Thats if there was no Michigan option. His worst case is that he heads to UM for 4 years.
Right, you've got to step things through logically to their conclusion, with the premise that he
WILL NOT be in San Francisco next year. If there's a chance he returns to San Francisco, then everything is too convoluted.
Options for San Fran -- assuming they are set on no Harbaugh in 2015 -- are...
1. Fire him, pay a buyout. Worst case scenario.
2. Let him get hired by Michigan after refusing to trade him. No buyout. Not the worst, and I bet if they're pissed enough at Harbaugh this could end up being what happens. This is effectively a game of chicken.
3. Trade him to another franchise that Harbaugh doesn't want to go to but is willing to give the most compensation. Best case scenario for 49ers, Harbaugh probably quits and goes to Michigan... so doubtful a trade like this goes through, because Harbaugh would find a way to make it known that he DOESN'T want to go there to someone even if contact is difficult per rules.
4. Trade him to another franchise that Harbaugh DOES want to go to. Best case scenario for both parties. 49ers get compensation, Harbaugh ends up at desired destination.
The only thing that can get in the way of #4 is timing and egos... which are definitely in play here. The Michigan opening is critical to what happens with Harbaugh, and he gets all of his leverage towards #4 by the job being open. If it were to be filled, option #3 becomes more probable and the 49ers go back to having all the leverage -- right now they have none, because if he doesn't get what he wants he can sign with Michigan at any time. But right now things seem to be trending towards Harbaugh to Oakland, Chicago, or Miami as more probable destinations than Michigan.