Cost Savings Ideas...
See recent article where I was interviewed anbd quoted in.
See recent article where I was interviewed anbd quoted in.
For the past 3 February vacations that my children have had, they have gone on vacation with my mother and father-in-law. They usually go on a 5-7 day cruise departing from a port in Florida and then get to spend a day or two with my mother who also lives in Florida. This year was no different; however they hit a little speed bump.
On Friday February 13th (ironic), my father-in-law and two children departed Newark airport for a flight to Miami. They had a connection through Dulles airport in Washington. The winds were very strong that day so it delayed their initial flight out of Newark. When they arrived in Dulles, the doors were shut for the connecting flight and were left with trying to find an alternate flight.
There was one remaining flight that evening to Miami that departed at 7:00PM and they could not get on, so rather than fussing around and scrambling, my father-in-law took it in his own hands and rented a car and decided to drive straight to Miami. They arrived in Miami at about 7:30am on the Saturday morning.
The kids slept and read and tried to stay awake to keep their "Poppa" awake so he could make pull the all-nighter. For a 9 and 10 year old, we didn’t hear any complaining.
They made it for breakfast, a quick nap and then onto the cruise just in time for lunch.
While I tease my father-in-law, I have all the respect and love for the man in the world. He always puts others in front of him and goes above and beyond. My kids, wife and I think the world of him, even though sometimes he marches to the beat of his own drummer. For those reasons, he is our own "Sully".
The New York Knicks and Stephon Marbury announced yesterday that the two parties had agreed on a buyout of his contract, whereby the Knicks would grant Marbury his unconditional release out of his contract in exchange for some amount of cash paid back by Marbury to the Knicks. The reported amounts are anywhere from $1.5 - $3 Million. Since Marbury's agreement for this season was approximately $21 Million, this represents a savings to the Knicks of between 7-14% depending on what the actual amount of the buyout is.
While the Knicks were unsuccessful in their efforts to trade Marbury and his salary this season, this was the second best option for them as they rid themselves of some expense and a major headache. Marbury is now free to sign with any other team and possibly contribute to winning an NBA championship. Unsure how realistic the latter is considering that Marbury has not suited up in 13 months.
The financial exercise that the Knicks just went through is occurring across the country in all sizes and shapes of organizations; thinning out staff costs to help declining revenues in order to maintain a sustainable profit margin. In the Knicks case, the salary reduction happens to be in the 7 figures!
While sports and entertainment are outlets for many people during the current economy, the Knicks/Marbury situation is a real life example of how the economy and decisions that are made are not let alone to banks, insurance companies and service organizations. I am guessing that if an organization can reduce costs by 7-14% and save themselves internal strife, the decision becomes a lot more palatable.
During a press conference held in Tampa yesterday, Alex Rodriguez admitted that his unnamed cousin shot him full of "boli", short for the anabolic steroid primobolan, during 2001 through 2003 while he was a member of the Texas Rangers. He apologized, blamed his actions on being "young and stupid" and will most certainly write a large check to The Taylor Hooton Foundation which is an organization dedicated to fighting the abuse of steroids. Today he will make his first appearance on the playing field for the Yankees and life will go on for A-Rod.
So the moral of the story is that if you are a gifted athlete who can perform at a level only achievable by the top .0001% of the population, that you can essentially cheat, possibly break the law, enjoy the benefits of the most lucrative contract in sports history and by the way...get away with it!
As a finance professional, time and time again, we have seen that if people cheat and cross over the line of the law, that they will almost certainly be punished for it. Imagine if a CFO or an accountant had their own version of "boli" where they could have their imaginary cousin inject them and all of a sudden their financial statements would improve overnight! Revenues would increase that extra amount so that budgets would be exceeded or earnings reported to Wall Street broke records! While it looked as if the business was having success, they were cheating and if caught, would be severely punished and in certain cases may face incarceration.
However, this does not appear to be the case for athletes, especially star athletes where a double standard continues to exist. As a father of a 10 year old boy who is a Yankee fan, we have had many conversations lately regarding A-Rod's ethics and trying to explain why what he did was cheating, but when he asks the question of "Will he get into trouble?", the answers are much tougher to explain to him why there are different levels of rules for different people in the world.
I wonder how A-Rod will explain the story to his daughters when they are old enough to start asking the same types of questions.
Like so many other finance and accounting professionals, this time of the year is one of the busiest as we are closing the books for the prior year and getting ramped up for the New Year. However, this year feels very different to many of my colleagues and friends who are in similar positions. Maybe it's the fact that in almost all prior January's, they had a greater sense of hope for the upcoming year than they do this year so there is not the proverbial carrot to keep them motivated.
My motivation to get me through this time of the year is knowing that for the limited time during the week when I get home later than I would prefer to and the time on the weekends, I get to spend time with my family and that I appreciate that time all the more. I look forward to any time I can spend with my 9 and 10 year old and as times as silly as driving them to and from their birthday parties and their sleepovers because I know that any day now that they are going to be teenagers not wanting to hang around with dad or give me a hug and kiss goodbye.
As I move through this stressful time of the year in the most challenging economic climate I have worked through, I look over at one the many pictures in my office and get a smile on my face when I see my daughter in her party shoes when she was 3 and I see my son with his baby teeth and remember what I have to go home to.
So the Associated Press contacted 21 banks that received at least $1 Billion each and asked four reasonably sounding questions; How much has been spent? What was it spent on? How much is being held in savings? What's the plan for the rest?
These seem pretty legitimate especially since the source of the funding was the American taxpayers. However, none of the 21 banks provided any specific answers.
While I agree that it is almost impossible to cite what expenses are going out the door based on revenue coming in using a 1 to 1 relationship, I disagree that the banks should not have been able to articulate what variety of programs would be earmarked for the funds; e.g., small business loans, low income family mortgages, extending credit lines, etc.
It seems like a budgeting exercise to me, just on a grander scale. If I know my revenue is $XXX, I know how much I can earmark to marketing programs, new business initiatives, etc., that will help to maintain the company in a solid, financial position. Maximizing revenue and managing expenses are basic principles of business. If I am unable to answer these types of questions asked of me, then clearly I am not doing my job.
Who are the senior managers of the banks that are unable to answer these questions accountable to? While the answer is ultimately the taxpayer, it appears from an outsider's perspective that they do not believe this to be true.
The Associated Press reported that John Mack, Morgan Stanley's CEO as well as the firm's two Presidents James Gorman and Walid Chammah informed the Board of Directors that they made a decision to forgo their bonuses for 2008. This marks the second year in a row that Mack has done so.
With the economy in turmoil, these gentlemen decided that based on recent backlash of unnecessary spending of the Big 3 Auto CEO's that the best defense was a good offense and decided to make this unsolicited announcement to the Morgan Stanley employees.
I commend the decision to do so. One of the impacts of their announcement is that it will most likely relieve tension amongst the staff who may not receive any type of bonus or salary increase and lets the staff know that the senior management team of the firm is "in it together" with them, standing side by side throughout the current economy