Covid-19 & Sport’s Thirst For Leadership

In the preamble to Forbes World’s Most Valuable Sports Empires 2022 list, there is, without doubt, some positive news for the sports industry. For some, the pandemic has proven so profitable that the list of industry giants has been expanded from 20, to 25, entrants, compared to 2021.

As Justin Teitelbaum and Mike Ozanian write “[a comparison of] this year’s top 20 with last year’s list shows an increase in aggregate enterprise value of 22%, to $124 billion, from $102 billion”.

As new conglomerates emerge, three key groups are profiting from the spoils of others’ shattered empires. They include Formula 1’s owner, Liberty Media
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, who rank first on the 2022 list—beside Denver Nuggets’ owner, Kroenke Sports & Entertainment, and Boston Red Sox owner, Fenway Sports Group—who sit, respectively in second and third spot.

Though this is a math led elucidation, and Forbes neither allies this growth with industry optimism or dismay, most experts are far more pessimistic about the year ahead. Was 2021 less of a unknown-hysteria, and more the result of failed leadership that has been dormant for several decades?

One Year Later: Fortune, Failure Or Worse For The Industry?

Almost exactly one year ago, in a piece for Forbes.com, I evaluated why economic pressure, alongside changing patterns of consumption by fans, would mark fortune for some, and the brink of failure for some leagues and teams.

MORE FROM FORBESFortune Or Failure? How Covid-19 Will Force Sports Industry To ChangeBy Will Nicoll

McKinsey & Company, and others, focused on England’s F.A. Premier League—where 3 or 4 sides swallowed as much as 80% of all league revenue, while the remaining teams were left with the rest, resulting in losses which the analyst calculated would amount to $670 million U.S Dollars in losses for the 2019-2020 season.

Deloitte went further. In the auditor’s Annual Review of Football Finance for 2020, red flags were identified that made the Premiership particularly prone to threat—possibly charting similar fates for other sports and league in the United States.

In paraphrase, analysts at the firm reasoned that neither Covid-19, nor the ruinous 9.9% contraction experienced by the United Kingdom, were necessarily the actual problem. While the richest sides in the world—Arsenal, Chelsea, Manchester United and others—showed good governance, patterns across most of the other league sides were peculiar when it came to balance of liquidity. At best it was risky. At worst it was cavalier.

Deloitte reasoned that the top 6 teams in the Premiership generated approximately 75% of all in-flows. Like the leaderboard of the Forbes 2022 Empire list, these billion dollar brands were, and remain unscathed, by economic pressure. But as all clubs spent more than 80% of revenue earned on inking, or servicing, contracts with players, even a small shock would mean the majority of league sides failing.

Loosely extrapolated this phenomenon applies to many teams in similar competitive positions within the United States. Experts who advise both clubs, and the wider industry, warn of players and coaches—who later enter the business of sport—as students of a business environment that doesn’t work. Failure of teams also tends not to be a domino role, but simultaneous failure of teams—a silent, but frightening, reality for the industry.

Silence On Racism, Mental Health & Bullying Don’t Cut Well With Gen-Z: Irrespective of Covid-19

Like the possible economic ruin which another wave of Covid-19 might generate, recent months—though free of civil rights demonstrations—continue to unearth dark truths about the culture of sports teams and federations. Allegations of bullying, racism, sexual assault and disregard for mental health have left clubs stumbling in their responses—on occasion, floundering in reputational damage.

Dozens of athletes—from Robin Soderling’s advocacy on player breakdowns, to the Chicago Bulls’ DeMar DeRozan’s honesty on the conditions that he, and fellow athletes of color face—has been harrowing. In remarks to Sportico where DeRozan and his team-mates launched their campaign to break the silence.

“Nobody ever talks about the situation we’ve all had,” DeRozan said, speaking of the poverty and neglect that predated the player’s sudden super-stardom. “For one, we come into the league with so much trauma that we don’t even identify with from our childhood. But we suppress it and forget about it so easily, because all of a sudden now we’re rich.” It is a painful touch-stone to the stories of men like Sonny Liston—who lost to Muhammad Ali, and then faded into ignominy, despite their achievements, beneath racist jibes and media campaigns.

McGraw: This Is A Flat Failure Of Leadership. No More, No Less

Wylie McGraw is a former professional baseball player, competitive bull rider, and 3-tour combat veteran turned private adviser to HNWIs and business leaders in the United States, the UK, and the former Soviet Union. It is widely reported that McGraw’s clients include former owners of sports teams in the U.K and the U.S, alongside several world-leading players. 

McGraw, who served tours of duty in Kosovo, Afghanistan and Iraq, has been particularly vocal in his calls for sports leagues and publicly listed companies to “stop the bs blaming acts of God for their negative experiences in economic recession or workforce performance, when the reality is these leaders need to face their demons and own the fact that their personal stress is a major proponent to [what is] a multi-billion dollar failure.” McGraw qualifies, referring to the aftermath of the Coronavirus pandemic.

In an interview, by telephone, Wylie spoke—albeit in non-specific terms—of sports stars and HNWIs who’d “managed to swallow their demons throughout their careers while believing it had no effect on their performance. Simultaneously they carry the false pretense that multi-million dollar paychecks would absolve an adult man who’d began life as a traumatized player, only for him to graduate to becoming an equally traumatized coach, further traumatized by an institutional culture [we know] to be highly remunerated as it is hostile and resistant to solutions that would end this cycle of chaos”, McGraw tells me.

I press him on the solution for human performance–which is physically, mentally, and emotionally necessary right now for the reflexes of professional sports and the impact it has on those it influences. 

“My job is providing a private, personalized framework created from the rigors learned in military combat and other intense life experiences, for mental and emotional discipline and optimization of those leaders who’ve forgotten their accountability due to money and power, and erupt the demons they carry that the Yes Men who surround them constantly enable. I’m there to battle the false sense that it’s fine to carry these stresses, simply because it’s painful and unpopular to face the truths that allow leaders of this caliber to escape – this is unacceptable. Erupting their demons in real time is what sports leadership actually needs right now, which results in exponential financial growth and better overall performance. Because the industry itself has traditionally been a unifying factor in national identity that supports communities, especially financially. So unless we commit to a new approach of leadership and how leaders operate, this very support could soon disappear and leave more players and communities decimated”.

Like experts across the sector–from Deloitte and McKinsey, to the newer engineers of cryptocurrencies and NFTs, which increasingly predominate the sport space–McGraw wholeheartedly agrees that the sports industry can actively heal division and create stronger culture with employment that pays well for all involved. But, as he adds, I know for a fact we cannot take the route that’s right and optimal until the sector and its leaders first face personal truths that my clients can and willingly do. This is how the industry transforms itself and the players it employs while uplifting the communities they impact. Sports teams did not disappear on their own volition or by unseen forces. European [and other] economies did not contract by double digits simply due to Covid-19’s sudden interruptions.

The custodians of power, whether it be politicians or C-suite executives and the like, have unfortunately overlooked their own blind spots at the expense of keeping both hands on the proverbial steering wheel. Which is why all roads unequivocally point to an uncontrolled eruption of chaos with serious, real world consequences, unless the true stakeholders in this sector not only expect, but demand those leaders they pay to better themselves now, not later.