N.C. State has stopped making buyout payments to former basketball coach Mark Gottfried, who has been swept up the Adidas college basketball corruption scandal.
The school still owes Gottfried about $520,000, his attorney said, and has broken a buyout agreement. There is no pending legal action — and Gottfried’s Raleigh-based attorney, Elliot Abrams of Cheshire Parker Schneider, said he hopes it doesn’t have come to that. N.C. State acknowledged it is no longer making the payments but wouldn’t provide details.
The school is trying to use Gottfried’s connection to the federal trial involving a former Adidas executive and former N.C. State star Dennis Smith Jr. as a way of paying Gottfried less than he is owed, Abrams said.
“Since 2018, N.C. State has been attempting to wriggle out of making the payments required by the contract that N.C. State’s lawyers drafted and that N.C. State signed and agreed to,” Abrams wrote in a text message to the News & Observer.
“Coach Gottfried has complied with every obligation under the agreement he and N.C. State signed and it is our hope that N.C. State will ultimately live up to its word as well.”
A spokesman for the school declined to comment on the status of Gottfried’s buyout.
“N.C. State’s payments to Mark Gottfried ceased in August of 2018,” Brad Bohlander, chief communications officer at N.C. State, wrote in a text message to the News & Observer.
“We cannot provide further comment at this time as this issue involves pending personnel matters.”
Gottfried was fired with four games left in the 2016-17 college basketball season. Under the terms of Gottfried’s contract, which ran through the 2019-20 season, N.C. State had owed him $760,000 per year (his base salary) or $2,280,000.
According to Abrams, the school negotiated a separate buyout agreement from Gottfried’s contract with similar financial details. The N&O requested on March 19 a copy of the agreement under the North Carolina Public Records Law, but N.C. State has not provided it.
N.C. State paid Gottfried the full amount for the first year of the buyout — $760,000. Gottfried was hired by Cal State-Northridge last March, which offset the amount N.C. State had owed.
Gottfried’s contract with CSUN was for $400,000 for the 2018-19 season and it goes up to $450,000 next season. Under the terms of the contract, N.C. State would still owe Gottfried about $520,000 through April 2020.
Under Gottfried’s N.C. State contract, there would have been legal recourse for N.C. State to stop payments on the buyout. The buyout agreement, according to Abrams, doesn’t include similar language.
If N.C. State had terminated Gottfried’s contract “for cause,” it would, according to the language in Gottfried’s contract, owe the “portion of the Annual Salary due to COACH as of the date of such discharge ... .“
N.C. State athletic director Debbie Yow said then Gottfried’s dismissal was for performance issues, the team went 9-27 in the ACC in Gottfried’s final two seasons, and for the lack of direction of the program.
According to Gottfried’s contract, under the section of “Termination by NC State for cause:”
“Misconduct of the COACH, or misconduct by an assistant coach or staff member of which the COACH knew, hard reason to know, or should have known through the exercise of reasonable diligence or which COACH condoned, of such a nature, as reasonably determined in the discretion of NC STATE, that would offend the traditions and ethics of NC STATE or which brings discredit to NC STATE ... “
The personnel files of Gottfried and former N.C. State assistant coach Orlando Early were requested in a subpoena by the U.S. Attorney for the Southern District of New York in Jan. 2018 in connection to the fraud trial of former Adidas executive Jim Gatto.
T.J. Gassnola, a former consultant for Adidas and government witness, testified during Gatto’s trial last October that Early had helped arrange a $40,000 payment to Smith’s family during the recruiting process. Early did not testify during Gatto’s trial.
A star recruit from Fayetteville, Smith was an All-ACC player for one season for the Wolfpack in 2016-17. N.C. State struggled to a losing record during Smith’s lone season and Gottfried was fired. Smith entered the NBA draft in 2017 and was a lottery pick of the Dallas Mavericks.
Gatto was convicted of conspiracy to commit wire fraud for funneling illegal payments to families of recruits to N.C. State, Louisville and Kansas. Earlier this month, he was sentenced to nine months in prison.
N.C. State has a multi-year contract with Adidas worth $38.7 million in uniforms, footwear, apparel and financial considerations.