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There is something rancid stewing here in Washington, D.C.
As we speak, there is a stink cloud floating high above the beltway. It reeks of bad management, poor decision-making, and excessively short-term thinking.
Truth be told, there is almost always something foul-smelling here in our nation's capital, but this time, the smell is not coming from our government.
The smell, my friends, comes from the NFL's Washington Redskins, who have slowly come to represent all that is wrong with the world of finance, spending, and investing. And I just can't stand it anymore.
How did we get here?
Born and raised in Washington's Woodley Park neighborhood, I have been a lifelong fan of the Burgundy and Gold. It's been a difficult relationship, for sure, suffering through more than a decade of incredibly poor leadership and lackluster performances on the field.
I've cursed the coaching staff, the players, and even its fans more times than I care to admit. But the fact is, when faced with a team as perennially disappointing as the Redskins are, my contempt ultimately sits with one man: the guy in charge. And just like a publicly traded company, enraged constituents of a failing organization (shareholders, employees, and customers) should almost always cast their gaze upward, all the way to the top office.
These are the people with their fingers on the trigger.
Meet Dan Snyder
Dan Snyder is slick, real slick. He's a self-made man whose ventures in business allowed him to purchase the Redskins in 1999 for the astounding price of $800 million, all at the tender age of 34. He canoodles with movie stars, he does big deals. He's a Wall-Street-gunslinger-Gordon-Gecko kind of slick.
Like other business "gurus," Snyder operates the Redskins under the mistaken assumption that success is something that can be bought. As far as I can tell, the Snyder Doctrine is some bizarre concoction of liberal amounts of reactionary decision-making, a strong concentration on the short term, and a heavy supply of poorly structured incentives. His favorite answer to solving complex problems is simply to throw more money at them.
Investors who have been around the block once or twice should start to see a few problems developing here.
To me, Dan Snyder is precisely the type of guy Benjamin Graham had in mind when he said "Wall Street people learn nothing and forget everything."
Let's get more specific
Snyder's run-n-gun managerial style has manifested itself in a number of ways over the past 10 years:
- Pumping and dumping head coaches like some Pink Sheets biotech. Even in a league where the average tenure for a head coach is 4.3 years, the Redskins have churned through six coaches in 10 years, which is just an incredible number to fathom.
- Regularly trading away crucial draft picks. The draft is generally the place where good teams cultivate the most value.
- Constantly paying top-dollar for over-the-hill veterans whose collective performance has been stunningly poor. Snyder often exchanges the team's draft picks to facilitate these ridiculous and expensive trades.
- Finding new and creative ways to work the salary cap in order to accommodate these overpaid disappointments. This kind of financial engineering has now placed the team on the precipice of serious disaster. It can barely afford to retain even the most mediocre of second- and third-string players in order to keep the overpaid elite in uniform.
- Squeezing fans for every last cent of their cash by constantly increasing prices, even charging for admission to training camp one year.
- Making suggestions that the team will move from the relatively new $250.5 million FedEx Field in Maryland (of which the state funded a full $70.5 million) back to D.C. in order to make more money after a mere 12 year stay. Of course, D.C. would likely help subsidize such a move with my own tax dollars—perhaps some federal tax dollars, too—which is all simply fantastic.
- Actually suing loyal season ticket holders who have suffered financial hardship during this recession in order to recover lost revenue on tickets that could be (much more easily, mind you) resold on the open market.
There are plenty more missteps to cite, but I think you get the point.
Now, do any of these practices feel at all familiar in a financial world gone wrong?
Why you need to study the Redskins
Snyder's Redskins are a textbook example of appalling managerial practices. And trust me, this goes way beyond football.
Investors who've sat through the last two years of market performance have definitely seen this type of behavior before. We've seen it at AIG (NYSE: AIG ) , at Countrywide (now part of Bank of America (NYSE: BAC ) ), at the trading desks at Bear Stearns (now part of JPMorgan (NYSE: JPM ) ), Lehman Brothers, and Merrill Lynch (also part of Bank of America).
The type of myopic thinking that Dan Snyder seems to embrace so tightly helped steer another storied franchise, General Motors, into the ditch it finds itself in today. Whoever taught Snyder about business practices must be getting around a lot, because everyone seems to be playing from the same playbook these days.
And that is really a tragedy.
There is some hope
Fortunately, not all individuals in America are working this way. Leaders like Jim Sinegal at Costco (Nasdaq: COST ) are making decisions based on the impacts those decisions will have, not next year, but in 25 years. Others like Jeff Bezos at Amazon.com (Nasdaq: AMZN ) make it publicly clear that they will not run their businesses by catering to the throngs of Wall Street analysts who demand quarter-by-quarter performance.
Then there's Warren Buffett at Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) , who's made a deliberate decision to turn his back on the ethically questionable managerial style de jour and deliver a new sense of transparency, modesty, and success that is so rarely found in corporate America today.
There are real business leaders out there today -- you just have to spend a while finding them.
The Foolish bottom line
As owner of the Redskins, Dan Snyder's a textbook example of how not to lead an organization. His tenure's all about excessive micromanagement, myopia, and thus far, unequivocal failure. As Fools, it is incumbent upon us to recognize these practices and avoid them as we walk down a road to financial success. Don't be like the 'Skins and Snyder, and please don't park your money with those who are.
So what do you think? Is Snyder the worst leader still left in charge of a major organization? Know of other sports figures doing it worse? Chime in below.