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Buying and Selling

Where Pay Per View Gets Tricky

My wife tipped me off to some puzzling news. USA Today evidently is amending the way they compensate writers, going to an incentive system that pays bonuses to the writers getting the most page views.

The Big Lead originally broke the news, and the article expresses concern that writers might start pandering to the lowest common denominator to bring in views. This is a legitimate worry, but USA Today might be onto something.

The company needs to reward employees who provide the desired results. News organizations are useless if no one uses them. Even worse, they are unprofitable. They need sets of eyes. Writers are the product, so if my story on celebrity smut brings readers in, I need to be compensated.

The balance needs to come in when deciding where and how the page views fit in. There’s a USA Today reporter that’s writing a story on the newly-averted budget shutdown (yawn). He or she is not going to get the page views the reporter writing on Charlie Sheen’s exploits.

Also, I can get a ton of page views by reporting exaggerated, false or simply sensationalized information. This obviously chips away at the news organization’s reputation (one of its most important assets), and reporters need to be evaluated on accuracy, professionalism, ethics and tone. But if all those criteria are met, page views are deadly important, too.

I can’t condemn USA Today for what they’re trying to do. Information and the journalists who provide it aren’t free, and it’s about time they start properly valuing both.

The arrow is DOWN?

An interesting study by University of Chicago’s Tobias Moskovitz suggests that Cubs’ fans have grown more “fair-weather” the last few years. These days attendance is very sensitive to team performance.

The team finished 75-87 last year, and is off to a 3-3 start in 2011. On Monday, the Cubs acknowledged their lowest attendance at a game in nine years — 26,292 fans for a 4-1 victory over the Arizona Diamondbacks, though maybe half that many were actually there.

“I think the fans are showing a little tough love,” said Moskowitz, a Cubs fan.

The pressure is going to be on the Ricketts family soon if the Cubs continue to stumble and fans begin to stay away. If revenues slip, they might have no choice but to sell the team for something in a few years.

It might also signal the beginning of the end for Wrigley Field.

A Common Thief … Too Common

Hackney’s on Harms celebrated St. Patrick’s Day the way you would expect a neighborhood restaurant owned by an Irish-Catholic family. They had an Irish band, Harp and Guinness on tap, corned beef, cabbage and all the expected fare.

They also got the Glenview Police involved and had them collar a 52-year-old woman, a former bookkeeper at the Harms Rd. location. Because she was in charge of making the nightly deposits and because inadequate controls were in  place, she was able to embezzle something to the tune of $186,000 from September 2008 until the restaurant caught on last fall.

It appears that the bookkeeper was pocketing cash from each day’s receipts and then writing a check from Hackney’s account to the bank to make up for the lost cash. It was a confusing scheme, and it’s a little surprising neither the bank nor Hackney’s caught on sooner.

That said, I know exactly how it feels to find someone in my own organization with his hand in the cookie jar. His scheme was doctored (or plain forged) receipts that went on his expense reports. This fraud totaled only a tenth of what Hackney’s experienced, but it was no less stinging. Family businesses rely on trust — sometimes too much — with employees.

We discovered this in January and I wonder why we didn’t catch on sooner. The problem is simple. The system of controls we have in place is inadequate. We’re a small business, and most employees are stretched thin. The company president approves the expense reports, but he only checks to be sure all the receipts are in the report and that the numbers match. He’s not spot-checking them for irregularities.

It was a brutal lesson for one man to learn when he came into the office to be informed he was fired. It could have been worse. Unlike the Masterson family who owns Hackney’s, we decided not to prosecute. (I use the word we to indicate it was discussed. Collectively we decided not to get police involved. I won’t tell you what my course of action would have been had it been my call.)

At least we learned our lesson, too. Right?

Supply Chain Reaction

I have not yet picked my jaw up from the floor following the destruction and havoc caused by the earthquake and tsunami in Japan. The earthquake begat the tsunami, which begat the nuclear power plant disasters.

The next effect is next. The cascading problems from the tsunami, the near-meltdown and massive loss of life and property in Northern Japan is already causing supply-chain problems. While I don’t trust what GM’s intentions are, here’s an ominous story:

Mr. Akerson has said the potential toll of fallout from the tsunami, earthquake and nuclear crisis in Japan remains unknown. He has been working in recent days to prepare for the worst, including a move to shut down a GM factory in Louisiana that builds slow-selling small trucks. In shutting the plant, Mr. Akerson said, GM is working to ensure adequate supplies at all U.S. plants.

GM has been the most vocal of Detroit’s auto makers in voicing concerns about the magnitude of potential supply chain troubles in the wake of Japan’s disaster.

I had mentioned this to someone at work about the problems we might have getting parts since so many automotive components come from Japan. It’s frightening to anyone involved in manufacturing, as a disruption in supply ruins the best-laid plans. You’re quickly behind schedule and as more materials are late coming in, you’ve upset customers. Unfortunately, so much is out of your hands. As one supplier once told me, “We’re not making sausages.”

(Ironically, even making sausages involves getting materials, tooling up, and scheduling production. Sausage-makers are not making sausages, either).

The New York Times continues:

Japan is the world’s third-largest economy, and a vital supplier of parts and equipment for major industries like computers, electronics and automobiles. The worst of the damage was northeast of Tokyo, near the quake’s epicenter, though Japan’s manufacturing heartland is farther south. But greater problems will emerge if rolling electrical blackouts and transportation disruptions across the country continue for long.

The article is worth reading as those not involved with planning around long lead times, coordinating suppliers all over the world, and finding new suppliers that can deliver products to a high standard at a reasonable cost.

But it’s also worth pondering the amazing conveniences in life we take for granted. Today, I purchased several products and got them without needing to go more than 12 miles from my home. With the devices I own, I can access just about any piece of public information in the world in moments.

Until a catastrophe hits. Then we’re temporarily in a state of flux until supply chain managers find another supplier. And usually no one notices.

Ponder all this, knowing that between China, South Korea and Japan so many of the consumer products we have grown to rely on come from there. Civil unrest in China, a conflict between North Korea and South Korea, a conflict between China and Taiwan would dwarf a natural disaster in Japan.

If only those were less likely, too.

The Sports Bubble

Via waxpaperbeercup, I found an article on Hardball Times regarding the falling value of baseball teams.  According to Ethan Stock, franchise values have peaked and are poised to take a long fall.

The logic makes sense to me, and stock cites seven reasons:

  1. Weak Real Estate Market.
  2. Municipalities and State Governments More Reluctant tIo Build New Stadiums.
  3. Media of all forms in serious crisis thanks to collapse of ad revenue.
  4. Slowing of growth of “Rich Guys.”
  5. Diminishing of “Wannabe Rich Guys.”
  6. Sharp Reduction of “Super Rich Guys.” (i.e., potential owners)
  7. End of “Creative” Discounted Cash Flow Projections.

It’s enough to make me morbidly curious about what this means for Tom Ricketts and family as they are supposedly closing in on buying the Cubs.  If the Cubs’ sale breaks down, there are serious consequences for the Cubs.