When former Michigan interim athletic director Jim Hackett worked on football coach Jim Harbaugh’s contract, he dipped into the contract world of corporate executives.
Hackett, a former CEO of Steelcase, told The Detroit News in March he used a model often used in business contracts.
Harbaugh, entering his second season at Michigan, will receive $9 million from Michigan this year based on the contract amendment signed in June and released by the university this week.
The business model is in effect, considering its use of a life insurance policy, which Harbaugh owns. Harbaugh already stood to make $5 million a year, but now Michigan will loan him $4 million this year and $2 million the next five years to pay a life insurance policy. He received $2 million on June 3, and if he remains the coach on Dec. 6, he will receive another $2 million payment.
As long as the policy is active, he can make withdrawals from the policy. Upon Harbaugh’s death, the university will get its money back without interest. Harbaugh will have beneficiaries for the remainder of the insurance payout.
The contract was signed by U-M president Mark Schlissel, athletic director Warde Manuel and Harbaugh, but Hackett was the one who determined the direction of this contract.
“I’m really proud of the instrument we’re using,” Hackett said in March. “We’re using life insurance as a vehicle to deliver value. The great thing is the value.
“The way the design of this works, he gets value that he gives back when his estate settles years from now. The university is essentially loaning him the money during his lifetime, but it comes back to us. I’m really proud of this idea. It’s generous of him. It’s a great deal.”