Mike Brown Owns a Monopoly. This Does Not Mean He is a Smart/Good Businessman.

Via Cincy Jungle, I stumbled on this line from Chick:

Remember: Team owner and president Mike Brown is a very smart businessman.

No.  Wrong.  False.  Incorrect.

I hate when people say this.  Bothers me to no end.  Makes me feel like I am taking crazy pills.  Let me clarify so we can dispel this silly notion once and for all:

Mike Brown happens to be a monopoly franchisee owner of a hugely successful larger business called the NFL.  Mike Brown did not invent the NFL.  He did not invent the salary cap/revenue sharing structure that led to such a popular, competitive league.  He did not inspire the rabid, obsessive fandom that infects virtually all Americans with respect to football and creates almost limitless demand to consume it.

No, all Mike did was pop out of his mother's womb as the son of Paul Brown, inherit his business, and ride an incredible wave of growth that had nothing to do with him.  Right dad, right place, right time. 

In fact, I would argue he's a terrible businessman.  All it takes to see this is a quick thought experiment.  What if Mike Brown ran any other business the way he ran the Bengals?  This would mean the following:

1. Key executives would consist entirely of family members and maybe a few close friends
2. The most important department for the long term health of the business would be severely understaffed
3. There would be no reinvestment in the business itself for future improvements, all money made would go directly back to owners
4. There would be no concern as to whether or not your customers actually liked your product

I could go on but I do not wish to belabor the point.  It should be obvious that any business that faces actual competition would fail spectacularly if Mike Brown ran it the way he runs the Bengals.  It requires it's own post but let me just add that Mike Brown likely leaves tens of millions of dollars on the table running the franchise in this manner (hint:  they made more money in 2005/2006 than any other year, can you guess why?).

So no, Mike Brown is not a good businessman.  

Here's what he is good at:  exploiting his monopolistic advantage to run the Bengals HIS WAY; on field success be damned. 

But that does not (I repeat DOES NOT) make him a good businessman.  So stop saying it.

PS - The only incredibly profitable move he ever made was milking the stadium deal for all he could.  Essentially, a cold, calculating, cynical maneuver to take advantage of a city's desire for pro football at a time when fan bases were held hostage by the threat of moving.  And even that doesn't fit the definition of a "business" decision when you think about it.

Comments

[CurseofBoJackson]

Spot on dude. Sometimes Chick has brain farts, that was a big one.

[Who Dey Boston]

That stadium deal still makes me livid every time I think about it. Not only did the stadium cost as much as it did, but there was no reason to build it at the current location (Im sure some may disagree with that statement, but once you're inside a stadium, to me it doesn't matter what's outside, so building it out in the 'burbs would have made more sense to me). Cincinnati got seriously swindled by Brown. On top of that, Cincinnati city officials are forecasting about a 40 million dollar budget deficit for the city. Im sure its not entirely due to the stadium, but having Cincinnati virtually buy Brown a new stadium on the false promises the man claimed (making the Bengals more competitive) had to be one of the worst deals the city has ever made and definitely contributed to the city's current economic woes.

[Rich]

I hope that I live long enough to see Bengals owners that care about the team. I'm 39 and I will probably die about the same time as Katie Blackburn, so I think it is too late for me. Maybe my son, though.

I bought Isaac Curtis and Boomer Esiason throwback jerseys. My son and I dvr'd America's Team: Missing Rings - the 1988 Cincinnati Bengals. I am pretty much as resigned to living in the past as in the future. I am a sad little douche bag.

[Who Dey Boston]

And another point: Most people tend, or at least try to take some sort of pride in their line of work, whatever it may be. As the owner of a business and/or franchise logic would compel one to think that you, as an owner, would want to see that business grow or outperform the competition. Therefore, one would think that as the owner of an NFL franchise you would have some pride in the team's record during your ownership, especially when have been 'earning' what seems to be an ever-increasing salary since 1991. In other words, most might try to focus on their legacy during their tenure as owner after they have earned the money they have wanted to make (at least Al Davis's and Ralph Wilson's teams made it to the Super Bowl at some point during their respective ownerships). Mike Brown's appetite for money is apparently insatiable. Its ridiculous....and sort of pathetic/maddening. I just hope his daughter sees things differently.

Viva la revolution.

[Chaz]

Wrong - Mike Brown is an AMAZING businessman. Every business school in the world teaches one basic tenet: the goal of a businessman is to maximize shareholder value. Period.

Your mistake is in viewing the city and the fans as shareholders, which is incorrect: we are consumers with no say in the management of the firm, and no tools for change other than to speak with our wallets (re: WDR modus operandi). Over the course of its operations, Mike Brown has bought/forced out other shareholders and cemented family ownership of the organization. The Brown family are (I believe) the sole owners of the Bengals, and will be for the foreseeable future (I suspect the reason why the only execs are family is to transfer ownership and beat estate taxes).

Mike Brown maximizes his return, period. By refusing to hire a GM, he collects a 2 million dollar salary every year (would you forego this if you were in his shoes? I wouldn't). But that's the point - WDR is built on one goal - bringing championship football to Cincinnati. Does winning provide additional revenue? Hell yes. But that's a serious investment for a long-term return that may or may not come. Brown is taking the one in hand, where we comrades want the two in the bush.

Re: your last point. Putting the major burden of cost on the city IS a business decision, it was as slimy and terrible as you say, but again - the on-field success of the Bengals is Mike Brown's hobby; the net $ return to his (and his family's) coffers is his business.

Mike Brown is most certainly one hell of a businessman, one living hell for the fans of his team.

[Matt]

Brown shares one characteristic with many of the Wall St. execs that led their businesses into bankruptcy... he gives himself huge bonuses regardless of his own performance or the businesses performance. Just one of the many mistakes the super genius business man Mike Brown makes.

[Sleeping With Bieniemy]

Chaz,

Reorganizing the ownership structure has nothing to do with being a smart businessman. Mike Brown could have consolidated family ownership (which you rightly point out he did) and it would have made zero difference if they owned 100% of a crappy business.

No, he secured total control of a fantastic business that he just lucked into. And if he tried to field a competitive team by hiring a real front office, the cost of which would likely not exceed 5/10 million a year, he would almost certainly earn more in the long run to make up for it. Their revenues were estimated at 40/50 million hire in 2005/2006 so I'd say it's flat out silly for him not to pursue it if he wanted to maximize his return on the franchise.

As far as the stadium, don't call him a smart businessman for doing the obvious. There was a huge trend in the NFL to make the public pay the cost of the team while getting none of the revenues. He just did what other franchises were doing. Not like he was some brilliant guy who figured out that out all by himself and is unique among owners.

You might hire Mike Brown to be your negotiator or lawyer because he's a stubborn asshole who could care less about making friends, but you would be a damned fool to hire him to run your average business.

[Wyatt]

I was a manager at McDonald's when I was in college, and they have people that work for corporate that come periodically (usually at least once per quarter) to evaluate the store. If things are poorly run and/or out of hand, the franchisee runs the risk of having their franchise suspended or revoked, or having their stores taken over by corporate. So, while the bottom line was most certainly important, it wasn't the be-all, end-all, as we were required to provide customers with a satisfactory experience.

The reason I bring all this up is because I feel the NFL needs to have some kind of quality control system like this in place, because perenially bad teams, no matter how rabid their fanbases, hurt the overall success and image of the NFL, a league that's trying to tout its parity as a cause for excitement.

[Chaz]

Re: Bieniemy -

1, unlike many owners, Mike Brown does not have an alternate source of revenue. Snyder has (had) 6 flags, Jerry Jones has real estate $, Allen has Microsoft, Kraft had processed cheese (I think he's comfortable after that sale). This is his cash cow. I stand by my point that owning an NFL franchise is his business, fielding a professional football team is his hobby. He has to put in a minimum effort in order to fill the seats (thank god Cincinnati residents have grown a modicum of self respect for this season), but that's it - you get diminishing returns as you spend more than selling out games (esp if all the facility costs are on the city's dime).

Second, while I will accept your figures of 40-50 million per annum revenue (profit?), the franchise is worth a little under $1bn. I don't know what it was worth in 1990 when MB took ownership from Paul, but we're talking about serious capital gains taxes/estate taxes when he dies (which, by the look of him, won't be decades away). I would bet serious money that not a small chunk of those revenues are paid in stock to the family members.

Its funny how much we agree on things, save for the order of MB priorities. I truly believe his priorities are #1 retain ownership w/in family, #2 maximize profit, #3 ruin 2 million christmases with another failed playoff attempt.

I agree that his priorities SHOULD be #1 bring championship football to Cincinnati, and that the money would follow, but he's not Robert Kraft. Kraft is brilliant at 2 businesses - operating an NFL franchise and fielding a successful football team. I think Rooney had to trade all of his stake in the other family businesses for sole control of the Steelers, but same thing goes. Our disagreement boils down to metrics - you believe that having a successful product constitutes a successful business, and I hold that its the bottom line. I don't like it any more than you do, but if you showed MBs setup to any CEO in the country, they'd applaud. Mike Brown is the Dick Fuld of the NFL - destroys ridiculous amounts of his customers money, is unrepentant, and doesn't worry whether his product is less than AAA, just as long as it sells.

[Robinsgr]

Chaz

Mike Brown succeeds because he owns a monopoly business. This is quite different than succeeding in a competitive business. For instance, if MB owned a McDonalds and there was another McDonalds a few blocks away, MBs business inability would be aparent by the number of customers passing by his place and going to the next McDonalds, where the product would undoubtably be better. MBs football business monopolizes the local football fanbase the same way Microsoft (as an example) monopolized computer software for so many years. Even if the product is lousy, it is the only product available to fill the need (locally). So MB succeeds at making money.

I agree with Bieniemy - making money does not mean MB is a good businessman. Everyone in the NFL makes money, and I would argue anyone could make money owning an NFL franchise because of its monopoly power. If MB had to compete - truly compete - his inability would be evident and he would either have to change his ways or go out of business. This is a reality.

[Danno]

Of course MB is a pathetic businessman. Aside from the points you make, which are great BTW, he is trained as a lawyer. The most of his business knowledge came from his working with the Bengals, which isn't a competitive (in the classical sense) as you said.

He certainly would fail as a ceo, coo, cfo, or even sales manager in a another company. Part of the big reason companies fail is an inability to adapt to new changes/trends in the market place, attack weak points, or re-invent themselves. None of those things can even begin to describe Mike Brown tactics.

[Bob Sugar]

Mike Brown sits on the Board of Directors at Cincinnati Financial Inc. I am pretty sure that he does not do this for free or fun. Yes, Mike Brown makes money, and in some myopic views, this could be looked at as being a successful CEO. The fact of the matter is, he makes money due to his affiliation with the NFL. There are 31 other franchises out there that continue to line the pockets of Mikey Boy, as well as all the booger eaters who continue to buy tickets, jerseys and the such that give him direct profit.

In the real world, CEO's are required to make sure the share holders earnings go up, but the CEO has no chance to do so with a shit box product like the Bengals. The only way a CEO can earn money for his/her shareholders is to have a product that consumers want in good and bad economic times, like P&G, or the Steelers.

Mike Brown Sucks
Katie Blackburn Sucks
Troy Blackburn-Brown Sucks

I vote for a letter to be sent to Mark Cuban explaining our situation and requesting his help by purchasing this franchise and giving the fans, or at least me, what I want, a winner.

Viva La Revolution!

[Joe Skanutz]

Correction: Bob Kraft has no relation to Kraft Foods, cheese etc. Kraft Foods was started in 1903 by a Canadian of German ancestory James l. Kraft. Let's be accurate comrades the Revolution needs facts to succeed.

[Sad Bengals fan]

I hate Mike Brown with an extreme passion, the problem with him is that he thinks that he can run the team, Marvin isn't the problem he can't make a decision because Brown has a hand around his throat. Sadly the only hope i believe the Bengals have is waiting out the horrible storm that is the Brown family, and maybe one day our children can enjoy a successfull product year in and year out, but that would be a very distant future.