WKYT Fact✓Check: University of Kentucky deal to offset taxes in Michigan State buyout tied to estimated $2M-plus cost

The University of Kentucky has agreed to cover tax impacts connected to Michigan State’s athletics buyout tied to J. Batt’s hiring, and WKYT’s Fact✓Check review says the tax coverage alone could translate into an added cost of more than $2 million, with the overall financial impact tied to the deal potentially exceeding $5 million. According to WKYT, the agreement involves UK paying or otherwise covering the taxes associated with Michigan State’s payment related to Batt’s departure from his prior athletics role, as part of the terms of UK’s selection of Batt as its new athletics director. WKYT’s review frames the issue as a matter of how tax “gross-up” provisions work when institutions structure coaching and executive transitions, including whether the receiving party’s tax liability is shifted back to the hiring institution. WKYT reports that financial planners consulted for the Fact✓Check estimate the tax coverage as being costly, describing an arrangement that increases the effective compensation value because the taxes owed on buyout-related money are paid for by UK. WKYT’s review says those outside estimates place the incremental tax-related cost above $2 million. The review also says that when this tax component is considered alongside other elements associated with the buyout and hiring structure, the total cost to UK could exceed $5 million. The WKYT Fact✓Check comes as universities increasingly rely on complex compensation and transition structures for athletics staff, including buyouts, relocation-related terms, and performance-related compensation. In such deals, the presence of a tax-offset or “tax coverage” term can materially change the true cost compared with a headline figure that might only describe a base buyout amount. Under the WKYT review, the core dispute is not about the existence of the buyout payment itself, but about the downstream financial effect of UK’s promise to cover tax consequences that would otherwise fall on the individual receiving the buyout-related payment. WKYT’s framing emphasizes that tax coverage provisions can require the hiring institution to pay additional sums so the recipient is not left with an unexpected tax bill. WKYT’s review also notes that the estimates depend on assumptions about tax treatment and the magnitude of the underlying payment. Because tax calculations vary based on factors such as timing and the applicable tax rates, WKYT’s bottom-line figures are presented as planner estimates rather than as a single, final accounting number publicly provided by UK in the context of the Fact✓Check. The question for UK and for the public is how the university’s athletics contracting affects the broader cost picture and budgeting, particularly for a public institution. If the tax-coverage provision functions as estimated, UK’s athletics hiring deal would represent a larger net spending obligation than a contract headline alone might suggest. WKYT’s Fact✓Check does not finalize the university’s ultimate accounting without additional documentation, but it provides a framework for understanding how a tax-offset term can add to the total cost burden. The next practical step for UK stakeholders would be confirming the final amounts involved in the tax coverage and how the payments are recorded in institutional financial reporting once the transaction steps are completed.