Sept. 8 (Bloomberg) -- Jeffrey Lurie toured the offices of the Philadelphia Eagles for the first time as owner in 1994 and found the National Football League team sharing windowless space in Veterans Stadium with live rodents.
“It was a very common thing for me to be on the phone and say, ‘There goes another rat, right across the carpet,’” Lurie, a film producer, said in a telephone interview. “I’m thinking, ‘I just wired $185 million dollars and read on the front page of the Wall Street Journal what a fool I was.’ And I had no reason to believe I was not a fool at that point.”
Seventeen years later, Lurie’s Eagles are title favorites among Las Vegas bookmakers for the season that begins tonight when the New Orleans Saints visit the defending-champion Green Bay Packers. Even though his team committed $225 million in salaries and acquired six Pro Bowl players in two weeks, Philadelphia’s on-field success owes more to Lurie’s turnaround of corporate culture than the signing of free agents such as cornerback Nnamdi Asomugha, according to Rosabeth Moss Kanter, the Harvard Business School professor.
Lurie, who turns 60 today, and team President Joe Banner first solved institutional problems, then built a culture of sustained excellence based on accountability, collaboration and initiative, says Kanter, who studied the team for a chapter on corporate turnarounds in her 2004 book, “Confidence: How Winning Streaks and Losing Streaks Begin and End.” Since Lurie bought the team, the Eagles have reached the playoffs in 11 of his 16 full seasons, second in the NFL to the Indianapolis Colts over that time.
“Athletes can play above their level of talent or below their level of talent depending on what surrounds them,” Kanter, 68, said in an e-mail. “Those who feel they are part of a beautifully functioning team, with mutual support and camaraderie, can rise to the occasion.”
Lurie says he paid a then-record price for the team, which has never won the Super Bowl, because good management would yield rewards. The NFL at the time had many passive managers; Lurie said he thought the then-new system of free agency and capped payrolls would require an aggressive front office.
He put a list by his bed. He needed a new headquarters, a stadium and a scouting staff to attract players. He needed leaders, a coach and a quarterback. And he needed to create “a winning culture.”
Lurie and Banner first took care of little things, Kanter said. They did salary reviews on time, booked the team into better hotels and upgraded pregame food.
“If you can respect people enough to create a family culture, they realize the time and energy is well worth it,” Lurie said.
Lurie and Banner studied men such as Bill Walsh, who relied on offense, and Bill Parcells, who preached defense, and learned that the Super Bowl-winning coaches had different ideas about football and similar ideas about leadership. They were detail oriented and unafraid of mistakes.
After a 3-13 season under Ray Rhodes, they hired a coach and a quarterback with those traits. Andy Reid, an assistant with the Packers, wasn’t the big-name fans wanted. When Reid chose Syracuse University quarterback Donovan McNabb over Heisman Trophy-winning running back Ricky Williams in the 1999 NFL draft, fans booed.
The team also improved its standing in Philadelphia. Lurie’s Eagles have spent at least $22 million on charity in the Delaware Valley since founding the Eagles Youth Partnership in 1995, according to the team’s website.
Efforts to build a new stadium and headquarters began to pay off, Kanter writes. In 2000, the city and state agreed to contribute about $564 million toward new facilities for the team and baseball’s Phillies.
In 2001, the team opened the NovaCare Complex, a training facility and headquarters. The locker room had cherry fittings and no support columns, because Reid wanted an open environment. The fitness center was open to all employees when players weren’t using it. The lobby was decorated with images of Mother Theresa, Jonas Salk and Martin Luther King.
“I wanted everyone who comes through there to recognize incredible leaders,” Lurie said. “It’s also meant to put one’s ego into perspective.”
Lincoln Financial Field opened in 2003 and the Eagles continued to succeed. Reid has won about 60 percent of his games and NFL coach-of-the-year honors twice. His teams, led by McNabb, reached the conference championships five times. McNabb made six Pro Bowls and became the team’s all-time leader in wins, passing yards and passing touchdowns before he was traded to Washington last year. Michael Vick, whom the team signed after he spent 18 months in prison for his involvement in a dog-fighting ring, succeeded him and made the Pro Bowl last season.
Forbes magazine yesterday valued the franchise at $1.16 billion and in July ranked the Eagles the world’s 11th most-valuable sports team.
Lurie said that this summer’s hiring binge was planned back in 2008. His coaches figured out that, because of rules associated with the NFL’s labor agreement, the 2011 offseason would have twice as many available players as usual. And because the 2010 season was played without a lid on team payrolls, some teams wouldn’t have room available when the cap returned at $120 million with the 2011 labor contract.
The Eagles began structuring deals with current players such as cornerback Asante Samuel and tackle Jason Peters that left salary space in 2011. They used that to sign Asomugha, the top player available, along with Pro Bowl selections including receiver Steve Smith, running back Ronnie Brown and quarterback Vince Young.
The Eagles’ championship odds at the Las Vegas Hilton’s Race and Sports Book dropped to 6-1 from 12-1 last month after the acquisitions. All will be on display when the Eagles open the season against the St. Louis Rams on Sept. 11. The Packers and New England Patriots also have 6-1 odds.
Russ Lande, former scout of the Cleveland Browns and St. Louis Rams, said hiring too many stars can have a negative effect on team chemistry, even for a club that won the division with a 10-6 record last year.
“Since free agency became big, almost to a team, the one or two teams that are great in the summer signing free agents, almost all of them fail in the regular season,” said Lande, now an analyst for Sporting News magazine. “I’ve got a feeling they’re going to be one of the disappointments this year.”
Kanter said the Eagles aren’t in danger, because the culture Lurie built minimizes me-first behavior from the stars. They’ve “benefited from their owner’s values,” she said.
Lurie said he hopes to add a Super Bowl trophy to the Academy Award he won with his wife, Christina Weiss Lurie, this year as co-executive producers of Charles Ferguson’s documentary “Inside Job,” an account of the 2008 financial crisis. He said he’s not worried about integrating his new players.
“We were able to create a culture where we had a lot of smart people dedicate themselves to what it would take to create a winning franchise over a long period of time,” he said. “The only way you’re able to do that is if, as you might say in business, you’re not fearing next quarter’s results.”
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