IN MY VIEW: CEOs – You Get What You Pay For
First published on Running Rugby.
The ultimate responsibility for the success or failure of a rugby club off the field lies at the door of the chief executive but, with people from such a wide variety of backgrounds and on such varying salaries, is it a case of ‘you get what you pay for’?
Clearly, there is a significant disparity between the budgets of clubs in rugby – Leicester have just announced that they turned over £19 million in the year ending 30 June 2013 and clubs lower down the Aviva Premiership table and those towards the foot of Super League simply cannot compete with that level of spending power – but the investment made in the salary of a CEO may just be the most important one a club makes.
With even the biggest clubs in the sport not making huge profits, the founder and CEO of GlobalSportsJobs Will Lloyd says “very strong financial acumen” is the most important quality for a chief executive to have and he believes clubs skimping on the salaries of those at the very top are missing a trick.
“You’re only as good as what you pay for effectively and I think there is often a short-sightedness there – if you only pay a small amount of money to a chief executive, then you can’t expect a huge amount in return,” he said.
“If a club wants to be professional, then it has to employ professional people and it’s not going to employ professional people if it’s planning to offer £40-50,000 as a salary.
“So, those that think they have managed to get someone at £40,000 have been misled on the value of that individual.
“It can be an expensive business to recruit a chief executive, so I would have thought that maybe the option of recruiting from within as some clubs have done recently is a more cost effective one.”
Lloyd set up GlobalSportsJobs in 2011 after selling Sports Recruitment International in 2010, nine years after he had founded that company as well, and he says the safe approach is to hire someone with experience in the sport but that clubs could often be better served broadening their search.
“I think an understanding of the sports industry is a safer bet than a non-sports industry person. However, I’m not saying that’s a better option,” he said.
“I think the likelihood is that, particularly in rugby union, which I think is going through a growth stage from a financial perspective, it is more likely that a non-rugby candidate or a non-sports candidate would do a better job because they are divorced from the emotional impact that sport has.”
That is not a view held by everyone though and with many clubs opting for those who do have experience within rugby Mark Kemp of www.rugby-jobs.com, who has also served as commercial manager at both London Welsh and London Irish, believes it is absolutely vital that a CEO has a good grounding in the business of rugby specifically.
“The basis of a good chief executive is somebody who knows the game and I have to say that I’ve worked across tennis, golf and football as well and the chief executive at a rugby club is a particular animal and rugby is a particular sport that has unique things that other sports don’t have,” he said.
“Somebody who has touched, smelled and felt the commercial side of rugby or the business side and not necessarily the playing side is very important.
“A rugby club is a rugby club and you can’t lose sight of that. It is a professional business but you really need to know how to achieve what your support base wants and how you can operate within the budgets that you have.”
Kemp says there are so many factors specific to rugby that CEO’s coming in from other spheres can make the mistake of treating it like any other business but he is clear that a mixture of business acumen and rugby knowledge is necessary in order to achieve success.
“You have to understand how the business of rugby operates. Every week you are judged by what you do, what you bring in and what you achieve but actually often you have no control as to how you are being judged because the view depends on what is happening with the 15 or 13 players on the pitch,” he said.
“What you can do [as a chief executive] is you can generate a very solid club atmosphere around it, create a fan experience. You have to live up to the fan expectations but not blow them out of proportion. You need to manage your sponsors, create awareness for them and it is about managing all of these expectations.
“Too many times people come into the game believing that it is just another business and it can be run that way and it isn’t. It’s a passion and a desire to make something the best that it can be.”
Money does talk though and it is natural that some clubs are tempted to take on someone from outside rugby who can boast of making large sums of money for firms in previous jobs.
Kemp says chief executives can often expect to be paid large amounts for the work they do and deservedly so and Lloyd insists that chief executives worth their salt should be earning a salary of in excess of £100,000.
“I don’t know for a fact but I would suggest that a good chief executive should be on – and this is more union than league because I think many rugby league clubs may not be able to afford this – a six-figure package,” he said.
“It does come down to money at the end of the day because money gives you the opportunity to get more quality. The fact that there is a lot more money in football from TV rights, etc, suggests that they have more money to play with and that they have the opportunity, which they don’t always take, to attract a better calibre of person.
“The difference between rugby league and union is the size of budgets that they have to play with. That is playing budgets and operational budgets and I think that rugby union has grown up considerably more in the last five years or so than rugby league in terms of budgets and revenue generated through the professionalism of the sport.”
There have been a number of examples in both codes recently of clubs recruiting from within or going with what they know, for example Steve Gill making the step up from head of youth development to CEO at Castleford or former head coach Mike Rush becoming CEO at St Helens.
However, Salford appointed commercial banking expert David Matthews in July and Harlequins are one of several examples in rugby union where clubs have looked outside of rugby to fill the chief executive vacancy in recent years.
Lloyd says there is a growing recognition that a certain set of skills is required to do the job and that a lot more people with such qualities are needed to drive both rugby union and league forward.
“I think that sport generally is becoming a lot more recognised as a profession and with that people are taking the professional skill-sets that individuals have a lot more seriously than they were five years ago,” he said.
“The general consensus is that sport is becoming a lot more professional and I think that the industry needs a lot more professionals in it in order to realise its full potential.”
And, whilst there is no right or wrong way to recruit a chief executive – David Ellis at Harlequins has even said that his application for the job was simply a result of his wife seeing an advert in the paper – he does recommend using headhunting if the budget is there for it.
“For a club that can afford an executive search for a chief executive, I would recommend it because it gives them a very professional and transparent approach. In my opinion there aren’t many clubs that can afford it and I would say that there are even a handful of Premiership clubs that probably wouldn’t do it,” he said.
“A couple of Premiership clubs have done it recently and I would say that they have been successful.
“It is fair to say that headhunting is an expensive process but it can give you a transparent process and it has the capability of attracting quality people. I don’t think enough sports organisations across the board have a transparent process – in fact, I think very few have a transparent process – and I think they are short-sighted in the sense that they believe that they have done well if they can get away with not paying a headhunting fee. To me that is a short-term vision to a potentially long-term problem.”
Clearly, each chief executive vacancy is different and each candidate should be judged on their own merits but the advice seems to be equally clear – make sure the recruitment process is the best it can be and ideally make sure the applicants have a knowledge of both rugby and the broader business world.