4 Lessons of Environmental Compliance from the NCAA and the Dallas Cowboys.
Last year’s Heisman Trophy winner and superstar quarterback of 7G’s hometown FSU Seminole, Jameis Winston, just cannot get a break. He gets himself into precarious situations with coeds. He absentmindedly walks out of grocery stores without paying for crab legs. He stands up in public places yelling vulgar profanities.
“Why do I care,” you ask? You needn’t care about a college kid and his growing pains as a superstar athlete. However, if you are like me, you do ask, “Why can’t FSU and the NCAA prevent this type of behavior?” More conceptually, “Why doesn’t FSU better manage and minimize its risk?”
FSU could repeat profits of more than
$10 million from its football program this year. Those profits could increase significantly by going back-to-back National Champs and/or having one of two repeat Heisman Trophy winners in history.
How can FSU leave tens of millions of dollars to the behavioral whims of a 20-year-old athlete? It baffles me. Take his keys, institute a curfew, hire a full-time chaperone. Do something. Tim Cook, an educated professional and CEO of Apple, has a PR specialist who recently cut off a journalist mid-question to avoid a improbably slip by Cook, but FSU leaves its most visible and publicly scrutinized athlete to stand on tables in public and yell whatever comes to his mind. More baffling is the fact that this is not a new phenomenon, nor is it distinct to FSU. See
Georgia,
Texas A&M,
LSU,
West Virginia, Alabama,
Nebraska,
Baylor,
Ohio State, and
FSU again.
The same conceptual problem is pervasive throughout the retail and commercial petroleum industry. Each petroleum storage tank system (“PSTS”) is a figurative Jameis Winston. Every PSTS represents a valuable asset that enables a significant profit. However, when left out of sight and out of mind, PSTSs will likely put you in an unexpected tight spot that could cost you thousands of dollars, and possibly over a million.
The President of FSU must wince every time Jameis Winston’s name hits the news. PSTS owners and operators feel that same pit in their stomach when they are notified about a PSTS failing, going into a significant alarm, having an overfill, etc. Yet like FSU, many PSTS owners fail to proactively manage the risk associated with their volatile assets.
Enter Dez Bryant.
A few years back Dez Bryant was another Jameis Winston except he caught passes instead of tossing them. Bryant was considered the best receiver in 2009 and a possible Heisman contender before a suspension for failing to fully disclose his interaction with Deion Sanders. (See
ESPN). Oklahoma State University lost a lot of potential revenue from the suspension by not proactively managing their risk.
Enter Jerry Jones and the Dallas Cowboys.
Dez Bryant was obviously going pro, just like Jameis Winston. However, Bryant was still available late in the first round of the 2010 draft due to concerns about his off-field issues, when the Cowboys took a chance on him. Bryant proved to have the on-field talent but, had several public missteps, such as a confrontation with mall security, lawsuits due to unpaid debts, and was arrested in July 2012 for domestic violence against his mother. (See
ESPN).
Jerry had enough. In August 2012, he took matters into his own hands and implemented strict conduct guidelines for Bryant including: a midnight curfew, bi-weekly counseling, a driver, and most important, a rotating security team with one man accompanying Bryant at all times. (See
ESPN).
The result.
In 2013, Dez Bryant had no personal issues to distract his game (or Jerry’s business). He is arguably the Cowboys best player. (See
ESPN). Bryant’s
stats improved in 2012 and 2013. They look good for 2014. He has a touchdown in each of the last 4 games. Dez Bryant
jersey sales rank 15
th overall in the NFL. The Cowboys rank 4
th in
merchandise sales. Dallas is number one in ticket sales. Leave it to Jerry Jones to make a smart business decision to manage his risk, thus protecting his asset and his business.
The lessons.
PSTS owners and operators should learn a little of what to do from Jerry, and what not to do from FSU. Here are 4 things to take from Jerry’s actions that can help you manage your risk and maximize the value of your PSTS asset.
- Invest Wisely. Simply because an investment is not shiny and unblemished does not mean you should walk away from the opportunity. The secret is risk awareness and management, not risk aversion and elimination. This is the same for college football players and PSTS. Do your due diligence.
- Have Realistic Expectations. 20 year old athletes screw up. PSTS components wear, leak, and fail. Environmental managers and PSTS owners and operators are human, and have all been negligent at some time. And yes, regulators are becoming stricter and regulations more burdensome. As a PSTS owner or operator, you need to know the environmental compliance world like the back of your hand. Your bottom line depends on it. If you do not want to internalize the burden of managing environmental compliance, you need to get help.
- Manage Risk. By investing wisely and setting realistic expectations for managing your PSTSs you begin to manage your risk. Each company and its PSTS portfolio are different. You need to manage the risk accordingly. FSU needs to get one asset, Jameis Winston, under control. Ohio State, a few years back, needed a major overhaul of its program due to rampant violations of NCAA policies, arrests, etc. Accordingly, you may need a good environmental manager and a good maintenance team. However, you may need a third party compliance consultant, inspectors, remote monitoring, and supplemental insurance. The worst thing you can do is put your head in the sand, wait for the storm to arrive, and hope it blows over.
- Make Money. Most PSTS owners and operators view preventative risk management practices as a waste of money or a hit to their bottom line. I am sure Jerry’s disciplinary plan for Dez Bryant was not cheap. Moreover, the Cowboys faced no legal liability as a result of Bryant’s personal troubles. Regardless, Jerry still took action to maximize his return on investment by managing his risk.
PSTS owners need to internalize that compliance is no different. PSTS owners, operators or compliance managers are never awarded for “not having to pay penalties” or “not having a release” in a year. Contrarily, when a release happens, regulatory penalties are assessed, an insurance claim is denied, or major PSTS repairs are needed, watch a company scramble and panic. It is only then that management practices finally change because of the realization that the amount of money spent controlling the damage is so disproportionately higher than managing risk proactively.
I hope that FSU recognizes the apparent risk Jameis Winston presents to organization and that they do not wait until they loose a game because he is suspended, or worse, loose millions in revenue due to missing a repeat national championship. I hope that PSTS owners and operators take action and manage environmental risk before a release or an enforcement action disrupts their business.
(and I hope Jerry Jones comes up with a recipe for winning like he has for making money)
