The Good, the Bad, and the . . .

The last three days might be a microcosm for my immediate future. Saturday was the good. As much as students feel relief and satisfaction of finishing that last semester paper, faculty feel the same when they complete grading the last paper. Friday and Saturday I "crammed" to finish grading papers for my two summer courses. And the nice thing was that I learned some interesting things in many of these papers on topics related to corporate responsiblity and strategy. Now onto other projects.

Sunday was also okay, but nonetheless different as my oldest daughter and I attended a reception for new Freshman here at Rockhurst. Yes, my oldest is now off to college, a rite of passage I guess. Being a college professor I should be rejoicing in such rite and I am. Still, life will be different as she shifts more time to things outside of our home. Perhaps, I am just being selfish -- she will have less time to assist me in things like shopping at the grocery store and mowing the lawn for me. Fortunately, however, I will know where to find her!

Tonight, well it was the . . . eerie. My wife and I attended a get aquainted session for parents of new students to the private school my youngest daughter will be attending. Nearly 20 years of marriage and 4 kids, I have managed to avoid all such things as parent-teacher meetings, school get to know your child sessions, etc. (more on why I have avoided them later). That is, except when I was teaching sixth grade in the early 1990s. The people at the school were very nice and we are "cautiously optimistic" that this will work well for our daughter. Still, this is a new era for our family, not quite an empty nest, but different just same.

The public good

Today two things caught my eye (and ear) that relate to what I think of as the public good. First, I read an editorial on the potential sale of the Pittsburg Steelers, a football franchise owned by the Rooney family since 1933. Secondly, I heard an ad on the radio by T Boone Pickens calling for an aggressive move towards wind and solar energy -- he has a website promoting his plan.

The Rooney family is looking to sell because of the looming whammy of the estate tax. With the value of their franchise now nearly 3/4 a billion dollars, the elderly family members who own most of the franchise could be hit with a large tax bill. Even though they own a valuable asset, it doesn't mean they have liquid assets to cover a big bill. As the article notes, the coming election may influence the impact of the tax on the current ownership--whether Congress decides to increase the estate tax or not.

I don't know much about Mr. Pickens except that he has a LOT of money from oil and has given a lot back to things like his alma mater, Oklahoma State. In this current gambit he makes an appeal to wind and solar energy, touting its cleanness along with the economic imperative that we come out of the clutches of foreign oil. Here is the thing--a major plank of his plan is to get Congress to act: "On January 20, 2009, a new President gets sworn in. If we're organized, we can convince Congress to make major changes towards cleaner, cheaper and domestic energy resources." Certainly looking for favorable conditions is the right of any company--including getting favorable laws and subsidies.

The question is whether Congress will make things better. While income redistrution is a popular tactic, it also has unintended consequences. The Steelers are being pursued by a hedge fund, private equity concern, making a family built business vulnerable. In the case of T Boone, he is coming off as a conscientious public citizen looking for help from Congress. The question is should Congress let the market work to determine the viability of wind and solar (in other words, Pickens should convince consumers more than Congress) or does it assist businessmen like Pickens who have now staked themselves to this strategy? While an unfettered market is problematic, I also doubt Congressional wisdom to determine ultimate public goods.

$400 Million

It is free agent season for the National Basketball Association and another star player signs a big contract -- $111 million for Gilbert Arenas. This is guaranteed money. Yet, this pales in comparison to another big contract announced today: talk radio's Rush Limbaugh signed with Clear Channel for $400 million over 8 years. While the topic of Limbaugh and his impact on the political environment could lead to a lively debate, I am interested in this question: Has he earned the windfall?



First, some comparisons. With the new contract, which includes a $100 million signing bonus, Limbaugh's annual salary ($50 million not counting ancillary income from merchandise, etc.) now surpasses celebrities like Leno, Letterman, and Dr. Phil but is still well behind Spielberg, Oprah, and J.K. Rowling.



Like many of these celebrities, Limbaugh is a businessperson. Unlike many of them, he created a new market, so he is in some ways a entrepreneur who hit it big. In the mid-1980's am radio was a dying medium. The radio played mostly to local audiences. In 1988, Limbaugh took the chance of taking his show national--identifying a market need for a point of view (and style) not found in other media venues. So he is much like the many entrepreneurs who identified a new market and were able to exploit it. This NY Times Magazine article, which also came out today, tells part of the story.



Not only did he create a new market, he built a strong buisness model. He saw his customers as not only his listeners but the advertisers promoting their products on his show. He built a loyal audience (customer loyalty is what every product or company seeks) that not only listened--creating the largest radio audience--but bought the products of the companies sponsoring his show.



And he has made this work for 20 years; a proven talent and formula convinced Clear Channel to pony up for $400 million for 8 more years. It was a business deal based on market results . . .