In the aftermath of the Penn State scandal, references to Joe Paterno as emperor or king abounded. The recently released Freeh Report details and comments on the discretion and deference afforded Paterno and the PSU AD by top level administrators as well as the degree to which all of these individuals operated with little oversight by the PSU Board of Trustees. According to the report, the PSU president not only bent toward the Paterno/AD approach but willfully kept the Board out of the loop. Of course, the Report makes clear that the Board had adopted an oversight structure and operating procedure that permitted it to be manipulated relatively easily.
In the wake of the scope and severity of the scandal, a couple of writers have gone so far as to suggest that this will likely end the “coach as emperor” era. I seriously doubt that conclusion. Clearly, Joe Paterno operated at the very extreme of power and discretion because of his success, image, support by former players, devotion to the university, and very long tenure. Yet, coaches of far less stature gain extraordinary deference and discretion. The Sports Illustrated story on Ben Howland, Not the UCLA Way, offers a demonstrative case.
While there is much truth to the “Subversion of the Academy” by the college sports system as my colleagues Bobby McCormick and Bob Tollison explained, interestingly, the problem of unrestrained coaches extends beyond the college sphere. After firing Dan Reeves as Falcons head coach, owner Arthur Blank stated, “we’re looking for a coach, not a king.” The bounty system with the Saints draws attention to the same problem — Sean Payton, a very successful coach, came to ignore not only his owner’s instructions but clear directives from the Commissioner’s Office as well.
The separation of “management from control” or the “agency problem” has been much discussed in academic, media, and legal circles over the past 30+ years. Every corporate scandal draws new attention and supposed solutions, none of which ever really solve the problem because the problem reflects, at its core, a basic economic fact: costly information. The WSJ’s Holman Jenkins has written extensively on this point. While markets evolve and experiment with better solutions to this governance problem, the underlying issue of costly information never vanishes, so that either market idealists or, more often, government idealists who think they can make it vanish with a stroke of a pen delude themselves. As many college faculty can attest, these problems are often quite severe among university boards that are usually incentivized more poorly than corporate boards. The lack of a for-profit environment doesn’t solve the problem, it only exacerbates it.
Even though costly information and the associated difficulty in monitoring behavior is usually the item highlighted, the professional sports cases of “coach as king” shed light on another force — power and legitimacy. The secrecy of the bounty system may have helped it continue, but part of what gives Sean Payton or Dan Reeves the ability to blow off the owner is the fact that players along with media and fans, look to the coach as the expert. The coach’s power among these groups carves out discretion relative to the owner’s or GM’s desires in addition to observability issues. Owners who do much more than write paychecks are labeled meddlers. General managers serve as the intermediary between coaches and owners, but again, there can be power struggles between coach and GM, as in the case of Jeff Fisher and Floyd Reese with the Titans, where Jeff Fisher won out and is still treated like a prince by most of the media.
When Jerry Jones took over the Cowboys, the Dallas media nearly suffered a collective aneurysm when he dared to implement his desires and went so far as to make himself GM — forget the intermediary, was his view, I know as much about football as most GMs. A power showdown ultimately developed between Jones and Jimmy Johnson, resulting in Johnson’s exit. The Cowboys case also shows that some power on the part of the coach vis-a-vis the owner can be a good thing. An owner-as-emperor may not work either. The Cowboys have performed best when Jones’s influence has had some check placed on it by a powerful coach such as Bill Parcells.