Thursday, August 29, 2002

The Legacy of Benjamin Franklin

Randall Kennedy appeared yesterday on what is quickly becoming my favorite radio talk show, On Point. The topic tonight was Walter Isaacson's new book, Benjamin Franklin: An American Life. Kennedy wanted to talk about Franklin's participation in the slave trade, but the guest host pressed Kennedy on another topic. Here is my rough transcription of the broadcast:

Host: Do you see something in Ben Franklin that still resonates today?

Kennedy: Sure. For one thing, he clearly was entrepreneurial. He was an entrepreneur himself, and he was a supporter of entrepreneurial values. That's certainly one of the central values in American life. And, indeed, American's have exported entrepreneurial values around the world.

By the way, the regular host of On Point is Tom Ashbrook, who wrote a nice book about his experience founding, which still exists. Quite an accomplishment for any dot-com! The book is called The Leap, and prospective entrepreneurs -- especially those who are considering the possibility of leaving a stable job -- would be well advised to read it.

Tuesday, August 27, 2002

Rome on College Sports

Jim Rome is certainly one of the funniest and insightful sports commentators around. His take yesterday on the jump to the Atlantic Coast Conference by the University of Miami and Virginia Tech: the college presidents are "corporate raiders and robber barons." No doubt!

All of this revolves around football, which at most schools is the only profitable sport. Here at the University of Wisconsin, men's basketball also turns a profit, but the money generated by football dwarfs that and allows the entire athletic department to operate in the black. It is also the only college sport that does not have a playoff championship. The Bowl Championship Series was designed to address that problem, but it is obviously flawed because it leaves too many good programs on the outside looking in. This is particularly frustrating to schools like BYU, Louisville, and Fresno State, all of which have high-quality programs but must continually try to convince top athletes to choose their programs over BCS schools. That is a tough sell.

Which brings us to the ACC. Great basketball conference, but basically a one-school (Florida State) football conference, despite up-and-coming programs at Maryland and Virginia. Until now. Miami and VT are football powers, and the ACC has certainly upgraded. Kirk Herbstreit thinks this is the beginning of a trend, but allowing the conferences to compete for the best football programs is crazy. Stability in this industry has value because we want all of the market participants to survive and prosper. Simply stated, the competition belongs on the field, not in the presidents' offices.

So who will step forward and tackle this problem? The obvious candidate is the NCAA, but NCAA President Myles Brand has been frustratingly reluctant to act. He appears to be pandering to the big schools. Some people are talking about antitrust, and Scott Cowen, the President of Tulane, is attempting to exert public pressure. The last time we went through this, when the BCS was created, Congress played the role of instigator.

My prediction: Congress will be called into action again before all of the dust settles. Congress already made a cameo appearance in the Big East-ACC controversy, and it will be back for a more pominent role in the sequels.

Sunday, August 25, 2002

SEC as Shareholder Enabler

Pardon me if I do not share the enthusiasm of institutional investors over their latest victory in the SEC. On the last day of June, the SEC issued an order approving proposals by the New York Stock Exchange and Nasdaq that would require a shareholder vote to approve all equity compensation plans. Another Enron-era reform, these rules transfer more power over corporate policy from directors to shareholders. As I have written before, this is not a good thing. For the most part, shareholders should elect honest, competent, independent directors, then allow them to govern. But this does not seem to satisfy modern institutional investors. Even in the middle of the boom of the late 1990s, some institutional investors were clamoring for more power. Makes me wonder: are they really interested in improving corporate performance, or do they just want to be at the center of things?