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September 26, 2012 - The Management Blog

NFL Fans Get the ‘Stakeholder’ Treatment in Ref Dispute

Posted by: Stephen A. Miles and Nate Bennett

The outrage over the National Football League’s replacement officials reached new heights Monday night, after a controversial call handed what most agreed was an unearned win to the Seattle Seahawks over the Green Bay Packers. Now, with criticism of league owners pouring in, it looks like a settlement might be near. But what are we to make of the decision by NFL Commissioner Roger Goodell to lock out the officials in the first place?

Goodell’s decision wasn’t about money—it was about power and control. The enhanced benefits the referees seek are a rounding error in the world of professional football. The NFL is a vigorous, highly profitable monopoly, with $9 billion in annual revenue. Existing TV deals guarantee that the league has many bright years ahead.

What the lockout and resulting threat to the NFL brand should remind us is the important distinction between shareholders and stakeholders. Goodell has owners—shareholders—to please. After all, he serves at their pleasure. He has the power he has because it’s been vested in his position by shareholders. Everyone else involved—players, fans, television networks—are mere stakeholders.

This conflict between the interests of shareholders and stakeholders should be familiar to those who follow the debate in corporate governance circles. There have been many impassioned pleas over the years for chief executives to give more weight to the impact of their decisions on stakeholders—with little traction gained. Stakeholders often suffer when their interests become misaligned with those of shareholders. That’s the case here. Shareholder interests are protected by Goodell’s hard line; stakeholder players may suffer injury as head-to-head contact penalties continue to go unflagged, or if players who sense officials don’t have control take matters into their own hands. And they may suffer an unfair workplace environment as calls are blown.

Stakeholder fans will suffer as the outcome of games becomes more a roll of the dice than something settled between teams. And they—and advertisers—may lose as games take longer and are duller to watch.

Fortunately for league owners, the NFL has earned such an enviable position over the past few years that the concerns of stakeholders are nothing more than a nuisance. Ironically, the one team where the shareholder and the stakeholder-fan are one and the same is the Green Bay Packers—the publicly held team that most clearly lost a game due to officials Goodell hired on their behalf.

Miles is the Founder and Chief Executive Officer of The Miles Group. Previously, he was a Vice Chairman at Heidrick & Struggles and ran Leadership Advisory Services. Bennett is a professor at J. Mack Robinson College of Business, Georgia State University. He is co-author (with Stephen Miles) of two books, Riding Shotgun: The Role of the COO and Your Career Game: How Game Theory Can Help You Achieve Your Professional Goals.