I’m addicted to “Mike and Mike in the Morning.” I can’t help it. It’s hilarious. The morning sports banter on the nationally syndicated ESPN radio talk show is truly best-in-class. It matches Mike Golic—an overweight, crotchety, Twinkie-eating, conservative, Catholic, former Notre Dame football captain and nine-year NFL defensive tackle—against Mike “Greeny” Greenberg—a liberal, Jewish, Ivy League sports fanatic and self-described “meek metrosexual,” who has spent two decades covering and hosting Super Bowls and World Series, despite never having played professional ball in his life.
On a bad day, their morning show is still more entertaining and humorous than anything I’ve seen on television in about, well, ever. I regularly find myself laughing out loud during the drive to work. Except for the last couple weeks.
As you may have heard, Michael Vick, starting quarterback for the Atlanta Falcons, recently pled guilty to federal felony charges that resulted from his participation in a dog fighting ring. And for the last two weeks, it seems like all that Mike and Mike—and everyone else in the sports world—have wanted to talk about is Michael Vick.
The allegations were indeed despicable: The vicious breeding, brutal fighting, high-stakes gambling, and ghastly executions of dogs that allegedly took place on Vick’s property certainly merit his suspension from the league (which happened Aug. 24), and probably will have him in jail for the next few years (sentencing is scheduled for Dec. 10).
Needless to say, sports talk radio has been flooded with discussion of the Vick situation: the investigation, his choice of friends, his replacement on the field, the true happenings at his “Bad Newz Kennels,” Vick’s future as an athlete, the machinations of the courts, the fate of the dogs, and so forth.
The “Mike and Mike” conversation has also focused on responsibility, with Golic taking the conservative outlook (“blame Vick”), and Greeny taking the liberal view (“blame everybody else: Vick’s upbringing, his friends, society, etc.”). But, amazingly, none of the discussion has focused on the coaches, management, or ownership responsible for cultivating and maintaining the Atlanta Falcons’ organizational culture.
In the corporate world, CEOs, boards, and senior executives are regularly questioned, indicted, and even removed from their positions when their employees engage in misconduct. This “asleep at the switch” theory derives from the “tone at the top” model of corporate governance: Cultures of ethics and integrity start with the character of senior executives; if employees are breaking the law, it’s likely that their bosses are, too, or that their bosses simply don’t care. Either situation is unacceptable to shareholders.
“Tone at the top” has become fully ingrained in corporate governance culture. It comprises a critical component of the “control environment,” one of the five legs on which COSO’s internal control framework stands. The controls environment sets the tone of the organization, COSO writes, “influencing the control consciousness of its people.” Accordingly, the control environment includes “integrity, ethical values, and competence of the entity’s people.”
So what’s the control environment like at the Atlanta Falcons organization, where Michael Vick was the first pick in the 2001 NFL draft? What kind of culture is Falcons owner Arthur Blank cultivating? Are professional athletes—arguably the most high-profile role models on the planet—even briefed on personal conduct during the recruitment and training process? Is it really possible that, between locker room banter and the professional athlete’s propensity to gamble, literally no one in the Falcons organization knew anything about Vick’s extracurricular activities? I find that unfathomable, and examples of similar legal and ethical breakdowns in the corporate world would support that assessment.
Well-managed corporations are constantly engaged in risk-management exercises to minimize the downside of unforeseen threats: a hurricane that might wash their inventory into the Gulf, a Chinese partner that might coat their toys with lead paint, a rogue employee who might bribe a foreign official to meet a sales target.
Sports organizations and executives like Falcons owner and CEO Arthur Blank need to do a much better job managing risks to their organization; namely, protecting their assets: their people. That Blank and other team owners have not been monitoring the actions of their key assets like Michael Vick—and hence minimizing downside risks to their organizations and their multimillion dollar investments in those star athletes—is not only sad but is fundamentally negligent.
Back in 2004, the Atlanta Falcons were valued at more than $600 million, according to Forbes’ NFL Team Valuations report. In December of that year, Michael Vick signed a 10-year contract extension with the team, and the Falcons’ valuation climbed to nearly $700 million within 12 months. That team valuation continued to rise as the team reached the NFC title game, but I can only imagine what the financial value is now, considering that the Falcons have lost their star franchise player. According to press reports, corporate advertisers are trying to renegotiate sponsorship deals (can you say “material adverse condition?”), and disgruntled fans are dumping their seats. Vick’s No. 7 jersey, one of the best selling in the NFL, has already been pulled from shelves at pro shops.
The Vick incident is a financial disaster for the Falcons—even Mike and Mike wouldn’t find that funny—and the team is now looking to recoup more than $20 million of the $37 million in bonuses paid to Vick under the terms of his extension.
It’s also a reminder that sports organizations—and public companies—need to monitor their assets rigorously. In professional football, the assets are the players. The teams invest millions of dollars in those assets, and bet even more on stadium sponsorships and ticket sales. As a result, those teams need to know exactly what their athletes are doing around the clock: what they’re eating (or injecting), what car they’re driving (or racing), with whom they’re interacting, and anything else that could pose a risk to the organization and its investments.
Public companies do that all the time. Though some companies have been criticized for offering perks like personal drivers and financial planners to their “franchise players” (i.e., their CEOs and senior executives), these companies should in fact be cheered. By offering such perks, companies minimize the chances that an executive will, say, drive his Ferrari 100 mph down a suburban street, or invest in (or gamble on) an enterprise that could threaten the credibility of the organization.
If I were Falcons owner Arthur Blank, I wouldn’t let my players out of my sight. And if the Falcons were a public company, team president Rich McKay would already have been fired.
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