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Max Siegel | ‘It was probably one of the most difficult things I have experienced in my entire career’

Max Siegel | ‘It was probably one of the most difficult things I have experienced in my entire career’

By: Frank Dunne

Max Siegel is looking forward to the IAAF World Championships (Image of Sport)
Posted:
7 Jun 2017
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  • USATF has trebled its revenues in the five years that Max Siegel has been chief executive
  • Siegel rejects arguments that his 23-year, $500m deal with Nike left money on the table
  • Attacks on his management style were a painful price to pay for ‘professionalising the organisation’

USA track and field athletes head to London for the IAAF World Championships in August on the back of high performance levels in 2016.

This included winning 32 medals at the Olympic Games in Rio – the best haul at a non-boycotted Games since 1932; a record 23 medals at the IAAF World Indoor Championships in Portland, Oregon; and a record-equalling 21 medals at the IAAF World Junior Championships in Bydgoszcz, Poland.

These were some of the athletics highlights that Max Siegel, the chief executive of USA Track & Field (USATF), outlined in his State of the Sport address in Orlando, Florida, in December. Alongside them, were strong commercial results.

Four new sponsors – Chobani, Garden of Life, KT Tape and NormaTec – had come on board. This took the number of new partners since 2013 to 12, and followed the $500m (€440m), 23-year deal signed with Nike in 2014.

An eight-year deal with NBC had just been signed – the first multi-year commitment by the broadcaster to the USATF events. 

The revenue uplift from these deals feeds directly into athlete funding, with $7m having been paid out last year.

Track and field had become the fastest-growing sport at high-school level and paid USATF memberships hit 130,000 – up by nearly a third since 2011.

Yet just two months earlier, Siegel’s management style had come under the most intense media scrutiny, with a level of criticism he had not experienced in over 25 years in the sports and entertainment industries. 

From gospel to athletics
Siegel was already a board member of USATF when he was appointed chief executive in May 2012. His career to that point had been divided between the music industry (gospel was his passion) and sport.

His reputation as a consummate deal-maker – his 2010 book was called ‘Know What Makes Them Tick: How to Successfully Negotiate Any Situation’ – was one of the things that attracted the board to him.

He set off on a “journey to have a world-class business that mirrored the performance of our athletes on the track.” In June, SportBusiness International asked him where he had got to on that journey.

“We have a world-class high-performance programme”, he begins. “We have signed historic deals in the media space and the corporate sponsorship side.

"We have increased the level of funding and the quality of all our programmes outside of the elite athletes. We have grown our staff and diversified the skill set of our leadership and throughout the organisation.

"From an economic standpoint, we have made significant and historic gains. None of us are satisfied but we have come a long way and all our commercial partners and stakeholders can attest to the improvement we have made as an organisation.”

Those economic gains include increasing the operating budget from $17m in 2011 to the current level of just under $37m, much of which has come from sponsorship, which accounts for 70 per cent of the federation’s income.

From the outset, Siegel said his approach would be “really aggressive” in a marketplace which had become increasingly difficult. “Around 2008 and 2009, when the economy went bad, a lot of the sponsors went away from just doing it because there were a lot of people and great visibility,” he says. “You really had to demonstrate what value you were giving to the sponsor in exchange for their investment.”

No cookie cutter
Stage one was working with chief marketing officer Jill Geer on a campaign of listening. “We talked to our members, to sponsors who used to be with us, to prospective sponsors,” he recalls.

“We wanted to get a sense of a couple of things: how they felt about our organisation; and what they were trying to achieve by being in the Olympic space.”

They found that no two brands come to athletics looking for the same thing. Some want media value – exposure to large audiences. Others want direct consumer interaction to get to understand their customer base. Others want foot traffic in a store or people in hotel rooms. Others want a CSR programme, to do good in the community, or a connection to the grassroots. 

Image: Nia Ali, Brianna Rollins and Kristi Castlin pose with their 100m hurdles medals at Rio 2016 (Ryan Pierse/Getty Images)

“We developed a menu of assets that touched upon the different categories, rather than having a cookie-cutter approach”, Siegel says.

“We carefully thought through how we could demonstrate to a company that we could help them achieve their objectives.”

A signature deal for this new approach was the multi-million dollar, seven-year agreement in April 2014 in which chocolate manufacturer Hershey became the sponsor of the ‘Run, Jump, Throw’ youth sports programme.

The company had long been a supporter of athletics. In 1975, it set up Hershey’s Track & Field Games, a youth sports programme with meets in every state and every province in North America and a final in Hershey, Pennsylvania.

Siegel’s team talked through the new deal for a year with Hershey before it was agreed, helping the company to target its investment more cost-effectively.

“They were spending a lot of money to protect the integrity of their legacy but they were being very inefficient,” he says.

“Our team designed a robust community outreach programme based on teaching young people to become active.

We put together a proposal where they went from reaching out to maybe 5,000 kids a year, to being in front of over 500,000 young people through the ‘Run, Jump, Throw’ programme”. The bonus for the company was that it was able to raid the CSR kitty to fund the deal, rather than tapping into the sports marketing budget.

$500m is not enough
Two weeks later, USATF unveiled another sponsorship deal, one which made the industry sit up and take note.

Sports goods manufacturer Nike extended an agreement with the governing body for 23 years, from 2018 to 2040. The value of the deal doubled, from $10m to $20m per year.

However, as with any deal where commercial rights are signed away so far into the future, questions were raised about whether the USATF was leaving money on the table.

One critic of the deal was Siegel’s predecessor as USATF chief executive, Doug Logan. “I know of no other sponsorship deal, not tied to naming rights of real estate, for a term of that length. The risk is just too great,” he wrote at the time.

He predicted that by the end of the deal, the federation would “still be paying for the lack of judgment of its current leadership”.

Three years down the line, Siegel is unrepentant. “I have no reservation about that whatsoever”, he says. “If any owner or CEO out there is not interested in nearly tripling the operating budget for the foreseeable future and guaranteeing the financial stability of an organisation, rolling the dice about what the economy will be and how people will perform over a period of time, I’d be shocked.”

Before embarking on the deal, the USATF brought in external economics experts to help its own team model future scenarios.

The deal was frontloaded, enabling the federation to create a new investment account. “We have grown significant value in our reserves and our investments. The theory being that at some point we would like to have this organisation sustainable from the interest of our investment portfolio. That adds another level of income that we weren’t achieving before”, he adds.

Siegel is certain there is no better partner out there for US athletics than Nike, the company founded by former US athletics coach Bill Bowerman and former athlete Phil Knight in 1964.

“You look at that company and how it was founded, and our sport being in the very DNA of the founders,” Siegel says.

“That leadership team understands the value of our organisation and what it can do for their company. If there are fluctuations in the economy, Nike has the economic wherewithal to survive the ups and downs. The financial commitment and emotional understanding make me satisfied that it would be hard to replicate this deal with anyone else.” 

The backlash
Out of the blue, on October 7, the Washington Post ran an article eviscerating Siegel for his behaviour at the USATF. Citing “some athletes and former employees”, as well as “hundreds of pages of documents and emails”, the Post laid out the following charges.

Siegel had, it said: flown first class and used private jets, while other federation executives travelled economy; stayed in luxury hotels; awarded lucrative marketing contracts to companies that had links to his own sports marketing company; earned $1.7m from USATF, described as being seven times the average for a CEO of a similar-sized non-profit organisation; not put the kit sponsorship deal agreed with Nike out to a transparent tender; agreed to pay $23.75m to two former Nike employees, Adam Helfant and Chris Bevilacqua, for advising on the new Nike deal; and been an authoritarian boss who “berates staffers who disagree”.

The story was quickly picked up by other news outlets and Siegel was briefly front-page news. The controversy seems to have blown over but Siegel is clearly still hurt by what happened.

“On a personal level, it was very upsetting”, he says. “I have a wife and three teenage kids that I had to explain all that to.

"I didn’t anticipate it would be as personal as it was. It was probably one of the most difficult things I have experienced in my entire career. If you scour the media, you won’t find anything of that nature in 25-30 years.”

He remains convinced that it was largely motivated by disgruntled former employees who had failed to make the cut in the new business-oriented culture he was fostering.

“It’s always difficult when you try to professionalise an organisation that historically has been amateur in nature, both from a business standpoint and a mindset standpoint,” he says.

Siegel points out that he has received 100 per cent backing from the USATF board on all of the issues raised, and argues that his salary arrangements are in line with the market.

“My base salary was $250,000 less than the base salary of the outgoing CEO [Doug Logan] and benchmarked in between the CEOs of gymnastics and swimming," he says.

"Anything else – whether a performance bonus or retention bonus – is earned. I have been offered more high-profile opportunities and the organisation made a commitment for me to stay here. It was based on what we had delivered in terms of results and what we should do in the future.”

That future will start to take shape at the World Championships in London. In the meantime, Siegel sums up his first five years at the helm with a mixture of pride and ambition.

“We have made significant progress in a quest for continuous improvement,” he says. “But we are chasing perfection.”

Extra: Curriculum Vitae

Max Siegel, chief executive, USA Track & Field
Siegel was born in Indianapolis to a record promoter father and blues singer mother.

He trained as a lawyer, becoming the first African-American to graduate with honours from Notre Dame Law School. His legal career began with law firm Baker & Daniels in the 1990s. 

He moved into the music industry, eventually becoming senior vice president of record label Sony/BMG, where he helped shape the careers of stars like Justin Timberlake, Britney Spears and Usher.

As president of global operations at Dale Earnhardt’s stock car racing operation, he brought in tens of millions in sponsorship revenues.

He has owned the Nascar team Rev Racing since 2010 and spearheaded the Drive for Diversity programme to bring more women and people of different ethnic backgrounds into the sport.

Siegel was appointed chief executive of USATF in May 2012. He has also worked closely with the USA Swimming Foundation, and the country’s gymnastics and skiing federations. In March 2016, he was appointed by IAAF president Sebastian Coe to chair the IAAF Marketing Commission.

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