Monthly Archives: February 2012

Oprah Winfrey’s New Gig: NFL Owner

By William A. Foster, IV

“If we command our wealth, we shall be rich and free; if our wealth commands us, we are poor indeed.” – Edmund Burke

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Roger Goodell and the NFL seem pretty intent on putting a team back in Los Angeles (if not two). Now for the life of me I have no idea why they insist on a city where they’ve failed in just my lifetime more times than I’m even going to try and remember for the sake of my sanity. Of course they’ve even tossed around the horrible idea of putting a team in London as well. All of the ideas to some degree make my head hurt. The NFL is not a global sport. It’s a U.S. one. Learning and accepting one’s limitations are a great key to long-term success in life and business. The only two global team sports with a ball in my opinion for a myriad of reasons are basketball and futbol. The latter which has yet to take hold here in the U.S. but was one of only three sports to see a rise in youth sports participation, the other two being football which is no surprise and hockey – go figure, over the past decade with youth participation being a strong trend indicator of changing attitudes and demographics. To note soccer has more youth participants than hockey and football combined, with soccer having 13.6 million versus 12 million for football and hockey. So in the long-term it appears soccer is taking hold and in the short-term football is still king as noted by the almost 20% rise in youth participation in football versus only a 5.3% in soccer. Just for good measure to check the financial health of the NFL it should also be noted that the two team expansion will net each of the current 32 owners a check of about $67 million each.

This all leads me to the point of my article. If the NFL is going to expand with two new teams it is more than time for it to have its first African American majority owner and maybe its first two. There is some large irony that 65 years after Branch Rickey killed the Negro Leagues, with our help I might add, by bringing Jackie Robinson over to the Dodgers and essentially watching European American owners drain Negro League owners, the majority of whom were African Americans, of the better talent between the two leagues and yet no ownership was extended or merger was ever suggested that we have but one majority owner between the ninety-two major sports teams in the United States. It was in 2005 the last time the NFL almost had its first African American majority owner when Arizona businessman Reggie Fowler was going to attempt to buy the Minnesota Viking from Red McCombs. The deal would fall through though because as Red McCombs himself is quoted as saying “he had plenty of net worth, but there was not enough liquidity”. This is one of the many difficulties as African Americans build their net worth we tend to acquire hard assets which over the long-term will have strong appreciation but tend to have to leverage up at the expense of our soft assets like cash and cash equivalents in the short-term. Most of us can’t even imagine having the kind of the liquid cash in our everyday bank account that the very wealthy have but if you need to see an example just take a look at hedge fund manager David Tepper’s ATM receipt that was found where the balance in his savings account was almost $100 million. Yes, I said his savings account. You know the “rainy” day account or the emergency fund. Ironically it’s possibly not even that amount of liquidity would suffice for the NFL. In my own business experience most business franchises require a 25-30% cash position of the project. At the current estimates the new NFL teams will sale for around $1 billion, the prospective owner will need to have in the neighborhood of $300 million liquid. A look at the landscape there seems to be only one African American who would fit the criteria. Oprah.

The NFL office should pick up the phone and solicit Ms. Oprah Winfrey’s interest in owning a team. Yes, you heard me right. Actually I gave it away in the title but that’s not the point. Oprah Winfrey, the only African-American billionaire currently, has a net worth of $2.7 billion according to Forbes. Now, on the safe side assuming she has only a basic recommended 10% liquidity position in her portfolio, which in these current economic times would be rather foolish, she would have $270 million in liquidity more than giving her qualifying capability to purchase a NFL team. Let’s also face it the Oprah Effect is real as noted by CNBC. She has the Midas touch and her presence in the NFL would be no different. Another point to be noted is also the NFL fan base is dare I say now run by women – 60 million of them. There is also no denying that with shifting demographics in who is controlling the family purse strings is actually the person with well the purse and not the wallet into today’s changing landscape of who is making family purchasing decisions. Yes, the female consumer is to be reckoned with. Oprah, who even if some women don’t like, almost all respect for her story, journey, and tenacity as a businesswoman. Did I mention Oprah has her OWN network? The possibilities here are endless and I do mean endless.

It is not time for an African American owner. It is beyond time. For major sports like basketball and football whose labor pool is made up of over 70% African Americans it is shameful that the ownership pool has a mere 1 out of 62 (1.6%) owners that are African American. Do the right thing NFL and call Oprah. I’ll look for my consultant check in the mail.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK Companies, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.

The Who, What, Why, and How of HBCU Reparations

“A reform is a correction of abuses, a revolution is a transfer of power.” – Edward Bulwer-Lytton

The top 100 endowments in America have approximately $250 billion. The HBCU Endowment Foundation’s 105 HBCUs combined have approximately $1.5 to $2 billion. That’s over 125 times more. I am calling for education reparations. To keep it as simple as possible I’m asking for the equivalent of African America’s population. That is approximately 15% and would equal to $37.5 billion that would be equally divided amongst African America’s HBCU institutions. Each HWCU would contribute based on their percentage of the $250 billion pie so that schools with larger endowments are putting in more than those with smaller endowments. The even distribution among HBCUs would allow for schools that have been historically underfunded through a myriad of practices by state and social constraints to achieve some level of parity. This money would be used to build much needed economic and physical infrastructure at HBCUs. From buildings, expanding internationally, improved technology, social training, expanded recruitment, research, and most importantly scholarships that would allow HBCUs to compete for talented African American students who on large choose HWCUs based on financial accommodations.

While HBCUs continue to produce over 25% of African America’s college educated population (while being only 3% of all American higher education institutions) the rising cost of education and lack of financial resources is creating a new wealth divide among future generations even more so than before. America as a whole in 2012 will touch the $1 trillion in student loan debt. Couple this with African America losing 83% of its wealth in the Great Recession which now stands at approximately $2,200 median net worth, according to Economic Policy Institute. This in comparison with European America who has approximately $98,000 by EPI statistics and Asian America has approximately $80,000 according to the Pew Research Center. This recipe is destined to have an African America that is educated but so indebted they can never reap any benefits of their education.

We still have not captured the all important emphasis of circulation of social, economic, and political assets. As I stated in “The University of Power & Wealth” there is no greater institution in America perhaps the world that touches on all three of those developmental factors than colleges and universities. The research alone that creates businesses which in turn creates jobs is something African America sorely needs in spades. The social development of a people’s cultural value owned and controlled by them not given to them by opposing forces. Unfortunately, even in my own mind it is hard to sell such an idea when African Americans themselves still in mass seek to gain entrance into institutions that are not in their control and don’t understand the value of it. Stuck in a laborious mindset as opposed to an ownership mindset will continue to impede African America’s development. Something as simple as sending their child there (tuition revenue), donating (alumni), and a host of other self-defeating actions hamper our best opportunity to grow our way out of the cellar.

Instead we’ll continue to try and kick down the door of colleges and universities where we are the minority instead of the majority, maybe control one trustees seat (which still leaves you outnumbered), are not the major donors to the school which leaves you with little say in the direction, and then cry that we are not receiving fair treatment.

In part I believe these reparations are imperative to the institutional survival of HBCUs who continue to be in need of a massive cash infusion. Something we have been unable to achieve since our founding and seemingly have no help from the present government who has actually cut HBCU funding then restored it to a measly $85 million for 105 schools. Of course I also believe that no group in power would ever do anything or has ever done anything to voluntarily relinquish that power so that another group could rise and challenge them which is exactly what an act like this would generate. However, I believe the reparations conversation is still a poignant one worth having.

In the same way that Wal-Mart, Target, Kroger’s, and other major retail businesses act as an anchor store that brings in other stores to retain the dollar in a geographic area the college and universities of America are the same. I pointed out once that in Texas there is no more valuable real estate to be had at the moment other than in College Station and Austin homes of the state’s two major HWCUs. Now imagine if African America had that kind of demand for its own real estate as opposed to the demand many African Americans currently create for European American schools, neighborhoods, and businesses in our desire to be “accepted”.

The major thing that would have to exist in order for me for this to be a reality is that every HBCU would have to have a plan of purpose for using the money. They would also have to agree to keep the money at an African American bank as this too is one of the vital missteps of African America. Not controlling its banking system and then wondering why it receives and abnormal percentage of sub-prime debt but that is another article for another time.

Stop fighting for fairness and justice. These are relative terms and vary greatly depending on what side of the coin you are on. Instead fight for power to determine your own destiny and in order to do this African America must build its institutional power.

2011’s Top 20 HBCU Research Institutions

                       HBCU                                                           Research Expenditures

  1. Jackson State University                      $42.7 million
  2.  Howard University                               $36.4 million
  3.  Meharry Medical College                    $34.2 million
  4.  North Carolina A&T University         $28.8 million
  5.  Morehouse School of Medicine          $27.1 million
  6.  Florida A&M University                      $24.0 million
  7.  Hampton University                             $21.1 million
  8.  University of the Virgin Islands         $18.1 million
  9.  Tuskegee University                             $15.0 million
  10.  Morgan State University                     $12.3 million
  11.  Tennessee State University                $12.1 million
  12.  Alcorn State University                       $11.7 million
  13.  Prairie View A&M University            $10.8 million
  14.  Alabama A&M University                  $9.0 million
  15.  Virginia State University                    $8.3 million
  16.  Delaware State University                 $8.1 million
  17.  Norfolk State University                    $7.9 million
  18.  South Carolina State University       $7.6 million
  19.  Clark Atlanta University                    $7.5 million
  20.  University of Arkansas-Pine Bluff    $7.2 million

COMBINED TOTAL                                      $349.9 million
Additional Notes:

The Top 20 HBCU Research Institutions comprise 78% of ALL HBCU Research.
ALL HBCU Research Expenditures COMBINED TOTAL $448.2 million
The Top 20 HWCU Research Expenditures COMBINED TOTAL $16.4 billion Top 20 average HWCU – $820 million vs. Top 20 average HBCU – $17.5 million

Source: National Science Foundation

Official Launch!

I am happy to announce today with the start of African American history month the launch of HBCU Money™. The authoritative source for economic and financial matters concerning HBCU Nation in America, Africa, and the Caribbean.

Look for exciting and groundbreaking coverage in ways rarely covered on our financial matters. You’ll be seeing the launch of HBCU Money TV™ in the coming year as well.

We will look to earn your support, loyalty, and interaction with our community as we continue to build a presence in the world of financial journalism.

Our Money Matters™

Sincerely,

William A. Foster, IV                                                                                             President                                                                                                                             AK Companies, Inc.