Penn State, James Franklin agree to drastically reduced buyout as ex-coach moves on to Virginia Tech

Turns out Penn State won't be swallowing the $49 million buyout once attached to James Franklin's contract. Instead, the school will pay just $9 million after negotiating a dramatic reduction as Franklin's talks with Virginia Tech intensified in recent weeks, sources tell CBS Sports. 

Franklin is expected to be announced as the Hokies' next head coach within hours.

Franklin's original buyout -- the second-largest in college athletics history when Penn State fired him in mid-October -- was structured to be paid through 2031. His future earnings at Virginia Tech would have offset a significant portion of that total, but as discussions with the Hokies escalated, both sides agreed to settle on a smaller, negotiated sum, sources told CBS Sports. Details of his contract at Virginia Tech are not yet known.

The $40 million in savings is a substantial development for Penn State, which is still searching for its next coach. The lack of an $8 million to $9 million line item in the annual budget for the next six years frees up money to be invested in a new coach, staff and revenue sharing for players.

Athletics director Pat Kraft hinted in October that Penn State's next coaching contract will look different because of the changing landscape of NIL and revenue sharing. Backed by deep-pocketed boosters and now freed from a historic buyout, the university is positioned as well as anyone to adapt.

Virginia Tech hires James Franklin: Hokies make splash tabbing ex-Penn State coach to fill vacancy

Will Backus

"When all these contracts were signed, the use of the money going to rev share and all the other pieces that are involved (were not in place)," Kraft said in October. "You have to process the financials in such a different light. 

"And so, quite honestly, when you get into a search and start to have those hard conversations: What do you envision this program? How do you envision the program looking? How do you envision winning a national championship? I mean, the facts are the facts. You've got to recruit at a high level. And now the transfer portal -- you have to be able to recruit in the transfer portal at a high level. So how do you use your resources in the right way, building a roster that can compete for a national championship?"

The Franklin settlement lands amid a season of escalating buyouts and boardroom drama. LSU fired Brian Kelly on Oct. 26, and the two sides have been arguing over the terms of his contract, which stipulates that the school must pay him 90% of his remaining salary (roughly $54 million). LSU attempted to negotiate a smaller payment with a larger lump sum upfront, but Kelly declined and filed a lawsuit against LSU last week.

Franklin was fired when the Nittany Lions fell to 0-3 in the Big Ten following a 22-21 home loss to Northwestern in Week 7. Penn State started the season at No. 2 in the AP Top 25 but fell out of the rankings during the three-game losing skid. The school lost back-to-back games as a 20-point favorite (UCLA, Northwestern), becoming the first team to do so since 1978.

Franklin went 104-45 in 12 seasons, captured the 2016 Big Ten championship and led Penn State to its first College Football Playoff berth last December, ultimately reaching the semifinals in January. He posted six 10-win seasons but never solved the program's biggest hurdle: beating elite opponents. Franklin finished 4-21 against AP top 10 teams, was 0-10 on the road in those matchups. He also brings a 15-game losing streak against teams ranked No. 6 or better into his Virginia Tech tenure.  

Penn State lost six straight games, including three under Franklin, before recording its first Big Ten victory last Saturday at Michigan State. The Nittany Lions (4-6, 1-6) host Nebraska (7-3, 4-3) on Saturday.

Penn State targeted Nebraska's Matt Rhule, a former Penn State player, and Indiana's Curt Cignetti early in its coaching search, but both received pay raises and opted to remain at their respective schools.

Meanwhile, Franklin inherits a cushy gig at Virginia Tech, which is set to invest an additional $229 million into its athletics department over the next four years after its Board of Visitors approved a budget increase in September shortly after the school fired coach Brent Pry.