I disagree with the last part of what you said. The AD/University has plenty of leverage in certain areas like contract negotiations and how the athletic department (which the football team is a part of) functions.
Yes, the AD pretty much lets the coach be a CEO over what he does. But if you let them do ANYTHING they want, then you have things happen like what went on with the Baylor basketball program years ago or any program Kelvin Sampson was a part of. It is a balancing act, but the AD does have power. It doesn't surprise me, though, that an AD from Texas said that. He may or may not mean it. ADs are usually pretty controlling types in their own right.
Back to this scenario, though. KF was the one that needed something in this instance. We actually had leverage in a couple of ways. He probably wants to pave the way for his son to succeed him. Therefore I don't think he could afford to be unreasonable in his demands. He also is the one that needs at least a five-year deal to protect against negative recruiting. Yes, the program/University needed it, but it is his success that is impaired if he doesn't get it. But I think seal, figure he will not leave Iowa for another job, so why give him a ten-year deal? Negative recruiting will be there as each year passes just based upon his age, so you could say the longer term is irrelevant for that purpose.
All in all, though, he probably damages the chances of his son getting the job when he leaves if he doesn't leave in a MUTUALLY agreeable way. So maybe that is the ultimate leverage, so that the buyout is irrelevant, if there is a handshake agreement under the table anyway.
Im sure you are right in that the iowa athletic department isn't ran like things at Texas AM. However it is a fact that in Barta's twisted mind, he needs KFz more that KFz needs Iowa. For some reason Barta has these imaginary hand cuffs on. Almost the old "we are just poor old Iowa lucky to have KFz". True...we aren't Ohio State or Alabama, but we aren't some destitute backwoods team.