Bill Parcells is back in the NFL but this time he is not the head coach or the GM. Parcells has a new title -- executive vice president of football operations for the Miami Dolphins -- and a new and improved business model.
As people speculate about how he's going to operate from the owner's booth rather than the sideline, you can rest assured he has worked out all of the details and it's in the business plan. His plan is that of a CEO charged with reorganizing and righting the ship to bring value to the "shareholders" (in this case, Dolphins owner Wayne Huizenga) who have entrusted him with the helm.
Parcells will stay off the sidelines and in the owner's box like the CEO stays in the board room. He will bring in his team to implement his plans in the front office and sidelines. Already, he has hired former Dallas Cowboys personnel man Jeff Ireland as his new general manager, and Ireland will be charged with hiring a new head coach after Cam Cameron was fired on Thursday.
Parcells will surround himself with people who see things his way. He can easily fix the front office, coaching staff and player pool. Check his history and you realize he has always left a team in better shape than it was in when he got there. But most importantly, and until now often overlooked, he has left the owner with a more valuable franchise. That's why Parcells' new business model could earn him the title of the NFL's billion-dollar man.
The business model he has constructed is a stroke of genius -- and a model he may not be done using. After he fixes the Dolphins and increases the franchise value, he and his team of consultants will be poised to move on to the next undervalued franchise.
At the next stop, though, don't expect Parcells to be an employee of the franchise. He and his team will help maximize the shareholder value -- much like American billionaire financier Carl Icahn and his team do in the corporate world, but without the "corporate-raider" approach available to Icahn. Parcells' group may function as a super consulting firm that gets paid a fee based on the increased value that his firm brings to the franchise. As long as I am speculating, I will call the firm "Legacy Consulting."
At 66, Parcells would be considered too old to be on the field every day, but in this new model he may be just getting warmed up. Icahn is 71 and shows no signs of slowing down. Parcells has a number of very qualified friends who are semi-retired but have the vision, experience, and energy to join the team at Legacy Consulting. They will hire young guns with a passion for the business of football, and Parcells will expand his legacy beyond the white lines.
Their mission will be to fix dysfunctional organizations and bring enhanced value to ownership. A lot of owners have already turned to Parcells to accelerate the value of their franchise, which is what has put Parcells in the unique position he is in today.
Profitable results
A look at the Parcells Effect at his first four NFL stops might show Huizenga what he can expect to happen in Miami. Parcells has been the head coach, and in some cases the GM, of the Giants, Patriots, Jets and Cowboys. As NFL franchises are privately held, with the exception of the Green Bay Packers, the value of franchises can only be concretely established when they are sold. But thanks to Forbes Magazine and its annual valuations of NFL franchises, the public has some point of reference for the ever-increasing values.
According to Forbes, all four of Parcells' former teams are valued among the top 10 NFL organizations in the 2007 report. Dallas was valued at $851 million when Parcells arrived in 2003 and ranked No. 2 behind the Redskins ($952 million). Today, the Cowboys are the top seed in the NFC playoffs and they are valued at $1.5 billion -- ranked No. 1, with a new stadium under construction. How much of that $649 million increase in value is due to Parcells the CEO and his overhaul of the on-field portion of the organization? Those are his players winning games this season.
I was with the Jets when Parcells arrived. Our owner, Mr. Leon Hess, wanted a winner before he passed away, and Parcells delivered. But Mr. Hess had also established that the team would be sold upon his death. His return on investment in Parcells was quantified at the sale.
When Parcells arrived in 1997, Forbes valued the club at about $225 million. When he left after three years, there was an outstanding new owner who faced stiff competition in his successful bid to purchase the Jets -- paying in excess of $400 million, an increase of approximately $175 million.
The Patriots story is the most interesting. In the early '90s, New England needed a new owner but the club value was so low that the league got involved in fixing up the franchise for sale. Parcells was hand-picked by the NFL to be the head coach and general manager and given the charge to reorganize and effectively reposition the New England Patriots franchise in the marketplace.
It worked. The team found its new owner in Bob Kraft and Parcells took the Patriots to the Super Bowl. Then, in 1996, Parcells introduced Kraft to Bill Belichick, the first major success in Parcells' coaching legacy.
When Parcells took over for Ray Perkins as head coach of the Giants, that franchise was in bad shape. Of course, Parcells won two Super Bowls. As he walked out the door after the 1990 season, the Mara family was also able to sell half of the franchise to the Tisch family in 1991. Back in 1998, the Giants were ranked 15th in value. Today they sit in the No. 8 spot.
Dolphins in decline
As Huizenga looks at the four previous franchises that Parcells has been with, he sees the value of the four clubs shot up just about as fast as the team record under his direction. New Stadiums got approved and constructed, part-owners and new owners surfaced, and the owners that hired Parcells had a chance to sell and make more money.
Huizenga purchased the club in 1993 and currently has a franchise ranked 15th in value by Forbes at $942 million. Not a bad spot to be in -- but not as good as in previous years. A look at the Dolphins' ranking in Forbes' annual reports, and you see a franchise in steady decline (see chart).
The trend is plain to see. As part of Parcells' progress report on his venture to turn around the Dolphins, I will now be as focused on the financial metrics as I will be on the wins. Parcells will not only be looking to increase the $942 million value, but he certainly has his competitive eyes on improving the No. 15 ranking and the brass ring at $1.5 billion that has been established in Dallas.
Parcells will need three years to fully implement his plan with the Dolphins. He knows better than to try to rush in with a quick fix. Parcells will carefully manage the expectations of Huizenga. History indicates the value of the Dolphins may grow all on its own during the next three years. But Parcells will have a financial analysis that will prove his worth in maximizing the team's value. It will involve improving the ranking as compared to other franchises.
Forbes indicates the club's value has gone up $86 million since 2005. Three years of the Parcells Effect, along with the normal growth in club values, and Huizenga could be sitting on a team worth $1.2 billion. Huizenga may be able to sell 49 percent of the franchise for $600 million in 2010 -- maybe $400 million more than he originally paid for the club -- and still maintain majority ownership.
If Parcells succeeds and delivers this kind of value to Huizenga, it's reasonable to expect lots of potential owners to come calling for his services, and Legacy Consulting is off and running.
