August 24, 2005

The Bob Huggins Situation: Exhibit A in How to Mishandle a Loyal Employee and Alienate the Community

Filed under: Business Moves,Taxes & Government — Tom @ 1:43 pm

FOLLOW-UP POST: Comparing Basketball Program Graduation Rates
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I didn’t mean this to be Sports Day, but a local story is making national sports news, and with good reasons that go well beyond the national preoccupation with sports and the stupid amounts of money involved in the contract buyout offers cited:

No matter what Bob Huggins might have done during the final two years of his contract, he would not have been permitted to return as the University of Cincinnati basketball coach in 2007-08.

UC president Nancy Zimpher made that clear at a Tuesday night news conference when she was asked why she agreed to let Huggins, 51, finish the final two years of his contract in May if she had already decided that she didn’t want him to be UC’s coach.

“It was an acknowledgement of his rich history here that we wanted to give him an opportunity to coach in the Big East,” Zimpher said, “and to have a wonderful, sort of termination of his career at UC. Obviously, that didn’t turn out to be a viable option for him.”

UC effectively terminated Huggins’ employment at the school Tuesday, offering him three options:
- Accept a position generating financial support for student-athletes in need through March 31, 2008.
- Accept a payment of approximately $3 million to buy out the remainder of his contract.
- If Huggins rejects both of those options, the university will exercise its rights under the existing contract and terminate it with a buyout of $1.9 million.

Huggins’ UC bio is here. It begins: “Bob Huggins has established himself as one of the nation’s premier major basketball coaches.” It presumably won’t be there for long; backup text saved at BizzyBlog will replace it when it does.

Huggin’s tenure at UC has been marked by annual appearances in the NCAA basketball tournament; a 399-127 record; a drinking problem (reportedly under control); repeated refusals of more generous offers from other schools and pro teams; disciplinary problems with a few too many players; and, until recently, a poor graduation rate for his players. On balance, less than perfect, but awfully darn good.

What is going largely unreported, as far as I can tell, is a laundry list of things you DON’T do in employee relations, especialy with loyal employees:

  • Zimpher waited until new recruits had made commitments to attend UC based on “knowing” that Huggins would be coaching the next two seasons. One has already backed out after turning down (and at this point losing out on) offers from other schools. Apparently, Zimpher doesn’t know or doesn’t care about how the timing of her decision affects other people.
  • Huggins learned of the 24-hour ultimatum on Tuesday from reporters while out of town at a clinic.
  • Local talk show host Bill Cunningham is reporting that UC cleaned out Huggins’ office yesterday and had the contents delivered to his home.
  • To top it all, Cunningham also claims that UC President Zimpher has never met with Huggins since becoming UC’s President in October 2003.

If all of this is true, Cindy Sheehan has nothing on Huggins (see Update 6 below for what should be an unnecessary clarification).

And if that isn’t enough, Ms. Zimpher is managing to alienate just about everyone else in the community, including people who normally could care less about sports:

  • In the process of trying to raise academic standards, an admirable goal, she has made remarks that appear to demean the value of diplomas earned by previous UC graduates.
  • She has allowed tuition increases of 8% or more in each of the past two years while expressing little interest in controlling operating or construction costs.

There is a silver lining in this: Unlike many heavy-handed bosses, Zimpher does not appear to have the political capital to be able to survive at UC for more than a few years. The bad news: Regardless of whether my take on her staying power is correct, it will be difficult to recover from the damage she’s inflicting on the school, and not just in the Athletic Department.
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UPDATE: Mike Meckler at Red-State.com thinks the firing is an act of “courage.” I would say that it would have been an act of courage before the recruiting season began (all the reasons to fire Huggins were present at the time). Waiting until late August to fire a Division I basketball coach makes it an act of sabotage.

UPDATE 2: Lance McAllister of 1360 Homer reports that UC and Huggins have reached “a mutual agreement to terminate the contract.” He’s gone.

UPDATE 3: The financial fallout begins:
– McAllister is also reporting that a bank has withdrawn a $5 million naming rights offer for the football stadium.
– 1360 Homer also reports that the University is offering refunds of some sort to season-ticket holders and boosters.
– One of the team’s major sponsors has also publicly announced that it is terminating its sponsorship.

UPDATE 4: Don’t forget that if UC’s cash-cow basketball program falls on hard times, taxpayers will in some way, shape or form get socked for the losses.

UPDATE 5: Other employees at UC with far less leverage than Huggins are watching. What do you think they have learned about loyalty and gratitude during this sorry saga?

UPDATE 6: Of course, my Sheehan comparison relates to the amount of time spent waiting for a meeting, and is not meant to minimize the horrible experience of losing a son in wartime. Zheesh.

UPDATE 7: This point also needs to be made: Bob Huggins is THE reason UC had the opportunity to join the Big East Conference–the, only, one.

Pro Sports Owners and Athletes: Supersized Welfare Queens

Filed under: Corporate Outrage,Economy,Taxes & Government — Tom @ 10:33 am

BizzyBlog, a former avid sports fan, is sick and tired of taxpayer subsidies of sports stadiums, and increasingly absurd campaigns by the coddled owners of professional sports franchises to have ever-bigger palaces built.

First, Washington, capital of colossal subsidies, applies the pork barrel approach to pro sports in a big way:

In its quest to bring professional baseball back to Washington, the D.C. Council agreed to build a new stadium for the Washington Nationals that is to be largely financed by taxpayer dollars. This is a sweetheart deal that will allow Major League Baseball to sell the team at a price that virtually guarantees it a profit while likely creating a burden for D.C. taxpayers.

In February 2002 Major League Baseball purchased the lackluster Montreal Expos for $120 million. Three years later, it agreed to bring the team to Washington on the condition that a publicly funded stadium would be built. The league now is trying to sell the Washington Nationals.

The prospect of a free stadium is tantalizing to prospective buyers, who are expected to bid between $300 million and $400 million for the team. That would make the Nationals one of the highest-priced professional baseball teams ever, and the sale would be one of the most lucrative deals Major League Baseball has ever made.

With construction costs estimated at $535 million, Major League Baseball and a few well-connected investors stand to make a killing, while D.C. residents and businesses are left to pay the bill.

The D.C. Council has said that construction of a new stadium will spur economic development in a neglected area of the District. However, this is a promise the city may be unable to keep.

Economists seldom agree, but the many studies done over the past decade all arrived at the same conclusion: Publicly funded stadiums do not deliver the benefits they promise. A recent paper by the Cato Institute concluded, “The academic research overwhelmingly concludes that the presence of professional sports teams has no measurable positive impact on economic growth.”

On to Indianapolis, where the crybaby Irsay family, who moved their football team from Baltimore in the dead of night in 1984 when they didn’t get their way in that town (scroll down a little less than halfway), have been pleading poverty for eight years:

Since at least 1997, only 14 years after the 63,000-seat Hoosier Dome was built for $82 million, Indianapolis Colts owner Jim Irsay was publicly lobbying for a new stadium to host his team.

….. He has repeatedly said that his NFL franchise cannot survive on the revenues provided from the RCA Dome, and that a new stadium is needed sooner or later.

It’s tough making big money on an NFL franchise in a market this size without taxpayers subsidizing much of the costs. Taxpayers coughed up $20 million in 1998 to enlarge the RCA Dome’s suites and enhance the value of its expensive box seats. This actually cut the dome’s capacity to 57,900 seats, making it the smallest stadium in the league. In 2003 the team ranked 27th out of 32 NFL teams in terms of revenue and 29th in value.

“We’re significantly, significantly below the average (in revenue), and that disparity is growing, Irsay told Indianapolis television viewers. Yet the average determines what our expenses are with the salary cap. That’s what makes things so difficult.”

However, as the Cincinnati Bengals have proven, a new stadium does not ensure a better profit. Even with a new stadium, the Bengals were 24th in revenue in 2002, with only $4 million more in revenues than the Colts.

Oh, Cincinnati. How is Cincinnati doing with its two stadiums? Not well:

Stadium sales tax coming up short
Deficit looms, county says

The fund used to pay off stadium debt and cover property tax rollbacks could be $8 million in the red as early as next year, according to Hamilton County projections. The deficit could hit almost $300 million by 2032, when the debt is to be repaid.

“‘Wow’ is right,” said County Commissioner Todd Portune.

“Any way you slice it, you’re still looking at big numbers,” County Commissioner Pat DeWine said.

“We are in serious financial difficulties,” County Commissioner Phil Heimlich said.

The commissioners’ alarm comes as they are set to prepare a county budget for next year. The biggest issue for them is the sales tax fund and projections that show more money going out than coming in as early as next year.

Measures being considered to address the deficit are refinancing the debt, stretching the debt beyond the current 30 years, and using money now spent on daily county operations.

The last option in the previous sentence means that Hamilton County’s overburdened taxpayers could see money for essential services diverted to paying off stadium debt.

But what does this have to do with the high salaries of the athletes who play the games? Plenty.

Apologists will say “These salaries are just the result of the free market at work.”

Baloney. Stratospheric salaries occur because owners who have conned taxpayers into paying for the places their teams play in are therefore able to devote extra money to buying on-field talent. Collectively, this works to bid up players’ salaries well beyond what they would be if the owners had to pay for all of their operating costs.

Hence the title of the post. What has been taken from taxpayers effectively goes into the pockets of the owners and players. It is totally ridiculous, and as Cincinnati has shown, has the potential to be financially ruinous. The fact that the money goes to public-trough feeders who publicly pose as “businessmen” and too many spoiled brats on the field who never grew up just adds to the outrage.