I am sitting in his Translation agency in midtown Manhattan on a Monday morning, and Stoute leads me up a flight of stairs to his office, which runs along — and overlooks — 45th Street. I look at the array of photographs, letters and art that adorn his office, while he wraps up the call and sits on his couch. He’s casual, wearing jeans and an untucked dress shirt. He puts one foot on the table in front of him while tossing his cell phone on it. Stoute’s style and office fit him: a creative music executive who has worked with the likes of U2, Mariah Carey, Mary J. Blige, Eminem and Will Smith, as well as a progressive advertising CEO, as founder of Translation, where he is a partner with Jay-Z. The agency has been behind cutting-edge work for brands such as McDonald’s (“I’m Lovin’ It” with Justin Timberlake), Reebok, Anheuser-Busch and Coca-Cola. In sports, Translation was involved in the rebranding of the Brooklyn Nets, which he called an “invigorating, collaborative” process. “Jay-Z, myself, the trust we got from Mikhail Prokhorov and Bruce Ratner, it really was everybody working together,” he said. “There was a bunch of passion around it. It was good, talented people whose heads were all pointed in the right direction. You’re always going to get success out of that. We put ‘Brooklyn Nets’ at the center of the table. It wasn’t everybody trying to get their own thing. Everybody was working together with the same goal in mind.”
Sports has been a constant thread through Stoute’s life. Born to Trinidadian immigrants, he grew up in Queens and was a running back in high school.
|Steve Stoute in 2004 founded Translation, where he is a partner with Jay-Z.
We discuss the ebbs and flows in momentum, and Stoute comes back to the importance of sustaining it in business. “You keep momentum by staying disciplined to what got you there and working harder,” he adds. After a pause, he quickly warns, “What happens usually with success or momentum is that people start taking it for granted. Momentum is going to come and it’s going to go. So when it comes, don’t do what most people do, which is ride the momentum and when it’s over, tuck and roll. When we have momentum, we apply the maximum amount of pressure to stake our position on who we are as an agency and how important it is for the work that we do for our clients to cut through and be important and relevant to the world.” It’s obviously been working for the 43-year-old Stoute, as Translation has earned a number of agency awards and Stoute was named Ad Age’s Executive of the Year in January.
Creating successful momentum is incumbent on talent, and I mention to him that I was observing his staff before he came in, and like most ad agencies, it featured a youthful, diverse and eclectic vibe, as staffers were sharing social stories about their weekend while setting up into work groups.
“It’s important to have an outside interest here,” he said. “We have a program here called the ‘majors’ and the ‘minors.’ The ‘majors’ is what you went to school for, what you are hired for, whether it be production or creative or account management or digital. But I also need to know that you have a ‘minor.’ I need to know that you have something else that you do that’s very important that we can actually use to better the company.” He elaborates, “I don’t want you to take your cooking classes, your photography, or your DJ skills and use them only on the weekend and hide them. I want that to be part of the cultural conversation that we use to develop our marketing plans. Because we are a company that uses culture as commerce, it’s important that our employees donate something culturally, or bring something culturally to the table, in order to move what we do as a corporation forward. We allow people to express it and it’s purposeful.”
But none of this comes easy, and Stoute doesn’t hide the fact that the pressure of leading an organization can weigh on him. “When you’re building a company, you’re responsible for all the people,” he said. “I take full responsibility for my employees and my partners and what it requires for them to live their lives. There are a lot of people relying on me. That’s a tough responsibility that you take on and you deal with on a day-in and day-out basis.” In addition to carrying the weight of his company, he also notes the challenges of leadership, especially in getting everyone on the same page in the individualized thinking of an ad shop. “What’s tough is that you have got to get people to buy into your system. We’re trying to do something new, and those people who have prior agency experience sometimes hurt the learning process. They are trying to bring over what they took from Ogilvy or Grey, and they’re trying to bring it here. Well, I’m not Ogilvy and I’m not Grey. I’m not doing what they’re doing. I don’t want to do what they do. They were successful doing what they’re doing, that’s why they have names on the top of buildings. I’m trying to get my name on top of a building, so I’m doing it my way and that philosophy is very hard.”
Stoute runs in high-end social circles in the middle of pop culture, but don’t misinterpret his style with one of frivolity.
He’s a serious person (“I take this extremely seriously, this is a very important thing to me.”), focused and driven.
Born in Queens Village, he worked after-school jobs like shoveling snow and delivering newspapers, and he shares his straightforward advice to today’s young people. “The most important piece of advice that I give them — it sounds passé — is you have to first decide what does success look like for you, not what success looks like in general. That’s a great trap to fall in, trying to be what you think success is, but it doesn’t necessarily fulfill you and align with what your personal skills are. So once you define what success means to you, then you go after it.”
When I suggest that you can’t judge work ethic by a résumé, he agrees, and then goes after that document. “Résumés should be certified documents. They should be contracts,” he said. “If you lie on a résumé and you get hired, what you’re potentially doing is causing financial damage to the company. You’re also putting people from a team in jeopardy because you are now taking on a role, based on something people thought you could do, only to find out you can’t do. There needs to be some formality about résumés. It should not be as random as it is now. ‘You mean you didn’t graduate college and your résumé says you did?’ I’m on the long list of the people who’ve gotten burned by résumés that were not true.”
At this point, Stoute’s cellphone rings but he lets it go to voicemail.
He immediately segues into the overall health of today’s top sports properties, and he’s bullish on the NBA. “The NBA has done an unbelievable job of marketing itself and put a great product on the floor, day in and day out. What they are doing on a global level is phenomenal. The NFL needs to do much more consumer-facing, proactive communications about health and the long-term effects of the game because what you don’t want to happen is having a generation of kids that are growing up 6-4, 230 pounds, deciding, ‘I don’t want to play football, I don’t want to ruin my career.’ You want those athletes in football. The NFL is doing a lot behind the scenes. That I do know. But from a consumer-facing standpoint to parents and kids and youth leagues, they need to show they are focused on it and that the sport is much safer than other things that you could be doing with your life, which I believe it is.
“The NHL has not taken advantage of technology. They can shoot the game better. When you see those outdoor games, it looks unbelievable. You’re getting the ambience and the environment playing a role in making it entertaining and different. But in-venue, they haven’t figured out how to use great camera work to capture the speed, action or intensity of that sport. The regular games need to be reshot in-venue for television.”
Another call comes, and this time Stoute excuses himself to take it.
Our interview has run longer than I expected, and I begin to gather my belongings. He holds up his hand to have me wait, speaks quickly, and signs off the call by suggesting a follow-up with musician Nas. We begin to walk out of his office, and I note a letter from Paul Fireman on his wall. Stoute worked extensively with Fireman at Reebok on both music and advertising. I recall a quote where Fireman said that Stoute was always “blunt but never rude,” and that some misinterpret styles of communication. “You got to be honest with yourself when you deal with me,” Stoute said. “I have to be honest with myself. It’s very binary, winning and losing. How people found ways to add space and gray and colors to winning and losing is amazing to me and I don’t see that. There’s a winner and a loser. You either made money or you lost money. You either grew your business or you didn’t. For some strange reason people have created other scenarios in which you can ‘kind of’ win or ‘kind of’ lose and ‘kind of’ grow and ‘kind of’ not grow and ‘kind of’ ‘kind of.’ That’s not real and that’s not the bullshit that I’m going to be pushing. Some people, like Paul Fireman, who built a business from scratch, they understand that. But when you speak to some people who have found success in not dealing with the binary truth, they think it’s rude.”
I end by noting another client, A-B InBev CMO Paul Chibe, who said that because Stoute “is from the outside,” he thinks about marketing differently. “I am from the outside,” Stoute exclaimed. “I never got caught up in the metrics or tools that the guy who has been in this industry for a while uses in order to determine what success looks like. They have a premeditated formula for what they determine success to be. I determine success by more sales. That’s it. I haven’t found new ways to rationalize success. The first measure is more sales growth. That should be the goal. But over the years, people have found new ways to not make that the goal. But to me, the ultimate success is what I stay focused on — sales as an entrepreneur.” Pretty straightforward, I say. “I’m very honest and clear and upfront,” Stoute concludes. “I’m very transparent about how I feel.”
Abraham D. Madkour can be reached at email@example.com.
It’s no mystery why ancillary development is coveted. Successful ancillary developments can provide the team with additional opportunities to enhance the fan experience (and generate additional revenue, even if the fan never attends an event at the stadium). At the same time, it can provide the public sector with a new, stable job-creation and tax-revenue source. Additionally, ancillary development enhances one of the public sector’s primary reasons for involving itself in stadium development: the expectation of urban revitalization. There are a number of examples where a new stadium and ancillary development have revitalized previously depressed areas: the Inner Harbor (Baltimore), China Basin (San Francisco), L.A. Live (Los Angeles) and the LoDo District (Denver).
Initially, the public sector controlled ancillary development, as seen in Baltimore’s Inner Harbor or Denver’s LoDo District, and it preferred being primarily responsible for controlling the type and pace of development surrounding a stadium. The development was used by the public sector to offset its stadium development risk (of which it was also responsible). This responsibility included acquiring the land surrounding or adjacent to the stadium, and refashioning that land into property attractive for development purposes. This included entitling the ancillary land (for example, granting certain tax status to the ancillary land for the team’s benefit), or “upzoning” it (changing the land’s current zoning to allow for greater density or commercial uses). The team’s responsibility and risk exposure was limited to securing land-use restrictions to protect the fan experience and team revenue.
This paradigm is changing. The availability of public funds for stadium development projects is shrinking. The public’s appetite to finance stadiums and ancillary development risk (especially over the past few years) is much less than it was 10 to 15 years ago. Paradoxically, the public’s appetite for renovated stadiums continues to increase, as does its appreciation for what ancillary development can do to revitalize blighted urban areas.
The public sector has increasingly offered ancillary development opportunities where the team takes on the risk and upside to offset an increased investment in the stadium. Although recent changes in redevelopment laws in California have created new challenges, California has seen this approach successfully applied in San Diego for the Padres and more recently for the Sacramento Kings. This provides the public sector with:
■ An additional tool with which to finance stadium development;
■ A reduction in its operational and financial risk in ancillary development;
■ A reduction in political exposure; and
■ Incentives for the team to maximize development opportunities to create the new tax base and jobs quickly (which in turn maximizes potential revenue more quickly and justifies a more significant direct team investment in the stadium).
The primary public sector risk still represents an additional expenditure that will need to be funded (at least in part) by public funds. Additionally, the public sector will need to convince taxpayers that shifting responsibility is not just a case of giving the team additional “free” corporate incentives but rather a way to mitigate public risk exposure for a beneficial public cause.
|The St. Louis Cardinals went with a third-party developer for Ballpark Village next to Busch Stadium.
To mitigate some of this risk, the team could request more land entitlements than a typical real estate developer could expect to receive, in hopes of making up for the team’s additional capital outlay. As seen with the St. Louis Cardinals and the Cordish Co., the team also could mitigate its risk exposure by teaming up with a third-party developer. This developer could provide the team with a partner experienced in constructing and operating commercial/residential development and possibly a partner who can serve as a source of additional funds to finance the development. Of course, by partnering, the team will be challenged to cede some of the control that it received from the public sector in the first place.
In the case of the Cardinals, although the development was delayed due to a variety of factors tied to the recession, the $100 million phase one of the Ballpark Village is underway. This includes the Cardinals Hall of Fame and Museum and Cardinals Nation Restaurant, the Ballpark Village Live! Restaurant, the Budweiser Brew House, and PBR St. Louis. Along with Cordish, the team appears intricately involved in the planning, and both have made additional financial commitments to the project and expect to benefit from the improved fan experience by the 2014 season. As a result, the public sector is satisfied with the project improving the tax base, creating temporary construction jobs and providing permanent operational jobs.
Negotiating financial and operational obligations in a public-private partnership for ancillary development can be challenging, and to do so each party needs to be able to assess risk and reward in both the short view and the long view. Before negiotiating, each party should determine:
■ Their view for what the ancillary development will include;
■ Their respective financial “comfort zones” (i.e., how much financial responsibility the party is willing to assume in connection with the development);
■ Their respective management/operational comfort zones; and
■ Their desired timing for completion.
While striking the appropriate balance of risk and responsibility for each side involved can be challenging, the potential financial and civic benefits are lucrative enough that we expect the public sector and teams to continue to explore such undertakings.
Irwin Raij (firstname.lastname@example.org) is a partner at Foley & Lardner LLP and co-chair of its sports industry team, and Erick Harris is a former associate at Foley & Lardner.