partnership

The NFL hopes to capitalize on New England’s strong Irish roots when it partners with Premier Rugby League to bring the London Irish to Gillette Stadium this summer. (image via S&B Media)

The NFL is hands down the most popular sport in the United States. From lucrative media contracts and billionaire dollar stadiums, the NFL is also one of the most professional and forward thinking businesses in the U.S. With that being said, as of recent the NFL has teamed up with the Premier Rugby League to create a professional rugby league here in the U.S. Accordingly, scheduling has already been made to have an exhibition game played at the New England Patriots stadium, which will be televised on the NFL Network in August.

Not surprisingly, rugby ranks as one of the top sports in the entire world. Seemingly crushing American football in a popularity contest. Consequently, with the heightened growth of the sport in the United States, mainly at the collegiate level, NFL management saw this as an opportunity to capitalize on the market share and potential media assets. For many, this partnership did not come as a shock because in 1970 NFL owners invested in a soccer league, which eventually grew into what is now Major League Soccer (MLS). Essentially, the MLS investment gave birth to the idea of creating this rugby league.

What’s even more intriguing about this is the NFL’s plan to use the empty professional stadiums not utilized during the offseason. More or less exploiting already NFL owned properties to pursue the growth of a professional league. While the NFL is by and large a mogul in the marketing department, this would be a crucial time for not only them, but management as well. The issue lies at two decisive parts, which could affect the new founded partnership. First off, management would have to ensure that the quality of play is legitimate for fans to watch. Secondly, they would have to garner television contracts with the likes of FOX and NBC so common people could watch. That being said, getting those contracts won’t be especially hard due to the NFL’s popular track record. However, by just showing rugby on the premium NFL Network channel management may lose potential fans.

All of the above issues can be resolved with carefully strategy planning. However, if proper steps to grow the sport are not taken than the NFL with ultimately lose the partnership and potentially the cost to its own market share. Surely then the question arises at wondering whether or not this is a step in the right direction for the NFL and Rugby. Should management have pursued this partnership instead of investing the time and money on developing a larger worldwide audience for the NFL? What other issues can you see with this partnership? In due time we will all find out if this panned out well for the NFL and rugby.

Source:

http://www.forbes.com/sites/jasonbelzer/2013/05/17/nfl-plays-offensive-with-move-into-rugby/

The current economic crisis has a renewed interest in examining the situation that lead up to the Great Depression of the 1930s. Firms like Lehman Brothers and Bear Stearns were formulated in the 19^th century or the earlier part of the 20^th century and survived the shock of the Great Depression. It is viewed as the largest economic catastrophe in the history of our financial system. Yet, the 2008 global financial crisis and recession caused both of them to collapse.

We need to take a closer look at why they did fail in relationship to the structure of the company. The question that prevails is whether risk is better controlled under a partnership or a public corporation system?

Investopedia defines partnership as “a business organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business. Partnership doesn’t always mean two people. There are many large partnerships who have thousands of partners.” (LINK #1) A partnership structure where you are betting your own money is a better one at focusing on risk management. After researching various investment banks’ “business codes” or “risk management strategies”, I found Goldman Sachs to have the best business plan. (LINK #2) One of the reasons why Goldman has always been better at risk management and continued to do well throughout the 2008 meltdown is because as a partnership it really mattered to have good risk management. This is because it was the partners’ money that was at risk. Having your own money at risk is a very powerful motivator to make sure the risk and reward tradeoff is being made correctly. This view develops a culture in a company where the risk managers have equal power to the risk takers.

From what has happened, this didn’t exist in many other public companies. Even though Goldman changed into a publicly traded company, this culture of “it’s your money” stayed there to a fair extent. This is reflected by the fact that Goldman’s employees collectively still own a significant portion of the stock. (LINK #3) The same was true for Lehman Brothers and Bear Sterns employees. They also owned a significant portion of the company’s stock. No individual lost more money than Dick Fuld, CEO of Lehman Brothers. Reports say his total compensation from 2000-2007 totaled anywhere from $310 to $485 million, 85% of which was in the company’s stock. (LINK #4) Why was that economic incentive still not enough to make them be more careful? This has to do with the culture of the firms and the focus on making sure that there is a much better balance between risk takers and risk managers. Another thing Goldman does is it takes people who were traders and puts them on the risk management side. (LINK #5) Any company that takes the attitude that risk management is a low level function and the traders are the kings is setting themselves up for a problem. When you have good leadership at the top of your firm you will recognize the value of good risk management and their compensation will reflect that. An example that combines both culture and leadership is Warren Buffet. Warren Buffet has put everything that he owns into Berkshire Hathaway. It is clear that his attitude of “the risk for my shareholders is the same as the risk for me” reflects the overall success of the company. (LINK #6)

In closing I believe that it is the CEO’s job to protect the shareholders by investing in good risk management. The CEO’s who did not do this during 2008, for whatever reason, failed in their jobs.

Link #1-

http://www.investopedia.com/terms/p/partnership.asp

Link #2-

http://www.goldmansachs.com/what-we-do/investment-management/private-wealth-management/intellectual-capital/risk-mgmt-report/risk-mgmt-report.html

Link #3-

http://finance.yahoo.com/q/mh?s=GS+Major+Holders

Link #4-

http://www.businessweek.com/magazine/content/10_19/b4177056214833.htm

Link #5-

http://www.goldmansachs.com/careers/why-goldman-sachs/our-people/sarah-man-profile.html

Link #6-

http://finance.yahoo.com/echarts?s=BRK-A+Interactive#symbol=brk-a;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;