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Out with the family!

What's up with the Carolina Panthers? Last February, owner Jerry Richardson was on the operating table, getting a heart transplant. Son Mark Richardson ran the team and son Jon managed the stadium. But on Tuesday came news that Dad was more than alive and kicking: he fired both his sons!

This was a bit of a shock -- it was front page news in Charlotte -- especially as Mark had a reputation as an effective and innovative team president. So what's going on? One hypothesis is that a family business structure is an anachronism when the business in question has a market value of a billion dollars. From that perspective, if Mark Richardson is as talented as many perceive him to be, he should have no trouble finding a position as CEO of another one billion dollar business. If he's not, then it is probably a sound business decision to replace him.

I would not be surprised if thinking like that is behind Jerry Richardson's decision to fire his son. I've always found him to be an interesting character, a maverick of sorts. I use one of his surprising decisions as an example in my class on sports economics. Jerry Richardson's career as an NFL player lasted but two years. He played tight end for the Baltimore Colts, during the Johnny Unitas era. Under the "reserve system" in effect at the time, Richardson was paid less than his true value, as were most all players. Having been successful though, he negotiated for a raise, but was turned down by Weeb Eubank. So he quit! In basic economic terms, he had a high opportunity cost of playing football during the low wage, reserve system of his time. If Jerry Richardson was going to be under-paid, he had better things to do. Like become a mega-millionaire.