Fans see wins and losses as the benchmarks measuring team and coaching success. Their goal is to see their team win games – its not financial – its purely emotional.
However, owners have different perspectives. Yes, the want to win. But first and foremost is team revenue, team profit and team valuation. The organization is a business first, a sports team second.
And coaches understand this – they understand that their actions have a bottom-line effect on the businesses they are expected to run and how that team is ultimately valuated.
And over the past five years, only three teams in the NFL have seen their team valuation grow more than the Pittsburgh Steelers' – New England’s at 124%, Seattle’s at 102% and Indianapolis’ at 100%. Dallas, Denver, Baltimore, Washington, Miami – they have all grown at a lesser rate than Pittsburgh (88% over the past five years).
Pittsburgh is now valuated at $880 million – up $332 million since 2001 alone.
Furthermore, only two teams have seen their revenue grow faster as well over the past five years. Pittsburgh’s has grown by 72% - from $109 million to $187 million. Only Denver (80%) and New England (95%) have shown greater growth.
What do you attribute this growth to?
Winning. The teams at the top of the growth lists win, pure and simple. No teams experienced more success over the past five years than New England, Seattle, Indianapolis and Pittsburgh.
Yet, how does that tie back to coaches and what Bill Cowher, for example, should earn?
And there’s the rub.
Cowher obviously understood his value was much greater than simple wins and losses – he saw the growth numbers and obviously understood his direct impact on them. But, what do those growth numbers mean for an owner’s reciprocity to his coach?
To Paul Allen and Seattle, it meant $8 million for head coach Mike Holmgren after losing to Cowher in the Super Bowl. But despite a 2005 operating income of $36.5 million (over $23 million more than Seattle’s), the Rooneys seemed ill-prepared (or just plain reticent) to give away 11% of that operating income in a four million dollar raise for Bill Cowher to give him the reportedly asked-for $7 million salary. Perhaps in part due to the fact that operating incomes are so volatile in the NFL due to the effects of the myriad ways teams address contracts to overcome salary cap limitations, the Rooneys felt seven million was simply too much.
At the end of the day, Cowher saw his impact on the team’s growth, the rewards others in very similar positions got for similar successes, and simply made a decision to ask for what he felt he was worth. Unfortunately, that was more than the Rooneys would ultimately give.
But it’s understandable how Cowher got to his number of seven million. The operating income allowed for it, the growth he brought to the team was top five in the NFL – he earned it. And it was less than a man he just beat in the Super Bowl.
However, it’s also apparent that Cowher played the system well. Due to NFL rules, he can resign for the time remaining on his contract (just one year) and become a “free agent” again in 2008, where he’s almost certain to make his eight million or more. What’s one year out of work to a man set to make seven-plus million per year, and who’s made millions already? Cowher made a business decision – take nothing now for the gamble of earning more later. NFL rules are set up to allow freedom from his contract only one year after his resignation – and Cowher used that rule to his advantage.
In the end, the Rooneys gambled too - making a business decision of their own, that they can find an equally capable coach for less money than Cowher demanded to carry on Pittsburgh’s profitable and winning ways. Perhaps, factored in, was the cost of losing valuable assistants like Grimm and/or Whisenhunt if Cowher were to stay.
But ultimately, these decisions become financial ones – and ergo monetary risks. It’s obvious that, if nothing else, the Rooneys saw a greater financial risk in paying Bill Cowher $7 million than they did in replacing him.
Which, in and of itself, seems to speak volumes about their thoughts on whether Cowher could maintain his outstanding performance in Pittsburgh going forward.
By Ron Lippock
Posted Jan 6, 2007