SPAC Deals Are Helping Fuel The Runaway Market For College Football Coaching Salaries

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In the late 1990s, an undersized guard named Mat Ishbia walked on to the Michigan State University men’s basketball team. The Spartans won the national championship in 2000, but Ishbia’s role was a small one: Over the course of a three-year career, he played a grand total of 115 minutes and scored just 28 points.

But Ishbia’s biggest contributions to Michigan State athletics were still to come.

Mel Tucker\’s new $95 million contract at Michigan State is being partially funded by a SPAC billionaire.

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After graduating, Ishbia joined the startup that his father had founded, becoming the 12th employee at United Wholesale Mortgage. He quickly rose up the ranks, ascending to CEO in 2013, and he helped transform UWM into the largest wholesale mortgage lender in the country. This January, the company went public in what was then the largest SPAC merger of all time, landing a $16.1 billion valuation. The deal turned Ishbia into one of America’s wealthiest people, with a personal net worth of $7.9 billion.

It didn’t take long for some of that money to start making its way back to his alma mater. About two weeks after the merger closed, Isbhia made a $32 million donation to Michigan State athletics to build a new football facility and rename the school’s basketball court after his former coach, Tom Izzo.

That was merely a warmup. In late November, Michigan State football coach Mel Tucker inked a new 10-year, $95 million contract extension, the biggest deal ever for a coach not named Nick Saban. The Detroit Free Press reported that the cash for the extension didn’t come from university coffers: Instead, it was provided directly by Ishbia and fellow university booster Steve St. Andre, the CEO of marketing company Shift Digital.

College football is a sport defined by keeping up with the Joneses. And Tucker’s deal set the market for what has proved to be an unprecedented spending spree in the college coaching market. A few days later, the University of Oklahoma’s Lincoln Riley jumped to the University of Southern California, with reports indicating that the private university will pay around $100 million for his services over the next decade, topping Tucker’s total. Shortly thereafter, Louisiana State University poached Notre Dame coach Brian Kelly with a contract worth $9.5 million per year. Three of the four largest deals in the history of the sport had been handed out in the span of two weeks.

The action continued this past week, when Mario Cristobal left his post at the University of Oregon to become the next head coach at the University of Miami, reportedly swayed by a 10-year contract worth $80 million. According to the South Florida Sun Sentinel, one of the “thick wallets” who helped finance the contract was a Miami booster named John Ruiz—a lawyer who has come into a recent SPAC fortune of his own.

United Wholesale Mortgage didn’t hold the title of largest SPAC merger ever for long. In July, a little-known company called MSP Recovery shocked Wall Street when it announced plans to conduct a blank-check merger at a $32.6 billion valuation—a stunning sum for a company that expected to generate zero revenue this year. Led by Ruiz, MSP is in the business of buying up medical claims that were paid for by the government and then filing lawsuits to seek more money in cases where it believes another insurer should have paid instead. Forbes took a closer look earlier this year at MSP’s litigation-fueled model, and at how Ruiz seems to have created a $20 billion fortune out of thin air.

The contract for Cristobal—to whom Ruiz is related by marriage, per the Miami Herald—is part of a larger spending package that the lawyer hopes to implement at his alma mater. Also this week, Ruiz announced his ambitions to finance and build a new 50,000-seat stadium for the Hurricanes on the site of the current Coral Gables High School, a couple of miles from the university campus. He said it’s part of a plan to donate “north of $50 million” to the school “in the near future.\

Other boosters who funnel millions of dollars to other college football programs have made their fortunes in many different ways. Cristobal’s former employers at Oregon have long had a lucrative relationship with Nike founder Phil Knight. Oil and gas tycoons dominate the landscape in Texas. The most well-known donor to my own alma mater is a horse-racing magnate. There’s no shortage of money in this sport, particularly when you don’t have to pay the players.

But in the wake of the recent SPAC frenzy, business leaders who leveraged blank-check deals into massively valuable stock holdings have emerged as a major new source of capital, using their newfound fortunes to create generational wealth for coaches like Tucker and Cristobal. What a strange, silly sport.