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]]>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".
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.
]]>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.
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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.
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.
]]>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
]]>The heads of the Big 3 automakers flew into Washington, DC this week to ask/request/beg for financial relief. However, the politicians listening to these pleas were not having any of it, especially after the CEOs legs were cut out from underneath them very quickly when asked which of you flew into town on a commercial airline.
One thing I learned from my experience in the PR world is that sometimes perception is reality. Just as skilled litigating attorneys will paint pictures for juries, members of congress painted pictures of these 3 CEOs flying in on corporate luxury private planes asking for financial relief. Makes it difficult to swallow granting financial aid to a CEO that will not take accountability of his own actions or those of his companies spending patterns first before he comes to the nation's capital and asks for a handout.
Surely, the CEOs could downgrade from private jets to a share in one of many chartered jets. They would instantly recoup cash after the sale of the private jet as well as save millions of dollars in liability insurance that their company aka stockholders are paying for. This would go right to their bottom line. Of course, if they even wanted to downgrade further and "slum" it, they can always fly first class!
During these challenging times, it is senior management’s responsibilities to their stockholders and employees to manage expenses as best as possible without impacting their client/customer relationships. We are accountable to someone, albeit on a lesser level than these 3 individuals, and those changes have a real impact on fiscal stability as well as perception to the staff that senior management is in it with them and "walking the walk".
As a CFO of a blue chip organization, both internal and external colleagues have turned to me regarding the state of the economy to try and understand what is happening and what they can do to protect/help themselves to minimize risk and negative results. While I read the papers and on-line articles to stay current with the daily events, I admit I am far from an expert on the economy. My role as a CFO has me focusing my time on the impact of the economy at my organization and how it impacts our 300+ business partners rather than at a much more macro worldy level. Examples of this include focusing on potential budget reductions, relationships at risk and cost/benefit analysis on every requested dollar from staff of 250 people around the country.
My recommendation for other CFO's is to stay as current as possible with current events, but continue to focus on the impact of the economic turbulence in your own backyard. Understand each and every one of your business partners needs during this crucial time period and be prepared to offer creative and value added solutions. Once this period passes, the support that you provide now to your internal and external business partners could return positive results ten times over. As a CFO, we are always looking forward, but understanding what happened in the past.
]]>The term "Bailout" is frequently used to describe a bankruptcy or bankrupt entity which is about to receive a large infusion of liquidity to help keep it afloat. It has such a negative connotation.
What if the plan was called something more positive like "The $700 Billion Golden Ticket Plan" or "We believe in you, so here is $700 Billion"?
If the perception was spun so that this plan was a positive one to help show the world that the U.S. government believes in our economy so much that it is willing to invest in it, then perhaps the positivity would help garner more confidence on Wall Street and throughout the world's financial markets, rather than lending itself to despair and a lack of confidence in the U.S. economy.
Or we can always print silly t-shirts that read, "My parents went to Washington, DC and all I got was this t-shirt and $700 Billion!"
]]>Another Saturday of errands like running to Wal-Mart to pick up pictures and to the dry cleaners for the weekly drop off and pick up. My wife and kids did treat me extra special with great presents and we did get to go to an afternoon movie since it rained most of the day.
I don't feel any different than I did when I was in my 20's and 30's, but the feeling of always being one of the young people has definitely changed. Now I am one of the older people, but only by the number of candles on my cake as my son proudly drew in my homemade birthday card.
The only time I feel older these days is when one of my kids has a birthday. It makes me think back to when they were born and I used to carry them around in my arms. Now my 10 year old son is almost too big for me to carry and my daughter who swore to me she would always stay 5 is almost 9.
Turning 40 was not as drastic an event as people made it seem to be. Why should it be when it's only a number?
]]>Last summer, as both kids were in the middle of completing their 5th year of day camp, we asked our 9 year old son if he wanted to try sleep away camp because many of his friends from school were starting to attend them. He continually said no. Over Thanksgiving dinner this past November, he all of a sudden makes a proclamation that he wants to try it. Not to be outdone by her big brother, my daughter who is now 8, also says she wants to try it. So my wife starts the investigative process of sleep away camps in Pennsylavania and New York, and after about 8 weeks and attending one camp fair, we felt that we had picked the right camp for our children.
As we dropped off the children four weeks ago, we were both sad and happy about it. Both kids could not wait for us to depart so they can get on with camp, but we were sad to see that they did not seem to need us as much anymore as well as that we would not see them for 28 days when we were ready to pick them up.
About ten days ago, we received a call from the camp director who wanted to let us know that both kids had come to him independently to request if they could stay for the remaining three weeks of camp. After a few days of canceling their prior commitments as well as being allowed to speak with them on the telephone, my wife and I realized that this would be a great opportunity for them. In their voices, we heard sounds of confidence, maturity and happiness that made us realize that our selfishness of wanting to spend time with our kids was trumped by our ability to extend their experience by three more weeks and seeing them yesterday was just a reinforcement that we made the correct decision.
Both my wife and I attended camp and worked at them throughout our respective childhood. For the past five years, I have always told people that as I dropped the kids off at their camp each morning, I wish I could park my car and stay at camp forever. Being able to allow the kids to stay an extra 21 days at camp could add a lifetime of memories and friendships for each of them and as their parent, I feel that I am the lucky one as I could see how happy and appreciateive they were that we were able to make this happen for them.
]]>American's 1st quarter fuel expenses increased 45% year over year while their revenues increased 5% for the same time period. To break it down, this means that if everything remained constant, American brought in $5 more of ticket revenue and spent $45 more on fuel expense! American Airlines is not a non-profit agency so their goal is not to lose money.
As a finance professional, I have no issues with this policy change as I understand what is driving it. Certain travelers may think that this is one more cost that they are gouging me, but without these types of initiatives, airline companies will be forced to reduce number of flights and in more drastic cases, go out of business. With the reduction of available flights to the consumers, and when demand outweighs supply, the airline companies will be able to raise ticket prices and charge for incidentals like luggage, window seats, pillows, blankets, etc.
]]>If you don't you could be sorry!
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