentives

Memphis men's basketball coach Penny Hardaway's three-year contract is worth at least $4.8 million and includes lucrative incentives based on attendance and season ticket sales, according to a memorandum of understanding obtained by The Commercial Appeal through an open records request with the university.

Hardaway will earn $1.3 million in total compensation during his first year on the job and his salary will increase to $1.6 million in year two. The third year of the contract includes a salary of $1.9 million.

But he could see even more money if Tigers fans return to FedExForum as university administrators anticipate.

Hardaway would earn a bonus of $300,000 during any year in which the average turnstile attendance numbers for men's basketball games at FedExForum exceeds 12,000. The turnstile count measures the number of fans who physically attend each game.

In addition, Hardaway could earn another $50,000 bonus if men's basketball season ticket sales exceed $5 million during any year of his contract.

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This past season, attendance at Tiger home games hit a 48-year-low and former coach Tubby Smith's firing last month was largely due to financial reasons stemming from decreasing fan support of the program.

Memphis had an announced average attendance of 6,225 fans during the 2017-18 season.

Hardaway's memorandum of understanding also states that Hardaway's contract will include a provision involving "the renegotiation of the contract after year two." The exact details are not included in the memorandum of understanding.

Unlike Smith's contract with the university, Hardaway's deal also features an offset clause should Memphis fire Hardaway without cause.

If Hardaway's contract were terminated, the school would owe him his full remaining salary. But if Hardaway were to get a new job, the university would only have to pay him the difference in salary.

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Memphis owes Smith nearly $10 million after firing him with three years remaining on his five-year contract, although it can pay him that figure over six years. Smith has since taken the head coaching job at High Point.

Hardaway's memorandum of understanding also has more standard bonuses for winning a conference championship ($50,000), making the NCAA tournament ($50,000), earning national coach of the year honors ($75,000), reaching the Sweet 16 ($75,000), reaching the Elite Eight ($75,000), reaching the Final Four ($150,000) and making it to the NCAA tournament championship game ($250,000).

Hardaway is also due a bonus of $10,000 if the men's basketball team achieves a four-year academic progress rate of 975 or more. That bonus would increase to $20,000 if the team's four-year APR is above 990.

Additionally, the memorandum of understanding states that Hardaway's contract will have mutually agreed upon provisions related to several different categories:

Reasonable limitations on outside activities and outside employment

Coach's duties and responsibilities as the head coach for men's basketball

The university's right to terminate the contract for cause prior to its normal expiration

Return of incentive compensation for NCAA violations that have occurred in the program during coach's tenure

University's limited right to use coach's name and likeness during the term of the contract

Reasonable limitations on coach's right to use the university's name and logo

Hardaway said previously that he will not have to give up his sponsorship deal with Nike or his ownership stake with the Memphis Grizzlies now that he's the head coach at Memphis. The university's apparel contract with Nike, which is currently worth $1.5 million annually, expires at the end of this school year.

Smith did not sign his official contract with the university until 15 months after his hiring became official. He worked under a memorandum of understanding while negotiating the contract.

In his first year, Hardaway will earn almost $2 million less than what Smith was set to earn ($3.25 million) if he were still the head coach at Memphis.

Hardaway and athletic director Tom Bowen signed Hardaway's memorandum of understanding on March 20, the same day Hardaway was introduced as the school's new men's basketball coach. University President M. David Rudd signed the memorandum of understanding on March 26.