Lower-Profile Leadership

Leadership issues are not limited to matters of succession; they often require the head of the business appreciating when to take a back seat in the decision-making process. This happens frequently in the sports world when neophyte owners purchase teams they do not have the expertise to run from a player personnel perspective. Instead, the owner surrounds himself or herself with management pros who have experience, and who understand what the owner's overall business goals are for the team. This helps the new owner deflect criticism about his or her knowledge of the game while adding credibility to the franchise. Significantly, it also provides the owner with his or her own personal set of consultants, savvy pros who can help acquaint the novice sports owner with the pressing issues of the day.

When Computer Associates Chairman Charles Wang bought the NHL's New York Islanders with his CEO Sanjay Kumar in April 2000 for $175 million, they both admitted they knew nothing about hockey. Wang said he had only seen two hockey games and was reading Hockey for Dummies. So Wang stayed behind the scenes, while he opened his checkbook for General Manager (GM) Mike Milbury, who was GM of the team since 1995. In the press, Milbury remained the voice of decision making on the ice, and Wang worried about servicing customers and getting to know the personalities and work habits of his personnel. Although Wang was not recognized by his own Islanders fans while sitting in a seat at the team's 2001 draft party, it was his investment that enabled the Islanders to reach the playoffs for the first time in seven years in only his second year of ownership. In response to the team's performance, the Islanders began the 2002 2003 season with their largest season-ticket-holder base since the 1988 1989 season.

Wang's nearby New York rival is the New York Rangers, run by Cablevision mogul Charles Dolan's son James. Dolan also provides a compelling example of this approach to management. As chairman of Madison Square Garden, Dolan, a second-generation Cablevision executive, oversees the Rangers and the NBA's Knicks and the Women's National Basketball Association's (WNBA) Liberty. Although the Rangers media guide says he's "an ardent fan of the three MSG teams," Dolan downplayed his in-depth sports knowledge at the 2001 press conference announcing that former Philadelphia Flyers star Eric Lindros had been acquired by the Rangers.

At the news conference Dolan indicated that he didn't know much about the specifics of the organizations that he runs. He then went on to add that he manages the teams by placing trust in those that he hires, such as Rangers president and GM Glen Sather.

Dolan has a similar perspective on the Knicks and his role in running the franchise. He says he believes that, in addition to delegating authority, it is important that the people in his organization know that the company is not a faceless, soul-less corporation, and that his presence is not merely limited to a signature on the bottom of a check.

These might not seem like comments you would expect to hear from a guy who, along with his father Charles and his uncle Larry (who owns MLB's Cleveland Indians) was named the third most powerful person in sports by The Sporting News in 1999. However, it is a managerial style that, at least in James Dolan's case, works for him.

Many frustrated Rangers and Knicks fans who have witnessed escalating payrolls without the corresponding victories to match over the last several seasons disagree with Dolan's style. In 2002, the Knicks and the Rangers neither of which made the playoffs paid their players more on a per-win basis than any other NHL or NBA team. Meanwhile, the nearby and former laughing stock New Jersey Nets played their way into the 2002 NBA Finals.

When growing a business it is necessary to have short-, medium-, and long-term game plans. These plans must include strategies for increasing human and financial resources, and must focus on the tactics that will enable the cash register to ring today and tomorrow, as well as a year or two from today or tomorrow. Unlike established Fortune 500 firms that might have thoroughly developed five- to seven-year business plans, most start-up businesses have difficulty projecting out further than about three years. Companies, regardless of size, that focus on growing their business in the short and medium term don't have to worry as much about growth over the long run.

A unique variation of this theme occurs throughout sports, especially within college athletics where athletic directors and coaches convince recruits and their parents into thinking the university has a five-year plan when in fact it might really just be a year-to-year plan.

When a coach and his or her team are playing well, the coach's contract is generally automatically rolled over to give the appearance of long-term stability. Because many coaches have five-year contracts that are extended annually by a year or two, the coach can confidently say to a recruit, "I'm contractually obligated to be here for your entire playing career." Of course, he or she never says, "There's a buyout of $1.2 million, which I'm sure the school will pay if I'm not doing well or if I'm doing too well that another school is willing to pay it for me to take a better coaching position."

Two days after fourth-year head coach Bob Davie led the 2000 Notre Dame Fighting Irish football team to its first major bowl in five years, the school's athletic director Kevin White announced a five-year extension for Davie. Of course, after Davie's team was blown out by Oregon State in the Fiesta Bowl, 41 9 and Davie's 2001 team finished 5 6 on the year, the other four years on the contract meant nothing because the university chose to replace him.

Establishing and building a (family) business is an extraordinarily challenging, stressful, and daunting proposition. Yet Americans continue to do so every day, often relying on the inspirational and storied histories of companies like McDonald's and Harley-Davidson. In the sports business world there has been no better personification of a family business that has achieved the pinnacle of commercial success than NASCAR. NASCAR's history, track record, and extraordinary accomplishments have provided the requisite incentive for many to give entrepreneurship a try.

Now that many of the issues facing start-ups have been considered, it is useful to consider them along with the aforementioned stages of the business cycle. Following is a case study of sorts that chronicles how NASCAR has adeptly built its business by identifying like other successful businesses opportunities and threats that shape the organization and its future.