Inside Baseball: Sunderland AFC and the Sport of Business

I am not a big fan of soccer. I’ll turn it on occasionally, especially during fall Saturday mornings while waiting for “College Gameday” to get rolling, but I don’t follow specific teams or players (note: my sister lived in London for a while, and she reported back that our team is the Tottenham Hotspur, so theoretically I root for them, even though I don’t even know what their uniforms look like). What I do enjoy about it is the constant motion and that the game doesn’t stop (until someone gets their foot stepped on and reacts like they’ve been shot), even though it’s mostly just on in the background.

But just because I don’t enjoy it doesn’t mean I don’t respect the players, or see how obsessed fans get with it, or understand how much hard work so many people have to do to put on the most popular sport in the world. That’s why when the documentary series “Sunderland ‘Til I Die” appeared on Netflix, I made sure to watch it.

The first season of “Sunderland”, which followed English soccer club Sunderland AFC, appeared two years or so ago. While showing everything from players to management to back-office workers to cooks, the first season really focused on the fans, who live and die by their soccer team while living in a rusty former ship-building town. And the team is never good. Basically, it’s the English version of the Cleveland Browns.

As I said, the first season was magical (spoilers ahead – skip to next paragraph to avoid): The team had finished the previous season at the bottom of the Premier League, so they were relegated to the Championship League (the second division of English Soccer). They were expected to challenge for ECL leadership and promotion back into the EPL, and the fans rallied around them in what was expected to be a winning season. Then…the team forgot to win. As hopes evaporated, attendance plummeted, and fans were at each other’s throats, the team settled to the bottom of the ECL, being relegated once more, this time to the third division, League 1.

One point that seemed relatively minor during season one (due to the emphasis on Sunderland crashing and burning) was the team being sold. The owner for most of season one was a high-falutin’ Londoner who was able to avoid the Netflix cameras for the most part by sticking to his proper gentleman’s club. However, during the season he put the club up for sale. This action, which was very overshadowed in season one, is the crux of season two.

For season two (which is available now), the new owner, Stuart, and his chief officer, Charlie, divide their time between Southern England (primarly Oxford and London) and Sunderland in the Northeast. Unlike the previous owner, Stuart wants to be hands-on with the team, and he and Charlie looked to use their well-established business skills to turn the team around.

Because of that, this season was especially poignant to me, as so much of the focus this season was on the business of running a soccer club. While I’ve never worked in sports, in many respects business is business, and as someone who thinks a lot about business theory, it was enjoyable to watch them at work.

Along the way, a number of things really stood out to me. Here’s what really caught my attention:

* On a sheet of paper, draw a horizontal line. Think of the left end of it being “I like to work alone” and the right end being “I like to work in a group”. Draw a dot to represent yourself on the line anywhere but in the center. Now draw a vertical line through the center. Think of the top as “I prefer to delegate tasks” and the bottom as “I prefer to do the work myself”. Represent yourself on that line as well, anywhere but in the center. Then find the quadrant your lines converge in.

Congratulations, you’ve just found your business personality!

This is a simplified way of doing a DISC personality test. DISC tests (there are several different names and versions of this test, but they all do basically the same things) divide people into four different personality types:

· Upper left (Work alone/delegate tasks): Dominance – people who like to lead the group, assign work, check things as “completed”

· Upper right (Work in a group/delegate tasks): Influence – people who like to provide the long-term vision and strategy but avoid getting in the weeds

· Bottom right (Work in a group/do work themselves): Steadiness – people who are the “chemistry guys” of the group, who make sure everyone is pointing in the right direction

· Bottom left (Work alone/do work themselves): Conscientious – people who do the nuts-and-bolts work and usually have the best understanding of how things go together

Optimally, all teams would have a mix of all four personality types (Thought experiment: Think of your favorite fictional group. Luke, Han, Leia, Chewie. Mickey, Minnie, Donald, Goofy. Jerry, Elaine, George, Kramer. If you give it some thought, you could probably fit each team member within a distinct personality type).

But what if your team is only two people – who should you pair up with? What DISC theory says is that you should pair up with the personality type diagonal to you – that way each of the four conditions in the test will be represented. While diagonal personality types may have the hardest time appreciating each other (more on that later), they also complement each other the most.

For example, imagine there is a Dominant person, who wants to run a group, tell people what they need to do, and make sure things are checked off her checklist. Who is the most important person she could have on her staff? A Steady worker, who will keep things positive, bring in donuts every day, and make sure he does whatever he can so the group will succeed.

Another important note: None of the four personality types are dominant over the other, nor guarantee more success than the other. For example, in the scenario above, it doesn’t really matter which person is the boss.

Now, back to the show – as mentioned, we have a new leadership group coming in. One is an Influencer, who leads the meetings, establishes goals and guidelines, and sets the corporate vision, without getting his hands dirty in how to accomplish the tasks. The other is Conscientious, and spends time poring over budgets and contract details, figuring out player needs, and taking the lead on negotiations.

What may surprise you is that Stuart, the owner, is the Conscientious type. His chief lieutenant, Charlie, is the Influencer. Again, no type is more important than the other – as long as they complement each other it doesn’t matter who is the ultimate boss.

This was actually pretty exciting for me to see develop. Why? Because I’m Conscientious too! All too often, people assume that the ultimate boss has to be either a Dominant or an Influencer, and a Steady or Conscientious person has to be the underling. But as long as you have at least those diagonal personality types on the team, it doesn’t matter who is issuing the orders, and your team can succeed.

Well, in theory.

* As stated above, diagonal personality types work best together. However, they also have the hardest time understanding each other since they have no common ground, and are just as likely to succeed as they are to flame out.

I bring this up since, as a Conscientious type, I cannot tell you how repugnant I found Charlie to be. He seemed to me to be very out of touch with everything around him – willingly out of touch, like he just expected people to rise up to his level with no additional support or training. He set up next-to-impossible goals, and when asked for ideas or advice he would reply “That’s your job, not my job.”

Basically, Charlie was a douche.

Of the two huge business moments that happened during the season, the one that concerned him really showcased his douchiness….

* Two stories. First, one time when I was a kid, I remember getting in trouble for something with my dad, probably for something school-related. I’m assuming whatever it was was because of something I was supposed to do but didn’t, and that I thought it was something I wasn’t capable of doing. Whatever it was, I remember my dad telling me that was no excuse to not do it, and saying, “Think of a football coach with an offensive line that doesn’t know how to block. Maybe they’re still learning it, but would the coach be wrong to keep yelling at them every time they screw up?” I of course said no, since that’s obviously the answer that was expected (and keep in mind, whatever the problem was, it was most likely my fault due to laziness). However, I’ve been thinking this scenario over again and again in my head through the years – is it indeed smart for that coach to expect excellence when provided mediocre talent?

Second story – Phil Jackson, one of the greatest coaches in NBA history, had two stints as coach of the Lakers. The first was during the Shaq/Kobe years, when the Lakers were loaded with talent and perfectly executed Phil’s signature triangle offence. Then Shaq left and Phil retired. Soon after, however, he was lured back to coach the Kobe Lakers. The problem in his first year back was, besides Kobe, there was no real talent on the Lakers. It was very difficult to find two other players who should run the triangle with Kobe. So what did Phil do? For that year only, he abandoned his signature offence and ran the ball through Kobe alone. It wasn’t his ideal scheme, but Phil realized it gave him his best chance to win.

To me, the second story answers the question posed in the first story. Is the hypothetical football coach wrong to yell at his players for not doing things they’re incapable of? In my opinion…yes. If the offensive line is still learning to block, you run easy protection schemes. You keep the tight ends in. You pass more, and make sure the ball leaves the quarterback’s hand quickly.

In sum, you fit the scheme to the players, not the players to the scheme.

Talent is a resource just like software and pencils and buildings – to run an optimal business you need to optimize the people you have. Sure, you might WANT to have different people at your company, but the best way to work with your talent is to recognize their individual strengths, weaknesses, and growth potential and deploy them accordingly.

Now let’s bring it back to the show. Sunderland has a match scheduled for Boxing Day, and as the team is performing well in the beginning of the season, Charlie decides the Marketing department needs a new goal: They need to break the attendance record for a League 1 Boxing Day match (something like 36,000 people).

Not a bad goal to have. But remember, this would be a RECORD, meaning more people than have EVER attended a match in this league on that day. When you think about it, it’s pretty lofty.

So Charlie assembles the Marketing group and gives them their assignment. A note about the marketing group: You would think that the opportunity to work in the Marketing department of an English soccer club would attract the best talent across the country, if not the world. That is no doubt true for the major clubs, as well as those based in London. But for Sunderland, way up in the north of England, cut off from high society and prime Brexit country, the Marketing department looks to have been comprised of graduates of Sunderland Community College. The documentary doesn’t say specifically, but from the conversations the members had on-screen it sounded like their connection to the club had more to do with geography than credentials.

But that’s okay! Not everyone has to go to a prestigious university in order to do their job. Maybe you find them some training programs to maximize their long-term potential. Maybe you leverage their local knowledge and capability for hard work in the short term. Maybe you give them encouragement along the way to make sure they feel like part of the team. And maybe you set goals for 10% more attendance at five random games instead of picking one game to set a LEAGUE ATTENDANCE RECORD.

So what does Charlie do? He tell them they need to break the previous record. And when they go to him for help, he says it’s their job to figure out how they’re going to do it, not his job. And when the Marketing department inevitably stumbles, Charlie grumbles about them behind their backs.

Sure, there could have been other things going on behind the scenes. But from what was shown on camera, this was someone in power setting a stupid goal in a crappy way and then whining when the workers who were deployed in the wrong way did not come through.

Except they did! While things look bleak for setting the attendance record with just a week to go, the Marketing team pushes and pushes and pushes, all the way up through game day. Then, while the game is being played, the Sales team counts up all the tickets. The attendance is announced in the second half: 46,000! The Marketing team did it and then some!

And as we see towards the end of the episode, Charlie still fires some of them.

* I harp on Charlie because it comes easy to me, but the most devastating business mistakes actually come from Stuart. And I’m going to explain them to you with a little help from my good friends, the Koch brothers.

If you know me, you know that I’m no fan of the Koch brothers’ politics. What you may be surprised to know, though, is that I’m a huge fan of their business theories. I had the opportunity to do some work for Georgia Pacific a few years ago, and to be a part of the account it was required to read a book on their business principles. I really absorbed those lessons, and many of them made so much sense to me that I continue to use them on other accounts. While the ones I use most often involve knowing the difference between a budget and an investment as well as making sure the right people are involved in each meeting, the lessons that need to be brought up now include negotiating and risk.

To set the scene, at the beginning of the season, the best striker on the team was a guy named Maja. Maja came up through the club’s academy, made the team the previous season, and became the absolute star of the team in this season. However, his contract was coming up, and the team had to negotiate to sign him.

So let’s talk about negotiations. As illustrated by the Koch brothers in their book, there is no such thing as a 1:1 trade. If I had the option of giving you a quarter in order to get a quarter back, why would I bother to go through with the deal? Instead, in order for a trade to happen, each side has to feel like they are winning the deal. Let’s say I have two dimes and a nickel and I need to do laundry. I offer to give them to you for a quarter. We go through with the deal, and at the completion of the deal no value has changed. But I have a coin I can put into the laundry machine (more valuable than two dimes and a nickel), and you get to help a friend and can probably cash in a favor at a later date, all without losing any money. Like every good deal, truly a win/win!

So let’s go back to Maja. Maja is tearing up the league and scoring goals at an outrageous clip. And throughout the beginning of the season Stuart and his GM are on the phone with Maja’s agent negotiating a second contract. The negotiations are frustrating for Stuart, though, because of the fact that Maja continues to make a name for himself, so his value continues to rise – what the agent said Maja’s contract needs to be a week ago is no longer valid the next week. Sunderland and the agent never get on the same page, and once the contract period is up Maja immediately signs with the French club Bordeaux (note: I love the fact that there’s a Bordeaux soccer team for some reason and would love to get a Maja jersey – let’s hope my wife didn’t read this far into this post!).

The negotiations failed because Maja’s value continued to increase, and Sunderland could never meet the price. But of course, they COULD have met the price – all they’d have to do was hear what the agent said and say “Yes!”. Of course, that’s not how negotiations work, and since the agent was likely giving them a high-end price for Maja, if they had just said yes the price for Maja would most likely have exceeded his value on the pitch (I sound like a real soccer fan!), breaking the Koch law stated above that you have to feel like you are getting a higher return than you are giving up. But there’s one more item that has to be added to the return side of the scales: risk.

Risk is a necessary part of life and business, and you could not grow without taking on some risk. However, not all risk is the same – you could take all of your company’s profits and bet them on the roulette table, and MAYBE you would quadruple your money, but in the scheme of things that’s a stupid risk to take. Instead, you need to optimize risk.

Going back to Maja – he’s a known quantity, or as close to a known quantity as anyone can be (Could he suffer a devastating injury? Could you be one of those guys who play hard during contract years, then go silent until the next one? Could he just be going through a lucky streak? All of those things are possible – but no more or less possible than for any other player). Maybe his asking price exceeds his playing value. But by rejecting the asking price, you are making a bet: that you can find a player (or players) for that investment who will make up for that lost value. By allowing Maja to leave, Sunderland takes on that bet.

Up until this point, I don’t blame Stuart for anything in particular – it seems like business as usual for most sports. It’s the next part, though, that Stuart really screws up.

As the trading deadline approaches, Sunderland is on the lookout for Maja’s replacement. Actually, they get even more specific: they announce that they are looking for two strikers. This is their first mistake. Why would you announce this to the market? Making something that specific public only gives agents more leverage.

Then Sunderland finds the player they want: a striker on another team named Griggs. In fact, they focus their efforts exclusively on Griggs. This is their second, and mortal, mistake.

Stuart takes control of the negotiations. He offers Griggs’ club a million pounds for Griggs, but is rejected. With the deadline looming he ups it to a million and a quarter, but is rejected again. His GM tells him that there’s no use going higher than that – Griggs isn’t worth any more than that.

So what does Stuart do? If this was a week before the deadline, you’d think you’d identify a few more strikers from leagues around the world and start negotiating with them. However, Sunderland was laser-focused on Griggs…and now it’s the day of the deadline. There are no other irons in the fire. Boxed in, Stuart does the only thing he can think of – up the offer to two million pounds.

After a total of five offers, Griggs’ agent calls Stuart two minutes before the deadline and lets Stuart know that Griggs has accepted the final offer, in excess of three million pounds, over double the value that the GM had placed on him. Griggs shows up and fails to score a goal for several games. By the time Sunderland reaches the end of the season, Griggs is an afterthought who isn’t even the top striker on the team. While not a direct correlation, it’s moments like this that force Stuart to look to sell minority stakes in the club during the second half of the season.

Sure, Griggs could have come out a ball of fire and set league records for goals scored – if that was the case, we wouldn’t see this as a mistake at all. But that the results aren’t the point – the risk is. No matter what would have happened, it would have been alleviated if it was closer to his value. One way to think of value is to think of the safe betting price – based on all knowns, the safe betting price for Griggs was somewhere around 1.25 million pounds (if the GM is to be believed). By well exceeding that, Stuart might as well have thrown that money on the roulette table.

If you were paying attention (or even reading this far – if so, HI MOM!), you might have one question: What about the second striker? Answer: There WAS no second striker! And here we get to talk about something that usually seems theoretical at best for well-run companies but is totally in play here: opportunity cost.

As mentioned above, Sunderland decided to focus its efforts on Griggs. In order to do that, Stuart, the GM, and anyone else on the team had to drop everything else they were doing and only work on Griggs. While they were doing that, there were plenty of other players in the market, not only in England but also around the world. Yet Stuart had them focus only on Griggs. So not only did signing Griggs cause them to lose a bet on a huge amount of money, it also prevented them from finding (1) an alternative for Griggs (another Koch brothers principle – always have alternatives in mind) as well as (2) a second striker. So even if Griggs had ended up worth his investment, the team would still have been shorthanded, with nobody to put on the other side of him.

So, as you can see, there was a lot of failure by Sunderland in season 2 – and we never even talked about the results of the matches! In today’s business world, failure can be seen as a benefit – as long as you can demonstrate that you learned lessons from it. I can’t wait for season 3 to see if anyone got them an education.