CEO PERFORMANCE CEO Summitt
Inside the Vanderbilt Marriott hotel on a recent summer day in Nashville, Pat Summitt waits to deliver the keynote address at a conference of real estate executives gathered from across the South. Summitt bides her time meeting and greeting a long line of corporate conferees. She appears right at home. Summitt is the winningest college basketball coach in the history of the game--men's or women's. She boasts six national championships and is a member of the basketball Hall of Fame in Springfield, Mass. But Pat Summitt is more than a basketball coach. She's a businessperson, an international brand and the driving force behind waves of economic activity benefiting the University of Tennessee, the city of Knoxville and the state. Hobnobbing with the corporate types assembled to hear her speak, Summitt's business credentials are not in question.
Like business titans Lee Iacocca and Sam Walton, Summitt has also authored a bestselling book on management and leadership (Reach for the Summit, Broadway Books, 1998). The blueprint for professional success Summitt outlines in those pages clearly resonates beyond the hardwood. Organizers of the Nashville conference offer proof. They openly confess to scheduling their annual event around Summitt's speaking availability. Once behind the podium, it doesn't take Summitt long to reference her humble beginnings in Henrietta, Tenn., where the future Olympian honed her basketball skills competing against her merciless older brothers in a barn loft. Raised in a log cabin (the cornerstone for which legend has it was laid by Jesse James), Summitt's childhood was punctuated by hard work and stern parental upbringing. "I learned my life skills on a dairy farm," Summitt tells the group. It’s a statement that sheds new light on one of the many gems of wisdom included in Summitt’s book. Winners aren't born, she writes. They are self-made. The Essential Ingredient FedEx founder Fred Smith launched his empire with the purchase of a small Arkansas-based aviation firm. Today it's a $29 billion (revenue) transportation giant. Smith didn't invent the shipping business. He did, however, transform it into what it is today.
No less impressive are Summitt's accomplishments with the U.T. women's basketball program, which has served as the template for countless copycat programs nationwide and indeed even the women's professional game. Summitt obviously didn’t invent women's basketball. But she has been the face (some would say "the stare") that launched the game to critical mass in Tennessee and around the world. Like Smith, Summitt created her own competition.
How did she start out? The product of an era where girls weren't considered capable of running full court, Summitt began playing basketball when teams stationed three players at each end for offensive and defensive purposes. Later, as a student-athlete at U.T.-Martin, Summitt and her teammates had to sew their own numbers on their uniforms. They slept on cots in road gyms where they played. It's a fitting historical backdrop for another statement in Summitt’s book. The willingness to experiment with change may be the most essential ingredient to success in anything.
Handed the reins of the U.T. Lady Vol basketball program at the age of 22, Summitt inherited a situation in Knoxville that was not so dissimilar from her college experience. By any measure, the venture was a startup company. Players sold doughnuts to fund the program. Off-campus recruiting did not exist. Summitt herself drove the team van to road games. Traveling to Rock Hill, S.C., for a tournament was the highlight of a short season.
"Overall it was just a step above what I would call the intramural level," Summitt tells Business Tennessee. "But that's all we knew."
A Better Way By contrast, the Lady Vol program today--and women's collegiate basketball overall--hardly resembles those early years. There is a time-proven way of doing something. And then, eventually, there is a better way. Consider the following: * Development dollars tied directly to the Lady Vol basketball program, which in the 1980s hovered around $75,000 annually, now top $1 million. * Boosters pay $40,000 up front and $10,000 annually for the rights to first row floor seats at Lady Vol games. * The program is self-supporting and profitable, a feat matched by only a handful of other collegiate programs nationwide, all of whom owe their own successes to Summitt's accomplishments at U.T. * The Lady Vols dress in the finest locker room (4,500 square feet) and receive treatment in the finest training room (5,600 square-feet) in the country. * Summitt's basketball camps attract over 2,000 young female athletes, including 70 teams from 50 states and 30 countries, to Knoxville each summer. * Competing in and hosting NCAA tournament games each March generates significant revenue for U.T., Knoxville and the state. * Annual attendance at Lady Vol games consistently tops 200,000, constituting the biggest draw at Thompson-Boling Arena. Average attendance has risen from around 50 when Summitt arrived on campus to around 15,000 today. * Licensing revenues from Lady Vol merchandise sales are a boon to the university, reaching $700,000 in 2005. (Knoxville retailer Donna Kendrick, owner of McMillin's, estimates Lady Vol merchandise accounts for 30% of her annual sales and derive from orders placed around the world.) * Summitt's salary has risen from $36,000 in 1983 to its current level of $824,500. School officials say it places her among the 20 highest paid college basketball coaches in the country regardless of gender and above U.T. men's basketball coach Bruce Perl. It also ranks her near the top 10 highest paid executives in Tennessee, not far behind National Commerce Financial's William R. Reed Jr. * Summitt's success is the reason the women's college basketball Hall of Fame is located in Knoxville.
U.T. board member Susan Richardson Williams, who says traveling with Summitt is "like traveling with a rock star," sums up Summitt’s impact succinctly. "Pat Summitt is a business," she says. "And an incredibly positive business for the University of Tennessee."
The Glasscutter How has Summitt done it? Not unlike many companies that have benefited from changes in legislation creating a marketplace more ripe for their product, the introduction of Title IV funding clearly paved the way for growth in women's collegiate athletics. That does not diminish the fact that Summitt proved the investment a profitable one. She describes two ways to break through a glass ceiling. You can [...] try to shatter it with your high heels, or you can learn to cut glass. I choose to be a glasscutter.
Similarly, like a CEO who grows a company by gaining the respect and support of the financial markets, Summitt's ability to win, and to instill confidence in her stakeholders--boosters and the U.T. administration alike--also spurred success. Individual success is a myth. Your chief asset is the array of personalities you work with.
But perhaps the greatest insights into Summitt's formula for success are revealed in the speech Summitt delivers on this hot August afternoon in Nashville. In it, Summitt provides a glimpse of the managerial wisdom she employs with her players (better stated, her employees) and which serves as the underpinnings for her book.
Take for instance her principle that you can't push a piece of string but you can pull it. Summitt regales the Nashville audience with a story of how she likes to ask her players at the beginning of each season what style of basketball they want to play. Predictably, they respond that they want to run and press. "Music to my ears," Summitt says. However, once her team gets on the practice court and is soon panting from "running and pressing and running and pressing," Summitt says she is quick to remind them of the choice they made. It's the embodiment of one of her strongest maxims on leadership. Responsibility equals accountability equals ownership. And a sense of ownership is the most powerful weapon a team or organization can have. When Summitt Speaks... Not surprisingly, Summitt has become one of the most sought-after speakers in the country, commanding a minimum $40,000 fee for her services. It's an amount comparable to that which corporate heavyweight Donald Trump charges and richer in price than heralded men's basketball coach Rick Pitino. The list of the companies and organizations to which Summitt has spoken is a veritable "Who's who" of Fortune 500 companies, ranging from Wal-Mart to Victoria's Secret. Summitt recently spoke to 9,500 conferees with the Northwestern Mutual Group, wedged between speeches by former President George Bush Sr. and motivational icon Steven Covey. One month after 9/11, Summitt spoke to the Central Intelligence Agency. The CIA has invited Summitt back three times since.
In Nashville, the buzz among attendees following the event is palpable.
Summitt's status as a guru to the corporate world makes for another comparison, this time to former UCLA basketball coach John Wooden, one of the legendary coaches Summitt passed en route to becoming the winningest coach ever. A writer and teacher respected by sports fans and corporate types alike for his insight on the game and the management of people, the 94-year-old Wooden echoes the sentiment that Summitt's message transcends basketball. In an August interview, the "Wizard of Westwood" tells Business Tennessee, "the national championships Pat has won don’t really tell the whole story about her. Yes, she knows the game. But most of all she studies people. And much of the time that attribute is overlooked. True leaders understand people, they're able to analyze each one individually and then give each one the treatment they deserve."
Similar plaudits come from bestselling author and motivational speaker John C. Maxwell. "Pat Summitt's coaching career underlines the statement that everything rises and falls on leadership," Maxwell says. "Most people have leadership moments. Pat has given the University of Tennessee a lifetime of leadership."
Here Today, Where Tomorrow? Just 53, Summitt still has a lot of "lifetime" left to give. Her passion for coaching and teaching makes it conceivable that Summitt could accrue another 500 wins before hanging up "the stare." When she does finally exit, the search for her replacement will likely follow down a path of her own coaching lineage. Like HCA founder Tommy Frist's success in mentoring other top corporate executives in Tennessee, nearly 60 of Summitt's former players, assistants and graduate assistants have coached basketball at some level.
So what's next for Pat Summitt?
Summitt is the first women's coach in history to hold concurrently a position in both the college and professional ranks. A consultant for the Washington Mystics, Summitt says she at one time entertained the thought that if she ever left college she "might go to the WNBA, and specifically to the Mystics." If she did, Summitt would no doubt recognize many of the players currently being paid to play the professional game. U.T. has produced more WNBA players than any other collegiate program.
Even though Summitt makes her intention to keep coaching clear, admirers can't seem to help themselves from speculating about a future for Summitt outside of athletics. When U.T.'s latest presidential scandal created an opening in the university's top spot, Summitt was quickly nominated. An outspoken proponent of keeping the "student" in student-athlete--players are required to sit in the first three rows of every class they attend and are benched for unexcused absences--Summitt politely declined.
Others, including U.T. board member Williams, a former State Republican Party chairman, delight in the thought of a political future for Summitt. "She is the one woman I know that men and women alike truly respect," Williams says. Even Summitt's boss, U.T. women's athletic director Joan Cronan, can envision Summitt in a political role. "Pat could be successful at whatever she chooses," Cronan says. "She could coach men’s basketball. She could run for governor."
Summitt laughs at such talk, saying her brother Tommy Head's long tenure in the Tennessee House of Representatives cured her of any thoughts about someday entering politics. "That's much harder than coaching and a lot more stressful," she says. "I’m going to stay right here."
Summitt's comments will not halt conjecture about a future for her off the court. Such chatter is a byproduct of the fact that so many people view Pat Summitt as a leader. But amidst such speculation--and as unlikely as it might seem given the many accolades Summitt has received--it's important not to understate her present. Summitt heads a program that for decades has churned out a consistently successful product. She has turned her program into an international brand while enduring constant public scrutiny. In doing so, Pat Summitt already is more than a basketball coach. She's one of Tennessee's top CEOs.
MANUFACTURING
Lumber Mill: A Goodlettsville craftsman takes his second company to the Big Show
In the 1984 Hollywood movie The Natural, a farm boy who dreams of becoming a big league baseball player takes his faithful homemade bat Wonderboy,” made from a tree struck by lightning, and heads to the big city.
Goodlettsville entrepreneur Jon Moyer also has a dream. It’s that lightning will strike twice in his pursuit of operating the perfect, handcrafted baseball bat-making company.
A former quality control engineer for a furniture company in Kansas City, Mo., Moyer began making baseball bats for a friend playing in a senior league back in 1990. Fellow Kansas City resident and big league first baseman David Sequi heard about the bats, dubbed KC Slammer, and obtained one of Moyer’s bats. The career .291 hitter liked it, ordered a batch and soon began promoting the bat to fellow major leaguers.
Moyer operated KC Slammer from 1991 to 1996. That’s when he lost it in a divorce settlement. Moyer’s ex-wife eventually partnered with American Walnut, a gun stock company, and for a time production of the bats increased. But today the KC Slammer is no longer on the market.
Following his divorce, Moyer moved to Middle Tennessee and began driving trucks for 31-W Insulation. It was there that his boss, dispatcher Chad Lambreth, began inquiring about the KC Slammer logo on T-shirts Moyer wore to work.
“At that time, I wasn’t wanting to get back into the business,” recalls Moyer, who describes KC Slammer as a baby he trained to walk and that was on the verge of running before he “painfully” lost it. “But Chad made it a point that it happen.”
It was 1999 when Moyer and Lambreth started making bats together in a 1,500-square-foot building on property owned by Lambreth’s grandmother. (The company is in the process of constructing a 5,000-square-foot building to better accommodate its staff of six.) In the beginning, Lambreth had no idea how to make a bat. In fact, he’d never done any woodworking. Moyer taught him the skill.
In 2000, incorporated as Old Hickory Bat Co., the business partners contacted Sequi and began putting their bats in the hands of major leaguers. Word quickly spread. Currently, the company has a client list of over 100 major leaguers. It includes perennial all-stars Alex Rodriquez, Luis Pujols, Andruw Jones, Ken Griffey Jr., Miguel Tejada, Sammy Sosa, Vlad Guerrero and Manny Ramirez, as well as 2005 triple crown threat Derreck Lee of the Chicago Cubs.
The average major leaguer goes through about eight dozen bats a year. Hitters having big years like Lee often need more due to the demand for giveaways. Old Hickory Bat Co. churns out about 75 bats a day, a feat industry giants like Louisville Slugger accomplish about every quarter hour. “We don’t cut corners,” Lambreth explains. We still do a lot by hand. It’s more of a craftsman-type bat.”
Despite the ever rising cost of wood, Moyer says players at all levels of the sport “like what the small shops churn out and are willing to pay for better.” That margin allows small shops like Old Hickory Bat Co., one of less than 50 such bat makers authorized by Major League Baseball to supply bats to big leaguers, to turn a profit against larger competition that can retail product for less.
One would figure entrepreneurs Moyer and Lambreth are big fans of baseball. But that’s not at all the case for Lambreth.
“It’s hard for me to watch it if nobody is using our bats,” he concedes. “Without an interest there, I can’t sit down and watch a ball game.”
INVESTMENT
Intermission's Over: Bolstered by improved economic underpinnings, the Predators suddenly look like a good investment
Nashville-based hospitality giant Gaylord Entertainment Co. announced in 2002 it would exercise its contractual right to sell back its 16.5% minority stake in the Nashville Predators professional hockey team. For team owner Craig Leipold, it seemed the timing couldn't have been worse.
Heading into 2003, the National Hockey League faced great uncertainty. A looming fight between players and owners, which eventually led to a yearlong lockout and the cancellation of a full season, cast a dark cloud over the league--and Nashville's future in it. The lack of a player salary cap and revenue sharing among teams had pushed the league to the brink of bankruptcy. Nashville's chances of ever being truly competitive on the ice were hamstrung by a lack of league-wide financial equity. Completing the perfect storm, the team's honeymoon with the Nashville community was clearly over, evidenced by games where only a few thousand fans attended.
"I wouldn't have bought this franchise three years ago," Leipold confesses. "I simply had so much invested in it at that time that I had to stick with it."
Three years later, the picture has brightened considerably. A new collective bargaining deal hatched in July between players and owners (Leipold was a key negotiator) has stabilized the league's economic model, making Nashville more competitive both on and off the ice. Long term, the league looks sustainable. And the Nashville market appears to be a solid proposition.
For potential investors, the time appears ripe to go long on the franchise.
John Moag, whose Baltimore-based Moag and Co. is widely considered the nation's leading investment bank for sports-related industries, says hockey franchise values--and interest in ownership stakes in them--are on the rise.
"Hockey is now on extremely stable footing. Economically, it makes sense. It's poised to do great things. And enhanced valuations should follow," Moag says. "If you can actually make money in the sport, as opposed to simply seeing the value of your asset grow, investors are going to be willing to pay much more for it. So without question we are getting indications of renewed interest in the sport from the investment community."
Moag stresses that his prognostication rests on the premise that fans of the game will come back--something he believes will happen in time. Performance, he says, will drive that attendance.
Already one of the youngest, most talented teams in the league, the Predators have leveraged the league's new system to significantly up its team payroll, even adding the franchises' first-ever marquee name in Paul Kariya. Barring unforeseen conditions, the Preds will be a consistent Stanley Cup contender for years to come.
Leipold admits that over the last few years he has made "no attempt" to engage potential Nashville investors in discussion about gaining an ownership interest in the team. Those days are over.
"We're at the point where we can see our future in this market and clearly believe Nashville and the Predators are going to be associated for the next 50 years," he says. "We can now sell that concept. In the next year, I'd be very interested in talking to people in Nashville with Nashville roots about acquiring a 10%, 20%, 30% or even 50% ownership stake."
In hindsight, the optimal time to have purchased a piece of the franchise would have been before the lockout, a purchase that would have required a tremendous leap of faith. At that time, valuations were at all-time lows. Even now, however, during a phase where the true impact of the game's new economic rules aren't completely realized, and in which the league is working overtime to win back fans, potential investors can still expect to buy low. Leipold does not seek to disguise that fact when he says "the longer I wait, the more valuable this franchise will be. If I were a buyer, I would want to get in as fast as I can."
But with his franchise at last off of thin ice, Leipold can afford to be patient and wait for the right partners. The criteria? They must be local and in a business that can help the Preds better network in the Nashville market.
"I've received contact from interested buyers in Canada as recently as last month," Leipold says. "I don't even return their calls. I'm not interested. They don't provide any value to me."
Do you?
CORPORATE STRUCTURE
Minor League Philanthropy
Take me out to the not-for-profit...
Memphis' Triple-A minor league baseball team is a rare bird indeed. The Redbirds organization is the only not-for-profit, charitable organization in American professional sports.
The Bluff City's former team, the Chicks, departed for Jackson in 1999 following a failed push by its ownership group for a new taxpayer-funded stadium. Memphis entrepreneur Dean Jernigan (founder of publicly traded Storage USA) promptly bought the expansion rights to the Redbirds from Major League Baseball. Jernigan and his wife Kristi founded the Redbirds but turned the team over to a 501(c)3 foundation. Though each are contractually paid 50 cents per year to run the management company that operates the team, they vow never to take profit out of the organization. They do promise, however, to pick up the tab for any operating debts the team might someday experience.
A $72 million downtown ballpark, the most expensive ever constructed below the major league level, serves as the team's home. Revenues from the park, including those from naming rights and luxury suite leases, pay the debt service on the tax-exempt bonds used to build AutoZone Park. Though the city collects no direct tax revenue, it has benefited mightily from the downtown revitalization spurred on by the park's construction.
The city also benefits from two youth-related programs fueled by the $600,000 in annual profits the charitable Redbirds currently generate. First the Redbird's Foundation funds all Memphis City Schools baseball and softball programs, a casualty of district budget cuts 12 years ago. It also funds an inner city youth baseball program focused predominantly on teaching life skills. Redbirds general manager Dave Chase says that program "may be the best way for some kids to get out of the ruts they're in."
The current charitable efforts are just the tip of the iceberg. When the stadium bonds are fully paid in about 15 years, the Redbirds expect to pour a stunning $7 million annually into community programs throughout the Mid-South.
In a day and age of rampant owner greed and seemingly perpetual threats of sports franchise relocation, the arrangement is unusual to say the least. The question is, why? All things considered, it should come as a surprise that more communities--and philanthropists--haven't imitated the Redbirds' model.
On average, minor league baseball teams cost around $10 to $15 million. There are certainly Tennessee philanthropists or groups of philanthropists who give away that kind of money to more traditional charitable community projects like symphonies, museums or college buildings--even university sports facilities. Such tax-deductible gifts, granted for civic reasons, stand the test of time. And they do justice to the name of the benefactor.
The same can be true of a baseball team. Such a gift assures a sports franchise's continuity in a city. That's meaningful given that in the last few years alone, nearly 60 minor league baseball teams have held up communities in one way or another or broken contracts and left cities. (Here in Tennessee, the minor league baseball team in Jackson has been working for nearly two years to relocate.)
David Morris of the Minnesota-based Institute for Local Self-Reliance says communities shouldn't wait for a professional sports owner to stick it to them before considering adoption of the Redbirds' model.
"What we want is for people to take the bull by the horns and say we can look at this as a sound business proposition," Morris says. "I'd think it would be a structure that people would be willing to imitate."
To the philanthropists of Tennessee: consider your options.
SMALL BUSINESS
Virtual Golf
Rick Mordwinow puts his money where the greens are
Anyone who's ever shopped on eBay knows there's some weird stuff available for purchase in cyberspace. From air guitars to half-eaten cookies, there's little that has not been sold on the global online auction site.
Rick Mordwinow, until recently a mechanic on integrated circuits in California's semiconductor industry, made an unusual online purchase of his own earlier this year. Though he had no connection to Tennessee outside of a nine-month military training stint completed three decades ago in Memphis, Mordwinow, 49, bought a golf course in Athens, Tenn.
Fed up with Silicon Valley employers offering only contract work without benefits, Mordwinow flew east to see the Willow Springs Golf Course after finding it posted on eBay by its former owners, which included Athens mayor John Proffitt. Using proceeds from the sale of his Sacramento condo, Mordwinow secured the loan he needed for the $1,065,000 purchase. The former owners, Mordwinow says, "had $2.9 million invested."
Since buying the course in April, Mordwinow has expanded its membership base from 18 to over 110. He hopes to top 300 by year's end. He's grown membership in part by offering a 75% individual discount on $399 annual membership fees to any group of eight players who join simultaneously. Flyers distributed in various manufacturing facilities in the area including Bowater, DENSO and Texas Hydraulics have attracted plenty of interest.
More crucial to his success, though, is strict attention to customer service. Since buying the course, Mordwinow says he's spent 13 hours a day talking to customers.
"I'm just your ordinary Joe," Mordwinow says. "I'm not rich, and I'm not looking to get rich here."
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