SBJ/June 18-24, 2012/Leagues and Governing Bodies

Siegel finds new, tough challenge at USATF

When USA Track & Field’s board convened this spring at an airport hotel in Denver to interview CEO candidates, the group was weary from an 18-month search for a new executive, but its mood changed the moment the second interview began.

Max Siegel, a former music and NASCAR executive and USA Track & Field board member, walked into the room and grabbed the group’s attention with a sharp critique of the organization. He called its TV contracts horrendous, the sites of its competitions subpar, and its negotiating approach inadequate. In his eyes, the organization had settled for the status quo, and the status quo wasn’t good enough anymore.

Max Siegel is seen as a visionary and skilled orator, but he found difficulties during his time in NASCAR.
Photo by: USA TRACK & FIELD
“His interview was killer,” said Steve Miller, the USATF board member who led the CEO search. “He wasn’t the only one who spoke bluntly. He was just armed with the most information. His vision was very clear.”

The board later voted unanimously to hire Siegel, who they believe will help track and field regain its place as the pre-eminent Olympic sport in the U.S., a position it ceded over the last decade as doping scandals and dropped batons tarnished its reputation.

Just seven weeks into the job, that’s exactly what Siegel is trying to do.

The CEO, who this weekend will oversee his first Olympic trials in Eugene, Ore., has hired a new chief operating officer and begun a reassessment of the organization’s mission. He wants to reshape USATF for the future, and he’s started that process by highlighting problems he wants to fix, such as membership and sponsor attrition.

“Having a 50 percent attrition rate with your membership because they don’t see the relevance of being a member tells you that you have a problem with your brand,” Siegel said. “Having your sponsors leave over the years and taking hand-me-downs from the [U.S. Olympic Committee] is a real problem. If it were … easy and weren’t that complicated, then we wouldn’t be in this position and there wouldn’t be a need for me.”

Siegel, who is the organization’s fourth CEO in five years, comes into the track world with a mixed résumé in entertainment and sports. He had success in the music industry but ran into a series of challenges during his five years in NASCAR. The first NASCAR team he ran, Dale Earnhardt Inc., no longer exists. The second, Revolution Racing, has failed to pay bills on time and furloughed staff to control costs.

The struggles in NASCAR have led more than a dozen former colleagues to characterize Siegel as a visionary thinker who is adept at setting ambitious goals for an organization but dependent on staff to map out how to get there. He is a skilled orator in private settings, capable of laying out clear revenue goals before the USATF board or convincing Toyota to sponsor his race team, but guarded and evasive when it comes to setting goals publicly.

Since entering the sports industry full time in 2007, he has gravitated toward jobs that look impossible from the outside. He became the president of global operations at DEI right when Dale Earnhardt Jr.’s contract was up for renewal and the economy was on the verge of collapse. He subsequently launched a race team devoted to developing minority drivers for NASCAR, a sport that has had only seven African-American drivers in its 64-year history.

The track and field job looks similarly difficult from the outside. USATF had been without a CEO since October 2010 when it fired Siegel’s predecessor, Doug Logan. The organization has a reputation as the most political national governing body in the U.S. because of its array of constituent groups ranging from race walking to road running to track, and it is less than a decade removed from the doping scandals that tarnished the sport and triggered a decline in interest among casual Olympic viewers.

“We have the best team in the world, but Americans don’t know we have the best team in the world,” said Michael Lynch, the former Visa sports marketing executive who is now an independent consultant. “If I were to ask you how many track and field athletes were in a BusinessWeek list of the top 100 most powerful athletes in America, who would it be? There’s one, and it’s Usain Bolt, and he’s not even an American athlete.”

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Siegel was born in Indianapolis, where USATF is based. His father was a record executive and his mother a singer. When they divorced, he and his sister were abducted by his father, who convinced the two his mother was dead. It wasn’t until his father died of cancer when he was 12 that Siegel was reunited with his mother. He has described her as a functioning alcoholic, and he moved out of the home at 14. He eventually enrolled at the University of Notre Dame and its law school.

It was Siegel’s entrepreneurial spirit that got him his first job after graduating from law school in 1992. Jack Swarbrick, now the athletic director at Notre Dame, visited the school to interview students on behalf of his law firm, Baker Daniels. Swarbrick said most students he spoke to wanted to be in litigation, but Siegel told Swarbrick he wanted to create the firm’s first sports and entertainment practice. His vision was so compelling that Swarbrick decided to hire him on the spot.

Swarbrick, who did legal work for USATF in 2007 and 2008, described Siegel as a “serial entrepreneur” and said that was exactly what USATF needs.

“They need a new vision for the enterprise, and someone who will bring a fundamental new perspective,” Swarbrick said. “As long as there’s an outlet for him to build and create, he’ll be there long term.”

Siegel left the legal profession for a career in the music industry, starting first as an agent representing gospel artists and eventually becoming an executive at Sony. It was there that he showed his ability for diagnosing and solving problems. He recognized revenue at the label he managed was depressed because artists weren’t delivering albums on time. Missing deadlines is common in the music industry, but he met with artists and convinced enough of them to be on time, helping the label triple its revenue from $25 million to $75 million between 2001 and 2007.

“Where others said, ‘Oh, that’s a cranky performer,’ he went out and listened to the issue the performer had and tried to fix it,” said Eddie O’Loughlin, who runs a gospel label called Next Plateau/Universal. “He’s very persuasive. That was a big cause of that billing tripling.”

Siegel’s success in the music industry helped him land a job in NASCAR in 2007 when Teresa Earnhardt hired him to run her late husband’s race team, Dale Earnhardt Inc. He wanted to take the late Dale Earnhardt’s brand and expand its relevance outside the world of racing to make it relevant globally in entertainment and licensing.

Siegel wasn’t able to keep Dale Earnhardt Jr. (left) in the fold at DEI, leading to its demise.
Photo by: GETTY IMAGES
Brian Barr, a sales director with the team, described Siegel as a manager who painted the big picture and pushed the staff to achieve that. After the team expanded in 2007, it was in jeopardy of losing primary sponsor Principal Financial Group. Siegel pulled the marketing staff together and told them to come up with innovative ways to keep the deal. The team put together a package that included access to its facility, known as the “Garage Mahal,” for business meetings, access to the DEI trophy room and a private coach for at-track hospitality. The team had never included so many elements in a package before, and Barr credited Siegel with getting them approved and later retaining Principal Financial’s sponsorship.

“Some people might see that as difficult if they’re task-oriented, but others rise to that if they’re self-motivated and enjoy the opportunity,” Barr said.

Few blame Siegel for DEI’s demise. Teresa Earnhardt, who owned the team, had a reputation as a micromanager who often intervened in day-to-day business matters. She also had a strained relationship with her stepson, Dale Earnhardt Jr., who was the team’s biggest asset.

Siegel was brought in to bridge that divide and convince Earnhardt Jr. to stay with the team. But the driver reportedly wanted 51 percent of the team, and when Siegel couldn’t convince him to pay for it or convince Teresa to give it up, Earnhardt Jr. left for Hendrick Motorsports.

The team hung around for one season after losing Earnhardt Jr., but a lack of funding forced it to merge with Ganassi Racing at the end of 2008.

Siegel subsequently won a contract from NASCAR to spearhead the organization’s effort to develop minority drivers. To do so, he created Revolution Racing, a team that gives young female and ethnically diverse drivers a chance to compete in regional racing series.

The team has had success in developing drivers. Its most successful driver, Darrell Wallace Jr., is now competing in Nationwide Series races for Joe Gibbs Racing, and current driver Kyle Larson won a recent developmental series race. But financial issues arose last year.

Much of Revolution Racing’s equipment was repossessed, it furloughed most of its staff, it owed more than $400,000 in back taxes, it moved to three race shops in a single season, and it was sued by the owner of one of the shops for not paying rent. The team relies on NASCAR and two of its partners, Toyota and Goodyear, for most of its financial support, and former employees said it struggled to secure sponsorship.

“Like many teams in this sport, we have had challenges over the last year, but every issue is being addressed or has already been handled,” Siegel said. “We now have the staff in place who manage costs and provide the oversight any business needs. Through every issue we have faced, my commitment to the team and the sport has remained strong and is the reason why I have chosen to restructure and right-size rather than take the more drastic measures that other owners have regretfully had to pursue.”

The team is back up and running this year under a new name, Rev Racing, and Siegel remains involved with it, holding weekly phone calls with staff, but his reputation in the sport has been tainted by the team’s financial troubles.

“He can be a little hard to deal with,” said Todd Braun, whose family estate is suing Revolution Racing for unpaid rent. “It doesn’t seem like his deals really work out.”

■ ■ ■

Siegel’s transition from his work in NASCAR into his new job at USA Track & Field concerned many senior leaders in the Olympic movement. He was a member of the organization’s board of directors for three years before resigning last October so his marketing agency, Max Siegel Inc., could be hired to manage USATF’s marketing and sponsorship sales.

When the board decided to hire him six months later as CEO, it brought back memories of the USOC’s controversial decision to appoint former board member Stephanie Streeter as CEO in 2009. But USATF’s chairman, Stephanie Hightower, pointed to examples of other organizations elevating board members to CEO as evidence that such a move is common in the corporate world.

“The real issue here is that Max was not on the board when he was selected for this position,” Hightower said. “I don’t understand why anyone would be cringing, because he was not a board member when we started this process.”

In contrast to his predecessor at USATF, Doug Logan, who was brash and quick to set public goals for the organization, Siegel has taken a measured approach to the job. He wants to build consensus with the staff, the board and track constituents before laying out his goals for the future.

“The challenge is this isn’t like private business,” Siegel said. “When you have government and constituent issues, you can’t make a decision overnight.”

The staff is in the process of setting departmental goals. Once those are completed in the next 35 to 45 days — right before the London Olympics — there will be a clearer picture regarding how much membership will increase and how much sponsorship revenue will be generated.

Increasing the organization’s annual revenue is a priority, but Siegel declined to specify how much. His predecessor, Logan, set a public goal of doubling USATF revenue to $30 million, and increased it from $14.7 million in 2007 to $19.1 million in 2011, the comparable year in this quadrennial.

“Any board member or anyone out there could say, ‘Hey, go get me more money,’ but how are we going to get there?” Siegel said. “I have a solid handle on that, probably a better handle on where our business is and what we need to do organizationally than anybody in the last few years.”

Siegel’s immediate priority is to create a predictable schedule each year that TV partners can promote and sponsors can plan their media budgets around.

Right now, the only event USATF owns outright is its championships. It puts together the rest of a season by partnering with existing events such as the Penn Relays, which are owned by an organization in Philadelphia. Historically, USATF bought the television rights to those events and then tried to place them on TV and find a presenting sponsor for the broadcast. Oftentimes, it does so at a loss.

“Our biggest asset and our biggest opportunity is to relaunch the brand in the media space,” Siegel said. “If you don’t know when your events are and you get not-so-great airtime and your schedule isn’t organized, then you don’t have a chance to get people to invest because people need to plan their media.”

He sees a direct link between that and sponsorship sales. Siegel believes it takes 18 months to sell a new sponsorship, and though he plans to hire a new sponsorship sales director, he cautioned that it will take time for the organization to cut new deals. He didn’t sell any new sponsorships in the six months he worked as a consultant, and the organization has not announced any since he took over as CEO on May 1.

“No one is going to stroke a check in three months,” Siegel said. “We have to get ahead of the sales cycle.”

Siegel’s challenge will be to speed up the 18-month buying window he said media planners need. Track will be in the spotlight at the Olympics this summer. After that, it will be largely invisible to most brand marketers in the U.S.
“The best time to be selling the next four years is now,” Lynch said. “I hope that he’s pounding the pavement and making sure the corporate community is embracing track and field now.”

Track stakeholders are encouraged by what they’ve seen from Siegel so far. They’re impressed with his desire to build consensus and work with promoters and top athletes to increase the visibility of the sport. He met with New York Road Runners President and CEO Mary Wittenberg and representatives of the Armory Foundation, which owns the Millrose Games, during a recent trip to New York and began a discussion about how their respective organizations could work together to raise the profile of track and running in the U.S.

Winning over the support of athletes won’t be as easy. Top athletes don’t need USATF for much. Many can go abroad and earn enough money at international track meets to support themselves financially. But agents, promoters and Olympic observers hope Siegel can bring them into the fold.

“He can draw the sport together,” said Mark Wetmore, a meet promoter whose agency, Global Athletics & Marketing, represents top athletes such as sprinter Tyson Gay. “The professional side is alive. Is it well? For a lot of athletes it is. Could it be better? Of course. The most important thing he can do is raise the profile of the sport and make it more visible so athletes can be more visible.”

Siegel couldn’t have said it better himself.

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