6. Rebounding with Leigh Steinberg

Legendary sports agent, Leigh Steinberg, who inspired Tom Cruise's character in Jerry Maguire (1996) is our guest this week. In this episode, you’ll learn about Leigh’s contribution to making the NFL one of the highest grossing sports leagues in the world, how he’s created a repeated playbook for success, and how Leigh rebounded from deep personal setbacks. To learn more about taking your organization from the new normal to the new exceptional visit www.hipersolutions.com.

Transcript

David Morris  00:10

Thank you for joining the HiPER Leadership Podcast. I am your host, David Morris, CEO and Founder of HiPER solutions, where we provide tools and services to help drive change that creates lasting impact at Fortune 500s, government organizations, and private equity. In this series, we have set out to define the key attributes of a high impact performer or, as we call them, HiPER leaders, so that you, our listeners, can more effectively identify a game-changing leader for your next big transformation. Today, I'm looking forward to speaking with Leigh Steinberg, on the trait that the best of the best HiPER leaders possess. And that is the ability to bounce back no matter what the challenges. Now, many of you may know [him] as the real-life sports agent from the film, Jerry Maguire in 1986, whether you call it: adversity has the seeds of opportunity, or turning lemons into lemonade, or you look at Winston Churchill or Abraham Lincoln and all these challenges, what Leigh really exemplifies is somebody who, despite massive challenges and setbacks, was able to rebuild and in the end just has a staggering record across this 41 year career representing the number one overall picks in the NFL Draft, a record eight times and represents this year Super Bowl winner Patrick Mahomes. Who did beat my New England Patriots. Welcome, Leigh.

Leigh Steinberg  01:47

Thank you.

David Morris  01:49

You're welcome. Leigh, you know, as we got to know each other over the years, a lot of people know the story about you hit this peak and then all of a sudden, you know, you lost everything, you lost everything. And I want to probe into that, and really about the rebuild and all of that. And I want to really showcase a story first, about this example of your HiPER leadership. And really, it's about the mission. And, you know, I'm just curious for you to take us back to the NFL TV network deals, and what prompted you to do what you participated in.

Leigh Steinberg  02:35

So, I think it's really key in representing players, not simply to look for their narrow interests, but to be a steward of the sport. For players to be well compensated, they need the sport itself to generate revenue to come up with ancillary revenue streams. And so, looking into the future, when I started back in 1975, each team in the NFL received $2 million as their share of the national television contract per team per season. But looking into the future, and being able to visualize what the changes in broadcasts would mean to sports was really key and necessary to take sports to a new dimension. And it was clear at a time when they had three competitive networks that those were, in essence the only bidders, but watching the development of cable television, satellite television, meant that instead of three networks, there would be potentially hundreds of networks all bidding, and that would fractionalize the television market so it’d become more difficult to get much of an audience to focus on any one network. That's where sports could come in. So, there was a time where we held a Super Bowl party on the back lot of 20 Century Fox on the “Hello Dolly” set in old New York. And Rupert Murdoch attended that party. At that time, Fox was in its infancy and didn't have a whole lot of programming that people were necessarily excited about. And Rupert Murdoch mentioned at that point that he'd like to bid on the NFL, which instead of three networks would create four. And the league was about to redo the NFC package, the most powerful group of big city teams, to extend that; a level of $17 million per team per season. And, I went to owners and one-on-one said to them, you have to see the changes that are happening here in Hollywood, and understand that competitive bidding will exponentially change the size of rights’ fee packages. And all these alternative networks will also mean that more games by a great number are telecast, but also more preview shows, highlight shows, opinion shows, feature shows, so it will be a rebirth of massive amounts of TV programming, all of which can monetize. And so, by talking to those owners, they did not redo the CBS contract but opened it to competitive bidding, Fox bid a loss leader premium, more money than they could ever recover in advertising, in comparison to the rights’ fees they paid, but to be able to show their promos on Sunday to a national audience, and to get their Monday through Friday programming to be able to expand and that meant that the bottom line value of the network would expand. We're now at a point where each team makes $200 million per team per season the NFL, which is an incredible multiple, so it changed the face of sports and led to a situation where the NFL is not simply the most popular sport in the country by three to one, it's also the most popular television show. So, it's being able to visualize beyond today and understand where the trends are going and trying to be an agent or facilitator to share that vision with people who have the power to execute it.

David Morris  06:44

I think there's so many interesting qualities that make up a HiPER and one of them that have really stood out to us, Leigh, is this ability to bring together a diverse set of minds. Okay, especially now with everything going on in the world. That leader who can cross-functionally lead people who have egos, you know, people who come from all walks of life. But this ability to bring these individuals together to make something happen. And obviously, you spent your career doing that, with putting these deals together. But, I think what's so fascinating about that example, is the, just the variety of people that you would have needed to get on the same page. And yet, the way you describe it, it seems so effortless.

Leigh Steinberg  07:32

I think the most critical skill in many ways in life is the ability to listen and draw another human being out so that you understand how to peel back the layers of the onion to get deeper and deeper below the surface responses, but to truly understand someone's value system and priority, so that you can be focused on their greatest anxieties and fears and greatest hopes and dreams. And to really bond at an emotional level with another person. So, you can put your head into their head and put your heart into their heart and visualize the way the other person sees things and what's in their interest. By drawing out another person and being able to emotionally bond at a deeper level, then it's possible to, like in Mission Impossible where they used to throw cards out for each member of the team that would be functional, but by really understanding the needs of people who might classically be seen as the other side, is able to bring in a diversity of opinions and to understand how to proceed in in building consensus.

David Morris  08:56

So, in this case, all of a sudden, the actual idea surfaced, which if we could take the TV rights from was it $16 million or so to ultimately was over $200 million per team?

Leigh Steinberg  09:10

Yes, $17 million per team per season, back in the 90s. And again, there were owners who felt the sky was falling, that they would never get as much as $17 million again. So, it required the ability to understand what the impact and effect of competitive bidding with loss leader aspects to it, it wouldn't necessarily follow completely [a/the] rational profit-loss equation. It was a way to boost the bottom line of the network. And that meant that one of the aspects of sports that's key as you watch advertising move forward, is that it's watched. [The] contest is watched in real time. So, it's very difficult to record a football or baseball or basketball game, and to rely on the fact no one will tell you the score. So, they're watching real time, the commercials are placed in real time. People are not skipping through them. And so, it's got that ancillary impact in terms of making the advertisements and commercials themselves much more valuable and much stickier.

David Morris  10:32

What's, what's also interesting about that, and I love that you're passionate, the more passionate you get, Leigh, the more I hear your chair squeaking because I can just picture you moving in as you're describing this [laughs]. What I'm so curious about is when you saw that opportunity, you know as we would call [it], it's almost the tap on the shoulder the HiPER gets that which activates them on this quest, there was no one telling you, you needed to do this. You were not an owner of the team. You didn't own any sports team. So, there wasn't even really that much in it for you. Yeah, the players would get paid more ultimately down the road. But I'm sort of curious, in your mind, what activated you actually on this quest, that you were not going to be the biggest beneficiary of by any means.

Leigh Steinberg  11:20

Because it became clear to me that a paradigm was being played out, which was labor versus management. And the rules at that point were heavily stacked so there was no free agency, and all the bargaining power was on the owner side. So, the question was, how could you explode the pie? How could you bring so much revenue into a sport? Another thing I looked at was the internet, and the development of the internet. And we actually created a company called athlete direct, which for the very first time back in the America Online AOL days, ‘You've got mail,’ I was able to put athletes up onto the internet. And they talked about their weekly diaries, they talked about their charitable foundations. And I just signed an e-commerce application where you could buy directly from this. Well, this was revolutionary. And we ended up investing a certain amount of money in it. And then the multiple that we sold it for was really great. So, you could see that stadia were going to change, and that every city that had a stadium much over 15 or 20 years, that was going to change. And then the question became how many ancillary revenue streams could you build off of that. But, all of this was necessary, because in the representation of players, there was only so much that one could do with this limited revenue. So, it had a massive multiplying effect on player salaries and compensation. But it also created a whole series of other businesses that we could be involved with, in addition to the representation of players, and be entrepreneurial.

David Morris  13:15

And it all comes down to that expanding the pie. Now, as you were interacting with the owners and the other stakeholders to make this happen, what would you say the biggest blocker was? What was the situation that caused you kind of the biggest setback that you had to really figure out?

Leigh Steinberg  13:33

The owners who had been in the league a long time, were so stunned by the fact that the dollars had increased to $17 million, that they perceived that this wouldn’t last, that this was a bubble, that even at the lower level of income, they better lock in a guarantee, because somehow the sky would fall. But again, that analysis didn't take into consideration what was going to build out in terms of television. But you could see it coming. But could they see it coming? And so, it was really necessary to explain that it wasn't only Fox that would be a bidder, it might be ESPN. And it wasn't only that, potentially we might have new networks in the future like the NFL Network or other bidders. And the fact that whoever lost football or valuable sports, which see a diminution of their Monday through Friday ratings and the value of their ownership in the network would be less, so it was trying to visualize something that wasn't necessarily completely there at that time, this built out over time, so to where you can virtually sit for an hour and go through station after network after network on a cable box. But it wasn't there. And so, you had to be able to see it, just like the internet was in its rudimentary days. And I didn't want to represent players in, in sports where negotiations in essence, were dignified begging. [David: Mm hmm.] Because there wasn't enough revenue to really create profitability. And the other thing that happened, that I talked to owners about is, is as his television goes up in terms of revenue, your franchise value will go up. So, if you go back to 1976, $16.5 million dollars was what Tampa Bay & Seattle costs to get into the league. Now you have a franchise with Dallas, that's valued at $5 billion.

David Morris  15:44

It's such an example of, not only a mission orientation, as opposed to a political orientation, but an ability to really get everyone to see that and get them aligned, and it was when everyone benefited, including the network in the end. And I guess that's really what this comes down to. What type of counsel do you provide to the next generation of agents and others that you mentor, in really the key behind getting these win-win-win arrangements, even when you have people up front just trying to naysay you?

Leigh Steinberg  16:18

We do an agent academy and a sports career conference. And the goal is to mentor the next generation of sports professionals, and it's now a huge expansive field, so someone can work for a team, a league, a conference, an athletics department, sports marketing, branding, facilities management, media, agentry. So, there's this massive field which has been created, but the key is to aggregate specific skills, because someone could go to business school, law school, or sports management and learn the principles without learning the actual skills that are critically necessary. So, we teach the ability to negotiate, how to craft a win-win situation, how to recruit, how to share a vision with family or a younger person in terms of what their life can be and how we'll go about achieving it, to share negotiating skills. So, in one case, we have half the young people play general managers and half of them play player agents. Listening skills, as I mentioned before, and the ability to craft win-win situations where both parties walk away very happy. We talk about marketing and branding. And also, as you know, our firm is fundamentally based on the premise that athletes can be role models and retrace their routes and go back to the high school, collegiate, and professional community and set up charitable foundations or scholarship funds that enhance the quality of life. So, the question is, can you show a young person that they don't simply have to accept whatever the system or matrix is, as it is, but that they can use their own unique vision to, in our case, make sports deal with issues like domestic violence or racism or bullying, but in their own way they can either think of a better mousetrap and think outside the square, do the conventional analysis that's necessary to understand the confused fact situation, but then to make the leap in terms of coming up with a creative new way, a new modality to somehow make a better system or make everything more functional. And so, you're looking for that creative flair. The ability to think beyond the structures exists[ing] now, to imagine things and systems that work much better than what we have.

David Morris  19:06

As I think about that, Leigh, and you've studied thousands of people over all these years, you've picked up all these patterns. You've seen, probably, what's developable; what's set in stone. Putting yourself in the shoes right now of our audience; owners, investors, boards of directors that are needing to choose sort of next generation HiPER leaders to go drive breakthrough change. What would be some advice you would have in terms of being able to identify somebody who is wired for a mission, rather than politics, and willing to do effectively whatever it takes to win? I mean, what are some of the standout traits you'd be looking for if you're in those shoes?

Leigh Steinberg  19:54

Well, first of all, obviously work ethic because there are younger people who have shrugged off the millennial stereotype, and understand that, in your 20s, it's fine to go to every party, it's fine to go to every family event. But if you enter a field like sports or entertainment, you'll get rolled, because the best and brightest want to do this. And so, you have to have a stellar work ethic. And you have to be willing, whether you're an intern or a new hire, to be able to spend time where you're around when the opportunity comes, not necessarily something that you would be assigned, but you might be the only person sitting there with the owner or the executive at 8:30 at night, and you get assigned the program. Second of all, a detail orientation that enables an analysis where you don't miss steps and you don't miss facts. So, someone who's willing to take whatever the field is, and master the economics of it, master the profitability of it, understand how each part of functions, and then again, someone who at the end of the day, has resilience, has the ability, where life will knock you back. But can you take that temporary setback and rise again? And a sense of optimism is really critical. My leadership style is to explain in great detail what's expected and then not hover over an employee. If they're so worried about being yelled at or disciplined, you're not going to get their own inherent problem-solving capability from them, so you have to trust that there's an argument for executives; if they can do every single function better than anybody else, then why take the time to train other people? But if you want to grow a business, you need to create a whole constellation of superstars around you. So, when you're looking at the potential hire, does this person have the capability of being a superstar, being recognized in the field for their own talent and merit? Can you, as an executive, shift off responsibility that you're not irreplaceable, non-fungible, non-modular, but to realize a difference and train other people to do those things and then step back and give them the room to grow?

David Morris  22:48 

You know, Leigh, you've just laid out so many of the character traits, you know of the HiPER and, you know, what the owners and boards should be thinking about [for] the next generation of leaders. I would like to conclude; double clicking on, you know, an aspect of your life that, you know, I think few people ever go through. But understanding how you came out of it, whenever we hit a setback, should really provide guidance on how to deal with it. Can you help the audience understand the extent to the success that you had coming off of Jerry Maguire and all these successful contracts and money and fame and to lose it all, like how big was the success? How big the loss? And the reality is, how did you do that bounce back? Because this is the hallmark of the resolve.

Leigh Steinberg  23:43

At the height, and some people would look at us having the most valuable player in football and draftees like Tua Tagovailoa, and say this is the height now, but at the height, we had a dominant practice in football, baseball, basketball, boxing, Olympic athletes, we had raised hundreds of millions of dollars for charity and community. I've been the technical adviser on three big-hit sports movies, I wrote a couple best-selling books, and all by sticking to the principle that our role was to try to make a positive impact in the world. And a series of personal reverses happen in my life. My kids were diagnosed with retinitis pigmentosa which is an eye disease that inevitably leads to blindness. My father died a long death of cancer. We lost a house in a beachside community to mold and had to tear to the ground. And then I started experiencing problems in my marriage and I turned to alcohol to sort of escape.

David Morris  24:57

Leigh, what year was this?

Leigh Steinberg  25:01

I would say it manifested most heavily in 2008, ‘09 and ‘10. So, it got to the point where eventually I realized that my life was unbalanced. And I vowed to myself that I would put sobriety first and being a good father to my kids first, and that's what I'd focus on. I gave the practice to younger people, I gave up my house, I moved into sober living, I adopted a 12-step program with a unique fellowship. All I did was focus on sobriety and being an available and supportive parent. There was tremendous destruction, debt, and all sorts of things. But I had an epiphany, a moment of clarity, where I realized I wasn't a starving peasant in Darfur. I didn't have the last name Steinberg in Nazi Germany in the ‘30s, I didn't have cancer or wasn't sick in any way. And what excuse did I have not to live up to my dad's admonitions, which are: treasure relationships, especially family, and be an agent for change in the world. And really, there was no excuse, and you have to hit a certain bottom, David, to be able to totally adopt a program which requires some work. And so, I wasn't worried about career in sports. I was worried about: could I put the principles together and maintain sobriety and could I be a good father? And so, gradually, I waited until two or three years had passed until I felt that, I was still a bun in the oven, but it was time to re-enter and then I found a group of investors who probably looked at me as distressed property [both laugh] and invested in a new firm that started in 2014. And I found a really gifted young attorney named Chris Cabot to help and found some other folks. And I didn't get back by myself. I got back, helped by large groups of friends and I felt that support. So, the key was not to focus on the end result, but to just keep in the moment building with the trust that somehow this would all come back. And we had our first first-rounder in 2016. Holmes came along in 2017. He had a meteoric rise, we gradually built up a group of over 30 football players, and eventually we'll go into baseball, basketball, and the rest. I started writing for Forbes and now write for LinkedIn, and I knew that there was an absent period of about six or seven years where I wasn't practicing. And I had to get back out onto the campuses. And I ended up speaking at 85 universities, both as a way to tune in to what the next generation was thinking about, and to reintroduce myself to them; so that there was high-rate name recognition among people that were older, but I had to make sure what was happening with the next group and I just kept believing, had faith that somehow it would all work out.

David Morris  28:40

And at that absolute bottom; because again, here you are, with just all of this stuff. You have all this great stuff, all these accomplishments, all of this attention, all of this network, and you literally lose everything. Was there anything that really did become sort of the North Star, the key, and what should others keep in mind when they just absolutely hit rock bottom?

Leigh Steinberg  29:03

So, first of all to understand that the optimism my father had instilled in me, and my mother, from when I was a kid was difficult to sustain in the first year or two, but it just came back. And basically, I've always looked at life as the cliché; the glass half-full, not the glass half-empty, and I never really had serious doubts that I could succeed in sports and entertainment. I mean, as I told you, my priority was making sure I could stay sober and making sure I was a good parent to my kids. So, I think the key is to escape from your current situation to remember who you are as a human being, and remember what you are at your best. And instead of focusing on myself, I focused, as I had a lot of my life, on helping other people. And in that process, you escape self-absorption and begin to flourish again.

David Morris  30:14

Well, incredibly inspiring and you proved it. And this seems to be a repeatable playbook. And thank you. And to our HiPER leadership listeners, this would not be possible without you. If you haven't done so already, please subscribe to the HiPER Leadership Podcast on Apple podcasts. If you want us to help identify your next game changing-leader through our playbook, please visit our website at hipersolutions.com.