Blank: ‘Work to be done’ on Home Services

Jan

Blank: ‘Work to be done’

posted by admin in Home Depot

Running a pro sports franchise seems simple compared with running a retail empire. The Atlanta Falcons, with about 200 employees, generate an estimated $185 million in annual revenue. Home Depot, with 350,000 employees, generates about $80 billion.

But recent events suggest football team may be tougher to run.

“In certain ways, it is,” said Arthur Blank, the Home Depot co-founder who now owns the Falcons.

Blank made the football business look easy for a while, taking over the Falcons from the much-criticized Smith family in 2002, pouring money into the product, slashing some ticket prices, selling out the Georgia Dome and reaching the playoffs in two of his first three years as owner.

Then the momentum slowed with 8-8 and 7-9 seasons.

And this year it all came crashing down.

The team hired the wrong coach, Bobby Petrino, who quit after 13 games. Quarterback Michael Vick, around whom the team and the business had been built, went to prison for dogfighting. And many of the customers who bought season tickets stopped showing up at games, signaling that 2008 will be an exceedingly difficult sell.

“I wouldn’t say [we're] starting over,” Blank said. “But we clearly have work to be done.”

He summed up the year as “a perfect storm for us in a negative way.”

Blank is not the first high-profile Atlanta businessman to find sports ownership challenging.

“I remember when Ted [Turner] bought the Braves,” said Atlanta public-relations executive Bob Hope, who worked for the team at the time. “Bill Bartholomay [former owner] walked into my office and said, ‘Ted Turner is about to find out what it’s like to operate a business where your every move is visible, where you’re judged every day in the newspaper vs. your competitors, and where your life depends on what 24- and 25-year-old guys do.”

After a decade as hands-on owner of the Braves and Hawks â€” and little on-field or on-court success â€” Turner decided sports management was not his forte and removed himself from the teams’ operations.

Blank does not appear to be gravitating toward a similar conclusion.

The result of this year’s travails, he said, is “that I’ll end up being more committed and more focused and have more energy to accomplish what we promised Atlanta we’d accomplish â€” put a winning team on the field and bring that Lombardi [Super Bowl championship] trophy to Atlanta for the first time at some point during my tenure.”

This year’s events have tarnished two of the highest-profile moves made by Blank and team president and general manager Rich McKay: the December 2004 decision to sign Vick to a 10-year, $130 million contract and the January 2007 decision to hire Petrino, despite his history of job-hopping and questionable interpersonal skills.

Blank and McKay have said repeatedly that they had no reason to suspect Vick was involved in dogfighting. But risk is inherent in making one player so predominant in the payroll and marketing plan.

“Any good business needs to try to find as many assets as they can to build a connection with their consumer,” said Paul Swangard, director of the University of Oregon’s sports business center. “While a marquee star absolutely is an ingredient to that connection, it should never be the only thing, because you certainly run the risk of these types of who-can-predict-it things happening.”

In hiring Petrino, Blank and McKay concede miscalculating his commitment to the job and the extent of his communications shortcomings.

“We knew one challenge Coach Petrino had with respect to communicating was with the media,” McKay said. “But from the research we had done, we didn’t think [communication with players] was an issue.”

Blank said one thing that makes running a football team tougher than a traditional business is the tendency in sports to hire key managers â€” for example, head coaches â€” from outside the organization. By contrast, he said, most businesses with “proper succession planning” would promote such people from within.

“You know them, you understand their capacity and loyalties, and you don’t have an issue of them not being able to handle the heat in the kitchen, if you will, and the tensions that come with the job,” Blank said.

McKay, who accepts responsibility for the Petrino hire, said the Falcons will review the process that led to the choice.

“Even though I do believe we had a good process â€¦ we’ll go back and talk about it and talk about the traits we wanted and what was important to us and make sure we don’t want to reorder those,” he said.

Although Falcons players have overwhelmingly portrayed Petrino this week as an in-over-his-head coach, Blank and McKay continued to want him in the job until he walked away. They agreed as late as Monday afternoon to satisfy a list of concerns he’d raised.

Blank and McKay said they had chalked this season up as a uniquely difficult year that did not lead them to conclude Petrino was wrong for the job.

Now, they embark on another attempt to get the coaching decision right, with fans more skeptical given the previous choice.

“The scrutiny paid to employees and the unique level of customer passion,” Oregon’s Swangard said, “are two of the differences from peddling nails and lumber.”