Business is world of tough choices

By DAVID MOON, Moon Capital Management
June 1, 2003

I am proud of East Tennessee State University for abandoning its football program.

That's a hard thing for me to say. I like football. I even like football players; I used to be one. My wife was a majorette at ETSU. A lot of lives ' both adult and students - will be disrupted as a result of this decision.

But the folks who run ETSU had a business decision to make and they made it. Football loses a million dollars a year at ETSU and the school simply could not afford to continue to subsidize this recreational and mildly popular spectator activity with funds from its academic programs.

It is a lesson we could all use in business: make the logical decision, not necessarily the one that pleases the most people or makes you feel good.

Businesses discontinue operations, terminate employees and close plants all the time. A company like General Electric can move 3,000 jobs from one continent to another, as easily as moving pieces on a chess set. Yes, those chess pieces are people and all of the decisions are difficult. Lives are disrupted. Like ETSU, however, General Electric often has to disrupt lives to serve its mission.

Sometimes you have to prune a tree for it to reach its healthy potential. If your resources are limited, sometimes you have to ignore a tree completely, and allow it to die, just to have the time and energy to concentrate on your more important ' or profitable ' vegetation.

(By the way, lest the anti-football crowd gets too excited, at the University of Tennessee, football is not only self sustaining, it subsidizes almost every other men's and women's sport, in addition to some of the university's academic mission.)

When a local restaurant closes, what is the real news story? Should we concentrate on the lost jobs and empty retail space? Or is the bigger story the two new restaurants and one existing restaurant that thrive, successfully taking food dollars from the failed business? Lightening strikes cause more forest fires than arsonists. It is nature's way of clearing the way for new vegetation. Big animals eat smaller ones. Just as in nature, food chains exist in business ' including college football. Yes, college football is a business. More people want to fish, go to the library and shop at Wal-Mart than want to attend ETSU football games. It is a product line the university can no longer afford to offer, despite the severed longstanding emotional ties.

There are plenty of things businesses (and universities) can do to make people feel better. Some of these decisions would be lauded by many. Corporations could double everyone's compensation. No jobs might ever be eliminated. Factories could always operate at full capacity. Negative performance reviews could be outlawed. Free lunches, daycare and health club memberships could be mandated. But if these decisions were at the expense of the survivability of an organization or the fulfillment of its mission, it would be no different than subsidizing football at the expense of algebra instruction.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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