Sometimes Uncle Scrooge is a very wise man and every once in a while, he will make a mistake or two.
Two years ago, at the height of the economic crisis, I sat down with Boston Bruins owner and Delaware North Companies chairman Jeremy Jacobs to talk about his hockey club, and the impact the financial meltdown would have on his business. As one would expect from one of Forbes Magazine’s richest Americans and a man often accused by fans of being more bottom line than standings-driven, his assessment was right on the money.
“We’re in for a tough time and most businesses are seeing that and preparing themselves,” Jacobs said. “You’re going to see more people unemployed. Less people coming out of school finding jobs. I think the universities will flourish because more people are going to want to stay in school longer. It has always been the push back. It’s human nature.”
Just as he predicted, the unemployment rate skyrocketed, as have college and graduate school applications.
According to the Economic Policy Institute, the jobless rate for college graduates under-25 is at its highest rate in a quarter-century. And most of those fortunate enough to call themselves employed have taken one, if not two steps back in once-promising careers defined by proud resumes built over years of hard work.
While Jacobs may have seen the future of his business during this great recession, he missed the boat on predicting the future of the National Hockey League after the great lockout of 2004-05. His mantra, one that kept the books clean and clear of long term, albatross contracts, is the same one currently employed by NFL owners, on the heels of yet another labor mess next winter.
The problem was, when the dust settled and ownership and players came to the table hoping to repair the damage, the substantial cap space the Bruins thought they would spend on their pick of free agents, looked far less enticing after a league-wide salary roll back. And when Ilya Kovalchuk agreed to a deal (and yes, it will still happen) that will keep him in Newark until the apocalypse, signed off on by the often thrifty and business savvy Lou Lamoriello, that ‘hard salary cap’, the one Jacobs pushed so hard for, was proven to be nothing more than Swiss cheese.
The sports economy doesn’t work like the rough and tumble economy of the real world. Only in sport, can one look at the nearly $2 billion George Steinbrenner spent on ‘talent’ over the last decade as a wise investment. Only in sport, can a bottom line owner like Jacobs, who has had one of the top two clubs in the Eastern Conference three times over the last eight years, be seen as the villain.
We’ve all known and understood that sports and the real world don’t mix. In the ‘real world’, no athlete is worth more than a doctor and no game would trump a Presidential address. And we all know that the best and the brightest will intern for free and work for pennies out for the sheer glory of working for a professional franchise.
Sports is, as one sports talk show host has dubbed it, ‘the toy box’ of our lives. This couldn’t be more true, as uber-billioniare owners dictate wins and losses with oodles of Monopoly money that fans could only imagine.
The best in business are allowed to mismanage the economics of sport. Sport is just a series of games that have little to no meaning on the lives of many. Now when these same people screw up the finances of life, taking down entire companies in the process. That’s when the wins and the losses really hit home.