Guarding the Gate
February 24, 2012
More slowly than I would like, because it’s not a field in which I’ve had formal training or extensive practical experience, I’ve been learning about the world of startup companies and venture capitalists that discovered the sports world in the 1990s and have proliferated during the past decade.
Usually with their founder making the contact, many of these young companies have reached out to the MHSAA, hoping we will embrace and endorse or utilize their new product or service. Almost all owe their existence to the World Wide Web and to the passion of their founder, either for sports or for a concept they think solves some need of athletes, coaches or fans . . . or advertisers and sponsors.
And almost every one of these startups is looking for an exit; looking for a bigger fish to swallow them whole. And paying them handsomely for consuming the young guppy. A lucky few make what the industry calls the “Big Exit,” like a major network buying the startup for many millions of dollars.
We hear from many of these startups that the advertisers are clamoring for this or that they are promoting, but we usually see one of two things happen. Either the advertisers show so little interest that the startup fails, or what support the advertisers do provide goes to the venture capitalists and not to those providing the content.
As we screen the plethora of proposals to capitalize on high school sporting events in Michigan, we look for two kinds of assurances. First, that the suitor doesn’t have an exit strategy; and second, that the initiative will have direct benefit in terms of both money and message to those providing the content: i.e., schools.
Most of the initiatives we screen will assist schools with neither money nor message, and some of them would actually provide a message that is contrary to the mission of educational athletics.
So we’re guarding the gate, in both directions – controlling the entrance to the high school sports market in Michigan, as well as the escape of those who are in our market for a fast buck and quick exit, big or small.
Gut Check
October 18, 2016
After nearly eight years on the staff of the National Federation of State High school Associations, I accepted the challenge of leading an effort by a private business to consolidate the insurance needs of high school athletic associations and to control their coverages and costs through a self-insuring pool. My assigned goal was to assemble at least half of the 50 states in this fund. The need was so great at that time for comprehensive general liability and directors and officers insurance tailored to the unique needs of state high school athletic associations, that the group was quickly assembled and launched.
My time leading this effort was brief. In spite of the program's immediate success and continued growth, I became uncomfortable. The discomfort was born and grew in the fact that while I was out meeting with states, decisions were being made back at the home office that I was not involved with or aware of. I began to feel used ... my credibility was bringing in business, but changes were being made without my input; and I feared for my reputation. After a year of this, I resigned the position. That was 1981.
Nine years later, the companies' CEO was terminated when it was discovered that he used the construction of a company headquarters office to build himself a new house at the same time, burying his home construction costs into the books of the companies' capital expenses. Seven years after that, the companies' founder and namesake went to jail for operating from 1984 until at least 1993 what was determined to have been a Ponzi-like scheme.
I listened to my gut which, long before my head, knew something was not right. In fact, my gut seemed on alert well before things went wrong. This has happened at other crossroads and dozens of less dramatic moments in my professional and personal lives.
In this time of increasingly complex and difficult decisions, both personal and professional, the gut may be a good guide for us all.