Among the war stories he shared to prove his
point was a behind-the-scenes tale of a tense
encounter he had at Madison Square Garden in July
1996. This run-in did not involve an athlete or coach;
instead it put Checketts nose-to-nose with New York's
mayor at the time -- the hard-charging Rudy Giuliani.
Checketts was president and CEO of Madison
Square Garden LP, then a $4 billion enterprise that
included the Garden arena, the New York Knicks
basketball team, the New York Rangers hockey team
and the MSG television network. He was in
Washington, D.C., on the eve of the NBA free agent
season, walking into a midnight meeting with the
agent for guard Allan Houston, when his assistant
telephoned with urgent news. There had been a brawl
at a boxing match that night in the Garden. It had
spread from the ring into the crowd, and it looked as if
14 people were killed. Checketts immediately flew
back to New York, fearing the worst, not least for the
future of his company. He learned that Giuliani was on
his way to the Garden. "My PR guy said, 'We are
dead,'" Checketts recalled.
In fact, no one had been killed, but there were
injuries and robberies. The terrifying melee had been
televised live on HBO. At 1:30 a.m., on a ramp inside
the arena, Checketts saw the mayor approaching him
with the police and fire commissioners -- and the
media in pursuit. "Dave, we've got a problem," Giuliani
said. Checketts recalled "thinking that this is either the
end of my career, or something productive is going to
come out of this."
Giuliani told Checketts he planned to tell the
media that the MSG security staff had acted badly.
Imagining the next day's reports -- saying the Garden
was unsafe -- Checketts didn't back down. "I
said, 'Rudy, if you say that our security acted badly, I'm
going to say that the [police] acted badly.'"
Giuliani parried: "Well, then, I'll say your security
acted slowly."
Checketts: "Well, then, I'll say that your police didn't
react at all."
At that point, Checketts recalled, Giuliani did "what
difficult people do: He came right up about four inches
from my face and said, 'Do you want to battle with
me?'"
Checketts said no. But he refused to let the mayor
ruin the company's reputation. After all, there had not
been an investigation into the causes of the brawl.
The two men adjourned to a side room and argued for
an hour. By 2:30 a.m., he said, "We walked out, joined
at the arm basically, and said, 'This is outrageous.
There's no room for it in New York or anywhere else.
There will be an investigation.' And we announced
steps to make sure it never happens again." The
damage was minimized.
Checketts, 52, said it took him years to master the
art of the confrontation. He had plenty of practice in
New York. Toward the end of the 1998-99 season, for
example, Knicks coach Jeff Van Gundy and general
manager Ernie Grunfeld were sniping, and James
Dolan of Cablevision, which owned the team,
instructed Checketts to fire one of them. He reluctantly
sacked Grunfeld, his friend, because he felt the
players were more loyal to the coach.
Checketts became a sports business superstar
early, but he hadn't planned to. Born in Utah, he
graduated from the University of Utah, served as a
Mormon missionary and earned his MBA at Brigham
Young University. He went straight from there in 1981
to consulting firm Bain. "For three years in Boston, I
was trying to find a way to save the Firestone Tire
Company," he said. "We fired 27,000 people and
closed seven plants. I was working around the clock....
That was great experience for me when I took over the
Utah Jazz, which was almost in bankruptcy. I
understood what to do."
At Bain, Checketts briefly looked into buying the
Boston Celtics for a client and met David Stern, at the
time an NBA executive. When Stern became NBA
commissioner in 1984, he tapped Checketts to help
run the struggling Utah Jazz. At age 28, Checketts
became the youngest team chief executive in the NBA,
and the Jazz soon became a perennial playoff
contender. In 1991, Checketts became president of
the New York Knicks, and in 1994 stepped up as
president of Madison Square Garden, helping to
restore the arena's stature and overseeing the
company's acquisition of Radio City Music Hall. He left
in 2001 to start his own company, SCP Worldwide (it
stands for Sports Capital Partners), which now owns
the St. Louis Blues NHL team and its arena, the
Scottrade Center; the Real Salt Lake Major League
Soccer team and its new, publicly funded, stadium;
and other media and entertainment units.
Ambitious? Sure. The New York Times called
Checketts "a monumental operator." His explanation
to the Times: "People have called it ambition, but I
have a different view. I don't see it as ambitious as
much as getting in a position to make a difference."
Opportunities in Tough Times
These are tough times for any business,
Checketts noted. But he insisted opportunities exist
for visionary entrepreneurs and committed leaders
who can anticipate what's ahead. "One thing that's
very different in 2008: The room for error has
disappeared in most every deal. You no longer have
that cushion. So you have to be the one who's thinking
ahead."
To illustrate, he shared another anecdote: In 1999
the Knicks had made the lowest spot in the NBA
playoffs and in the first round they were playing the
number-one-seeded Miami Heat. In the deciding
Game 5 of a brutal series, Allan Houston made an
incredible shot to put the Knicks up by one point with
just 0.8 seconds left. The victory seemed sealed --
Miami had one last possession, but there was an
NBA rule saying that, on a ball caught and shot with
less than one second left, the shot could not count.
Despite the rule, the referees allowed Miami's Tim
Hardaway to catch, dribble and throw up a final shot. If
it had gone in, Miami would have won the series.
When it missed, the Knicks players ran into the locker
room to celebrate, but they couldn't find their coach.
Amid the pandemonium, Coach Van Gundy was still
out on the floor, screaming at the officials for not
blowing the whistle on Miami's final shot.
Checketts finally pulled Van Gundy aside and
said, "Jeff, what are you doing? We won the game."
Van Gundy explained: "I'm coaching the next
round."
"You have to have people in your organization who
think ahead," Checketts said. "Be the one."
Checketts called sports "the ultimate human
capital business." It is important to have a great arena,
good concessions, convenient parking and nice
suites, but if you have a team that can't compete, he
said, you have no chance of doing well. At the same
time, he added, it's not all about hiring talent. "The
world loves talent, but it pays off on character.... As a
leader, it becomes your challenge to be able to identify
people who at a certain point in time rise to the
occasion." This is a great time for leaders to
emerge, "the opportunities for you are going to be
incredible," he suggested to the audience. "If you're
looking for perhaps a real safe opportunity, steady
salary, great job -- those may be harder to find, but the
opportunities for people who are entrepreneurial will
be there."
He stressed, however, that now is a time for
leaders who have integrity and want to build value. "A
company that's a large investor of ours [has] gone
under in one of the high-profile bankruptcies in New
York," he said. "And I can just tell you that the way
these people have lived during the past two decades
has been incredible, [as has] the amount of
compensation and wealth that has been generated for
just a few. I'm not making a political statement. I'm
actually not for the redistribution of wealth. But I am for
people showing some integrity, some honesty. We
need it. We need people who will give back to the
community. Private companies can do so much that
our government cannot do."
One thing the government can do is build
stadiums and arenas -- theoretically for the benefit of
taxpayers, but certainly also for team owners. SCP's
new soccer stadium outside Salt Lake City came after
a harsh political battle that had residents of Utah
attacking Checketts as a rich guy trying to divert tax
money to a stadium and away from schools and
roads. The state put $45 million into the facility, but the
revenue was from a hotel tax from which proceeds are
earmarked for promoting tourism. "There's still a lot of
anger in Utah," he said. "We try to tell them they're not
paying for it if they're not staying in hotels."
Buying the Real Salt Lake soccer team was one
way Checketts' company has been diversifying in a
tough economy. SCP Worldwide bought the ever-
struggling St. Louis Blues hockey franchise in 2006 --
and boosted season-ticket sales -- but the skating is
getting tough for smaller-market teams like St. Louis
in the major sports. TV revenues have flattened,
leagues aren't adding expansion teams anymore and
corporations that traditionally buy arena naming rights,
sponsorships and luxury suites are cutting back. The
growth, Checketts believes, is in non-major sports.
"We invested in soccer because we believe that
with the changing population -- not just Latino but the
changing world integration -- soccer has a lot of
upside. We bought our team for $15.5 million four
years ago. Now expansion teams are trading for $50
million."
What's next? "I think lacrosse is going to be a
major league sport in the next decade," he
predicted. "It's high-action, it's a good television sport,
and there's a very passionate following already. Plus
we're building all these soccer stadiums -- they're the
perfect place to play lacrosse."
Checketts happened to be speaking in
Philadelphia a day after the Phillies won the World
Series, and the city's streets still showed signs of the
prior night's celebrations. "Isn't it amazing that in
sports you have the ability as a business to move a
community?" he asked. Creating passion is why you
should get into sports, or any business, "because if
you get into it for any other reason, including creating
wealth, it's very difficult. You can earn a good living
certainly, but people have lost a lot of money in sports.
[Given] what you saw last night, whether the owners of
the Phillies are going to make money or not almost
doesn't matter to them today, I can guarantee you that."
Source: Knowledge@Wharton, November 2008