Lessons from the Commish
Why the NFL's Paul Tagliabue is a genuine Hall of Fame executive.
(FORTUNE Magazine) - How often do you see a chief executive hold his job for 17 years and then leave to universal acclaim? These days practically never. But when it happens -- as it just did -- it's worth our attention.
The CEO is National Football League commissioner Paul Tagliabue, whose business would be a FORTUNE 500 company if it published financial statements (league revenues are estimated at over $6 billion, making the NFL America's largest sports business by far).
I asked National Basketball Association commissioner David Stern for his verdict on Tagliabue's tenure. Response: "Spectacular. He's done a great job on every front." The Houston Chronicle called him "absolutely brilliant." The Seattle Post Intelligencer: Commisioner to Retire on Top. And on and on. We haven't seen such gushing over a retirement since Secretariat went to stud.
Obviously it was a Hall of Fame run. But what we really want to know is how Tagliabue did it -- and how we might hope to do it too. Three lessons from his career stand out:
1. Don't sacrifice long-term goals just to win today's game. This is by far the most important example set by Tagliabue, a master at big-picture strategic planning. In negotiating TV deals he spent enormous effort trying to foresee technology years ahead. He cannily parceled out NFL program rights to broadcast networks, cable networks, and the league's own NFL Network, which he created.
He found that cable networks like ESPN would pay vastly more per game than would broadcast giants, yet he realized that selling most of the games to cable, while financially tempting, would be strategically dumb. At a sports conference in Beijing last year, he told me, "In the near term, it could pay off very well. In the medium and long term, it could dry up the fan base that's so critical."
Tagliabue started working on the NFL's drug policy 20 years ago, when he was the league's outside lawyer. The NFL has had rigorous, random drug testing and real penalties for years. A drug crisis is raging in professional sports today, but it's centered largely in baseball, which still isn't facing reality.
One more example: Tagliabue was in Beijing laying the groundwork for NFL expansion. He checked on middle-school football programs the league was sponsoring, among other things. Where is football in China today? "About the same place it was in America in 1920," he said. "And football didn't become the clearly dominant sport in the U.S. until about 1965." Meaning he thinks it could be more than 40 years before football is huge in China. But just imagine when it is. That's thinking strategically.
2. Know your strength--and use it to determine your game plan. It would seem painfully obvious that you can't run a pro sports league without players, yet every other major sport has suffered player strikes in the past dozen years, and the NFL endured two in the '80s before Tagliabue took over.
One of his most valuable achievements was managing 17 NFL seasons without a labor stoppage. As a condition of taking the job he demanded that he be put in charge of labor negotiations, previously managed by a committee of owners. He then approached the players' union as a partner.
By negotiating labor peace, he did more than just maintain fans' enthusiasm. Multiyear labor agreements gave TV networks and advertisers the confidence to sign megabillion-dollar deals, an important reason the NFL's revenues today exceed those of any other league by a far greater margin than they did when Tagliabue first took over.
3. No pandering: Earn respect on the field of play. No more complaining about how tough it is to please your boss. Tagliabue worked for 32 rich egomaniacs, the team owners. Back in 1989 the owners needed seven months just to agree on hiring him, and a few still voted against him.
He immediately began telling them things they didn't want to hear, starting with his view that they were screwing up the labor situation. Yet by last year the owners clearly adored him and extended his contract (estimated pay: over $8 million a year) by a rare unanimous vote.
So what does Tagliabue do next? He isn't saying, but I have a guess. Consider that he once worked as a Pentagon policy analyst and is a member of the Council on Foreign Relations; he's said that his dream job is Secretary of State. As it happens, Secretary of State Condoleezza Rice is a ferocious football fan and has said that her dream job would be NFL commissioner.