From listening to people talk around here... it seems to me that Michigan thought they could get Miles at a discount. They thought since he played and coached here, and has said he is a 'Michigan Man' he would come no matter what. Didn't turn out that way.
Reminds me of a similar situation, offensive lineman for the Steelers - Faneca.
Local guy, been there a while now. Is a free agent at the end of the year. The Steelers not doing anything for him on a contract right now, priority is Big Ben (can't completely blame them).
But the fans think the guy should take some sort of discount in pay because he's local. He's been a big reason for the Steelers success (aka running game) over the years and the fans want him to take a discount in pay just because he's local. Some think the front office is thinking that way too.
If that's the case, they'll lose him just like Michigan "lost" Miles.