Newsflash: Coaches make too much money

This is no secret, of course. College basketball coaches make tons of cash. Any time someone argues against these sorts of multi-year, multi-million dollar salaries, coaches respond much like Jim Calhoun did in the UConn coach's famous outburst at an activist reporter in 2009 -- angrily and with justification.

The argument goes like this: Yeah, sure, I make a lot of money. But thanks to all the money I make for my school's athletics and academics budgets, I'm worth it. Now leave me alone. My wife is putting in a second guest house, and I need to shop for bathroom tile. (OK, so that last part may or may not be part of the argument.)

Fair enough. Big-time college hoops coaches do make lots of money for their schools. The claim is worth examining in more detail, though, which Forbes helpfully did yesterday. The conclusion? Even proportional to the revenue they generated, college coaches make way too much cheddar:

By any normal business metric, the top-paid college basketball coaches in the NCAA are the most overpaid leaders in the U.S. Take Kentucky's John Calipari, No. 1 on our pay list. He parlayed a run at the national title with the University of Memphis Wildcats into an eight-year, $32 million deal. It's good money, sure, but it wouldn't be out of place on the trading floor of any top-tier Wall Street firm or in the executive suite of hundreds of multinational businesses.

But measured against the revenue Calipari generates, his take-home looks outsized. Calipari (who left his two prior college programs--Massachusetts and Memphis--in hot water with the NCAA for alleged violations) pulls down 10% or so of the $35 million to $40 million that his program generates for the university (the entire athletic department generates $72 million a year, the school says). The corporate equivalent for Calipari's pay package would be Microsoft ( MSFT - news - people ) handing Steve Ballmer $6 billion a year. The average NBA coach, who works twice as many games as his college counterpart, makes $4 million a year, about 3.5% of an average club's revenue.

In other words, college coaches are paid a huge percentage of the revenue they generate for their schools, much more than your average bigwig CEO, and much more than their counterparts in the NBA. Not a bad gig, right?

It's worth noting here that much of this money comes in the form of sponsorships and endorsement deals which the school can then guarantee, and also that it's hard to estimate the revenue from an NCAA tournament appearance, each of which usually spurs hundreds of thousands of dollars in alumni donations that don't factor into these percentage calculations. It's also probably worth noting that for every Pitino or Billy Donovan there are hundreds of assistant coaches and small schools who don't pay their coaches nearly this much. Coaching is very much a feast-or-famine proposition.

Still, though, when college coaches feast, they feast. They feast much more than the players they recruit, who, it can be argued, are the reason college athletics are so exciting and profitable in the first place. Those players receive little more than a scholarship and room and board. Those are nice perks but measured against the millions their mentors make, a scholarship must seem like chump change. That's because it is.