It may have missed your radar, but two North American business icons waved the financial white flag in the last three weeks.
Harry & David filed for bankruptcy, and the storied Los Angeles Dodgers baseball franchise was taken over by Major League baseball. The organizations are deeply in debt, and the path forward is tricky for both.
What happened?
In the case of Harry & David, that Medford, Oregon-based purveyor of fine fruits and friendly customer service, a large portion of the blame is being cast toward H & D’s owner, private equity firm Wasserstein & Co. While there were clearly operating management errors (Tip 1: don’t expand right before a major recession), owner Wasserstein reportedly recouped 1.25 times their original investment and owned a company that was $198 million in debt.
In the case of the Dodgers MLB apparently intervened when owner Frank McCourt was tin-cupping $30 million to make payroll and with the club reportedly $480 million in debt. Season ticket sales have dropped by 1/3rd the past year, and the club – as one ESPN commentator noted – just didn’t seem like the Dodgers we all knew. Reports have suggested that Frank McCourt and his former spouse Jamie McCourt sucked huge amount of cash from the Dodgers while they ran the club.
When business icons stumble (think Montgomery Ward, Circuit City, Lehman Brothers, etc.) the first impulse is to ask “how?” as in “How can a firm that owns a commanding share of the market screw up?”
Sometimes it’s a case of a company whose time has come and gone, or tough competition that was simply consistently better.
Sometimes though it’s a case of leadership. Leadership that failed to steward an iconic firm effectively, and in the wake of their management leave behind good employees without jobs, or loyal fans without a team that can compete.
While both Harry & David and the Los Angeles Dodgers are businesses (just ask Brooklyn), I think it’s a shame when ownership errors mar a storied past.
Life Back West is an occasional set of writings focused on ways people, teams and organizations can be both more effective (doing the right thing) and more efficient (doing the right thing well). More about executive, career and team / leadership coaching services can be found at the “About J. Mike Smith and Back West, Inc.” sidebar or the “Hire Me” tab above. You can also read an online interview with me at WhoHub, as well as participate in my learning community courtesy of KnowledgeCrush.