Jim Harbaugh is making $9 million this year from his unique Michigan deal

Confirmed: It pays to be a head coach in college football.

Previously, Alabama head coach Nick Saban was the nation’s highest-paid coach in the country, earning $7 million per year. However, the most recent data shows that Michigan head coach Jim Harbaugh is making a whopping $9 million this year, making him college football’s highest-paid head coach.

Below is the updated list of head coaches who are making $5 million or more, per USA Today’s updated salary database that was released Wednesday.

Now, you may think this is absurd for a school to be paying a head coach close to $10 million in a year (we won’t argue one way or the other right now), but it’s the way that Michigan is paying Harbaugh that is interesting.

In August, UM agreed to pay Harbaugh more in the form of an annual life insurance premium. How it works was detailed by the Detroit Free Press in August.

It is listed in the form of a life insurance policy where the university will pay a premium of $2 million per year to the insurer for the life of the current contract, through December 2021. However, the addendum states that Michigan was to make an initial $2 million payment to the insurance company on the addendum’s effective date - June 3 - and will make another $2 million payment if Harbaugh remains the school’s head football coach on Dec. 6.

Harbaugh’s base salary plus bonuses is about $5 million. Add those two $2 million additions, and you get $9 million.

Now, there is a way that Michigan can get the money back spent on Harbaugh’s insurance policy. From the Free Press:

The university will get its money back, without interest, when Harbaugh dies. There are other scenarios under which U-M would get its money back: If the policy is surrendered or cancelled prior to Harbaugh’s death or the money would come from Harbaugh if he exercises his option to terminate the entire insurance arrangement in the event that his employment contract is terminated.

You’re probably wondering why it appears as if Saban is making slightly less than $7 million this year as opposed to last, but that’s not really the case. The $6.9M figure represents what only the school is paying him, not his total annual income, including money received from outside the school itself. The NCAA passed a rule last spring that made it no longer mandatory for athletic departments to release incomes received from outside sources. According to USA Today, Saban had reported $150,000 or more on in outside income.