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| A Great Business Example! |
Nike has become very successful. That is why it has huge cash reserves. I have no challenge with Nike doing well. That is why I advise business leaders to improve what they do for a living. We all want to do well. I get that. Hear, hear...toast it up...and congrats to Nike. Other struggling business leaders should take notes. Do more like what the winners do, then do less stuff our losing ways produce. It is simple stuff. It is usually the mind that is difficult. Nike somehow got over that hurdle.
That brings us to the hostage coin. Nike has announced it wants to expand. It wants to develop and expand its operations. Let me see? Did I just read 38 related but separate articles yesterday in the Wall Street Journal that covered the subject of a failing recession for almost everybody? Maybe Nike is not reading that stuff? Maybe Nike is living on a different planet? Oh, that's right! When economic times get tough consumers flock to the stores to purchase high dollar sports shoes! Right? Not! Then how do they do it?
People...Nike is not in the shoe sport business! Nike is not in the shoe business anymore than McDonald's is in the hamburger business. You see, Ray Kroc was in the commercial property rental business. All he wanted to do was make sure his McDonald's operators could win their business war while working hard in their little hamburger stores so he could collect the monthly rent. Call them loans or lease agreements, it still amounts to a monthly rent.
Ray wanted 5200 rent checks of $1,500 per month to appear in his account and that those checks cleared their bank when they were drawn. That happens to be only $7.8 million dollars of "non-employee'/"non-inventory"/"immediately collectible" funds hitting your account each month. Pretty much "keep" money. I wonder if you could do well with that kind of recession activity? No payroll and benefit account payable obligations, no suppliers waiting to factor payments for products delivered and no accounts receivables to wait out their normal delay spin to finally come home. This is looking better all the time. Ray Kroc developed a great business concept. Tip: does your business look like this one? If not, why not?
Nike is modeled in the same way McDonald's is modeled. Nike is in the rental business. They lease their reputation. A lease is just another way of saying, rent. Apparently, it is huge and profitable to do that.
For example, currently there is an economic corporate positioning war going on to capture who will dominate the T.V. business in your home. Here are some of the players fighting to capture your viewing habits. Comcast, Google, Verizon, Disney, Amazon, Microsoft, Apple, Samsung, Visio, Netflix, Red Box, and the long list goes on and on and on. Do you think television viewing is in the cross-hairs of corporate America's current investment positioning efforts? Ya' think? Currently, the number one rated spot on television viewing is sports programming! Now you see why Nike does so well! It ain't about shoes! It is all about the marketing of the logo and its lease agreements. How is your business model designed? Does it look for more lease agreements? Why not? That seems to be where the recessionary activity seems to be playing out. (Just some business observations.)
Nike has cash. A ton of it. Nike has funds. A ton of it. Nike can afford to build its campus expansions without any government help. No joke. So why are they flipping the hostage coin? Why is Nike asking the tax payer to foot some of their development costs? That is precisely what they are asking when they approached the State of Oregon to request a lower tax rate deal to build their expansion project. If Nike gets a 'break' on their share, guess who is expected to pick up the missing future collections? Have you got a mirror close by? If you look quickly, you will be able to peek at who will pick up some of the cost of that expansion plan. How do you look in that mirror? Better yet, where's your cash return? That is not exactly the kind of lease agreement I am suggesting you employ.
Why is Nike leaning on the public to capitalize some of their growth? Why is Nike holding the State of Oregon hostage by negotiating the State for lower taxation payments before they move forward on this expansion? There are three reasons why Nike is flipping this hostage coin. Number one, they can. Number two, they are smart. Number three, our government is dumber than they are smart. That's it.
You see, Nike knows the State needs to immediately produce new jobs. This Nike planned expansion is reported to be able to produce a thousand new jobs. The State needs a 1,000 more jobs. Nike knows this. Nike wants the State of Oregon to cut a 'lower-tax' deal before it decides to build its jobs in this State. Hence, Nike flipped the hostage coin.
As Nike might suggest, if Oregon does not want to play, someone else will. The fear of loss is greater than the expectation of gain...always. Nike gets this rule fully understood. Governments often times miss this rule.
Governments do not fully comprehend how business is done. That is exactly why their product, government services, is so over-priced and poorly served that users like Nike can leverage that reality into exposing the fear of loss. Nike can easily leverage the State into believing they need to come down in price to protect the movement of the services they provide. Unfortunately, all of this is true. Governments are way over-priced and well under-served to the point that a big business dog can leverage their way into getting better deals. What the heck do you think a lobby does? Governments are so over-wrought with inefficiencies and poor production results that they become subject to dealing lower cost arrangements behind closed doors because their products are so poorly supplied. Governments are terrible business operators. Nike is not.
If a government was to present their services to a competitive market, with no mandates to use them solely, all of us would elect to use someone else. They cost too much. We would shop elsewhere. Is that not what Nike is doing? Sure it is.
Oregon's Governor and his representatives do not fully see this picture. Nike does. Oh, trust me, Nike will play out the victim cards and the I wanna' help out the economy cards like any good salesman should do...but the truth remains, they know what they are doing.
Do not ever forget this fact, the State is really you. What ever the State decides to give away it must first take. And that place they will go to take what they need to cover what they gave away will be your pocket. Do not ever become mistaken about that part of the math equation for doing business. It is always far more simple than the complicated spin the government leaders try to describe. Their product is not very marketable. Nike knows it and will hit them hard with the fear of loss they can easily deliver. Those government leaders have left themselves with no choice but to give in. It is much the same as a small business owner who has a customer standing at the counter asking for a better discount on an already hugely reduced product when the store is suffering to make its daily sales. The hostage coin is flipped.
Someone gets to underwrite that sale. Someone gets to underwrite that tax-reduction deal. All that remains is for you to expect to pay slightly more personal taxes to cover the amount of the discount given to Nike. Don't worry, your life will be better off for the increased jobs. That is how the hostage coin works. At least, that is how it will ultimately spin out its justification. Get it?
Page two.
Several years ago another cash heavy deal was struck in the same state. Billionaire Paul Allen was buying sports toys, the Portland Trailblazers and some Seattle major sports teams like the Sonic's. Remember them? Well anyway, Paul Allen had cash reserves and was busy designing his $400 million dollar pleasure yacht being built overseas, which I believe Tiger Woods eventually bought. However, Paul asked the City of Portland, Oregon to tax the locals to build a new sports arena for his toy team, the Portland Trailblazers. It was the Rose Garden deal. The patrons of the city did it. They gave him the roses with their levy vote of approval. They now pay taxes to have their Trailblazers. They allowed Paul to flip the hostage coin for the promise to produce more local jobs. His wallet grew from that deal, not to mention how he was given a nice bouquet of roses to house his toy Blazers.
Let's not get sour here. We do not want to appear insensitive and jealous. Just because we do not have the ability to cut these really good personal deals, we ought not to question them. Right? Wrong!
Being held hostage is a crime. It does not matter who drives the deal. It does not matter who deals or plays the cards of the hostage game. Once that coin is tossed, the game is on. It is wrong to hold patrons hostage with their hard earned money and levy an increase in cost of living to them when they do not benefit from the 'direct' financial windfall of the negotiations. The public is leveraged outside of the deal by receiving the benefits in small long term employment increments that are not easily measured, and often times inflated in their disguise. This is how that hostage coin works. By the way, how is the economy and our government doing with all of these kinds of deals? How does the 'proof in the pudding' look right now? Can you say, RED INK?
Here's the deal. I have no beef with Nike or Paul Allen. They are very smart operators. They help communities in a lot of ways. They guide the kind of business models I appreciate. This post is not about crying foul when the ball is in fair play. The voters did approve the Garden taxation process that the Trailblazers use as home. That deal came with public support. Albeit, the public may not exactly understand the math that took place, in the end they approved the deal.
Here's my beef. Government.
My beef is a government who pretends to be in business when they have no wallet on the table. This is when the wrong kinds of deals are made. This is when the public gets the bill for the good ideas that went very wrong. And since no financial accountability is to be levied on the decision-makers wallets, who cares? Just as long as some stuff can be allowed to spin out nicely in future words of explanation and disguise. At least the motives to do well can be identified. Unfortunately, Nike does not make those same kinds of careless marketing mistakes. It is not emotional to them. It is business. Nike does in fact have their wallet on the table and they know exactly what they stand to gain. The State of Oregon does not. It has what it believes to be an "open checkbook" of dollars to spend in the future of its patrons lives. Those are easier dollars to allow to slip away. I suspect it would be very difficult to link this kind of thinking into more RED INK. But as a business owner, I know it is real. Giveaway's always cost more than ever expected. The last time I checked, it takes my store about five times more in sales to give away one dollar of loss. I have never read this kind of business thought in a government manual.
If our government keeps placing its product presentation and delivery onto the consumer shelves with this kind of monetary disrespect, the capitalists will continue to demand more savings for them to improve how they build their business models for plans to grow and support economic development. No breaks in cost, no jobs developed. Simple. Government is out of touch with being a good business operator. They stink at it. I tip my hat to Nike and the Paul Allen's of the world, I only wished I was in their seats.
Government is off base by a long margin. That is why it must always dance with the devil. It must and will continue to deal with coin flipping powers because it is not producing a good value. In order to improve its value, it needs to re-design its thinking into becoming a more efficient provider of the products they provide. What's more, government must consider strongly to get out of the games they do not need to be playing. Business is often times faced with these very same decisions. Drop what are not the things we should be doing and do only those things we ought to be doing, better.
Until next time...
That brings us to the hostage coin. Nike has announced it wants to expand. It wants to develop and expand its operations. Let me see? Did I just read 38 related but separate articles yesterday in the Wall Street Journal that covered the subject of a failing recession for almost everybody? Maybe Nike is not reading that stuff? Maybe Nike is living on a different planet? Oh, that's right! When economic times get tough consumers flock to the stores to purchase high dollar sports shoes! Right? Not! Then how do they do it?
People...Nike is not in the shoe sport business! Nike is not in the shoe business anymore than McDonald's is in the hamburger business. You see, Ray Kroc was in the commercial property rental business. All he wanted to do was make sure his McDonald's operators could win their business war while working hard in their little hamburger stores so he could collect the monthly rent. Call them loans or lease agreements, it still amounts to a monthly rent.
Ray wanted 5200 rent checks of $1,500 per month to appear in his account and that those checks cleared their bank when they were drawn. That happens to be only $7.8 million dollars of "non-employee'/"non-inventory"/"immediately collectible" funds hitting your account each month. Pretty much "keep" money. I wonder if you could do well with that kind of recession activity? No payroll and benefit account payable obligations, no suppliers waiting to factor payments for products delivered and no accounts receivables to wait out their normal delay spin to finally come home. This is looking better all the time. Ray Kroc developed a great business concept. Tip: does your business look like this one? If not, why not?
Nike is modeled in the same way McDonald's is modeled. Nike is in the rental business. They lease their reputation. A lease is just another way of saying, rent. Apparently, it is huge and profitable to do that.
For example, currently there is an economic corporate positioning war going on to capture who will dominate the T.V. business in your home. Here are some of the players fighting to capture your viewing habits. Comcast, Google, Verizon, Disney, Amazon, Microsoft, Apple, Samsung, Visio, Netflix, Red Box, and the long list goes on and on and on. Do you think television viewing is in the cross-hairs of corporate America's current investment positioning efforts? Ya' think? Currently, the number one rated spot on television viewing is sports programming! Now you see why Nike does so well! It ain't about shoes! It is all about the marketing of the logo and its lease agreements. How is your business model designed? Does it look for more lease agreements? Why not? That seems to be where the recessionary activity seems to be playing out. (Just some business observations.)
Nike has cash. A ton of it. Nike has funds. A ton of it. Nike can afford to build its campus expansions without any government help. No joke. So why are they flipping the hostage coin? Why is Nike asking the tax payer to foot some of their development costs? That is precisely what they are asking when they approached the State of Oregon to request a lower tax rate deal to build their expansion project. If Nike gets a 'break' on their share, guess who is expected to pick up the missing future collections? Have you got a mirror close by? If you look quickly, you will be able to peek at who will pick up some of the cost of that expansion plan. How do you look in that mirror? Better yet, where's your cash return? That is not exactly the kind of lease agreement I am suggesting you employ.
Why is Nike leaning on the public to capitalize some of their growth? Why is Nike holding the State of Oregon hostage by negotiating the State for lower taxation payments before they move forward on this expansion? There are three reasons why Nike is flipping this hostage coin. Number one, they can. Number two, they are smart. Number three, our government is dumber than they are smart. That's it.
You see, Nike knows the State needs to immediately produce new jobs. This Nike planned expansion is reported to be able to produce a thousand new jobs. The State needs a 1,000 more jobs. Nike knows this. Nike wants the State of Oregon to cut a 'lower-tax' deal before it decides to build its jobs in this State. Hence, Nike flipped the hostage coin.
As Nike might suggest, if Oregon does not want to play, someone else will. The fear of loss is greater than the expectation of gain...always. Nike gets this rule fully understood. Governments often times miss this rule.
Governments do not fully comprehend how business is done. That is exactly why their product, government services, is so over-priced and poorly served that users like Nike can leverage that reality into exposing the fear of loss. Nike can easily leverage the State into believing they need to come down in price to protect the movement of the services they provide. Unfortunately, all of this is true. Governments are way over-priced and well under-served to the point that a big business dog can leverage their way into getting better deals. What the heck do you think a lobby does? Governments are so over-wrought with inefficiencies and poor production results that they become subject to dealing lower cost arrangements behind closed doors because their products are so poorly supplied. Governments are terrible business operators. Nike is not.
If a government was to present their services to a competitive market, with no mandates to use them solely, all of us would elect to use someone else. They cost too much. We would shop elsewhere. Is that not what Nike is doing? Sure it is.
Oregon's Governor and his representatives do not fully see this picture. Nike does. Oh, trust me, Nike will play out the victim cards and the I wanna' help out the economy cards like any good salesman should do...but the truth remains, they know what they are doing.
Do not ever forget this fact, the State is really you. What ever the State decides to give away it must first take. And that place they will go to take what they need to cover what they gave away will be your pocket. Do not ever become mistaken about that part of the math equation for doing business. It is always far more simple than the complicated spin the government leaders try to describe. Their product is not very marketable. Nike knows it and will hit them hard with the fear of loss they can easily deliver. Those government leaders have left themselves with no choice but to give in. It is much the same as a small business owner who has a customer standing at the counter asking for a better discount on an already hugely reduced product when the store is suffering to make its daily sales. The hostage coin is flipped.
Someone gets to underwrite that sale. Someone gets to underwrite that tax-reduction deal. All that remains is for you to expect to pay slightly more personal taxes to cover the amount of the discount given to Nike. Don't worry, your life will be better off for the increased jobs. That is how the hostage coin works. At least, that is how it will ultimately spin out its justification. Get it?
Page two.
|
| One Of The Best Business Models On The Planet! |
Let's not get sour here. We do not want to appear insensitive and jealous. Just because we do not have the ability to cut these really good personal deals, we ought not to question them. Right? Wrong!
Being held hostage is a crime. It does not matter who drives the deal. It does not matter who deals or plays the cards of the hostage game. Once that coin is tossed, the game is on. It is wrong to hold patrons hostage with their hard earned money and levy an increase in cost of living to them when they do not benefit from the 'direct' financial windfall of the negotiations. The public is leveraged outside of the deal by receiving the benefits in small long term employment increments that are not easily measured, and often times inflated in their disguise. This is how that hostage coin works. By the way, how is the economy and our government doing with all of these kinds of deals? How does the 'proof in the pudding' look right now? Can you say, RED INK?
Here's the deal. I have no beef with Nike or Paul Allen. They are very smart operators. They help communities in a lot of ways. They guide the kind of business models I appreciate. This post is not about crying foul when the ball is in fair play. The voters did approve the Garden taxation process that the Trailblazers use as home. That deal came with public support. Albeit, the public may not exactly understand the math that took place, in the end they approved the deal.
Here's my beef. Government.
My beef is a government who pretends to be in business when they have no wallet on the table. This is when the wrong kinds of deals are made. This is when the public gets the bill for the good ideas that went very wrong. And since no financial accountability is to be levied on the decision-makers wallets, who cares? Just as long as some stuff can be allowed to spin out nicely in future words of explanation and disguise. At least the motives to do well can be identified. Unfortunately, Nike does not make those same kinds of careless marketing mistakes. It is not emotional to them. It is business. Nike does in fact have their wallet on the table and they know exactly what they stand to gain. The State of Oregon does not. It has what it believes to be an "open checkbook" of dollars to spend in the future of its patrons lives. Those are easier dollars to allow to slip away. I suspect it would be very difficult to link this kind of thinking into more RED INK. But as a business owner, I know it is real. Giveaway's always cost more than ever expected. The last time I checked, it takes my store about five times more in sales to give away one dollar of loss. I have never read this kind of business thought in a government manual.
If our government keeps placing its product presentation and delivery onto the consumer shelves with this kind of monetary disrespect, the capitalists will continue to demand more savings for them to improve how they build their business models for plans to grow and support economic development. No breaks in cost, no jobs developed. Simple. Government is out of touch with being a good business operator. They stink at it. I tip my hat to Nike and the Paul Allen's of the world, I only wished I was in their seats.
Government is off base by a long margin. That is why it must always dance with the devil. It must and will continue to deal with coin flipping powers because it is not producing a good value. In order to improve its value, it needs to re-design its thinking into becoming a more efficient provider of the products they provide. What's more, government must consider strongly to get out of the games they do not need to be playing. Business is often times faced with these very same decisions. Drop what are not the things we should be doing and do only those things we ought to be doing, better.
Until next time...
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