Friday, January 29, 2010

Sympathy for Bob Gutkowski

or, Why Business Is Hard

As you may have read, a judge dismissed former Madison Square Garden exec Bob Gutkowski's suit alleging that the Yankees owed him money for his alleged role as "the architect of the YES Network." The YES Network, and the local media revenue it brings in, being the economic engine that drives the Yankees' financial empire, you'd think that whoever...architected? that engine would be swimming in giant vats of money, Scrooge McDuck-style. But Gutkowski wound up getting none of that filthy lucre--he just got a handful of consulting contracts from the new network, and, he says, a lot of promises that he'd get to build and/or run the network someday. And he got to do neither of those things. For this he sued, and now lost.

Because the law suit was dismissed, rather than going to trial, we have no basis to determine if Gutkowski's claims are true, or if they're more along the lines of those annoying "Windows 7 was my idea" commercials:

(By the way, this parody of those commercials was pretty funny, and only slightly NSFW.)

Anyway, after the YES Network case was dismissed, Gutkowski's attorney's comment to the New York Times was, “What’s interesting about the opinion is that the claims were dismissed on several legal technicalities, not because Steinbrenner didn’t take Gutkowski’s work product and make millions of dollars off it.” Most of those "legal technicalities" amounted to the fact that Gutkowski and Steinbrenner never had a contract, which is quite a troubling technicality when you're suing for breach of contract. The other technicality was that, even though Gutkowski allegedly first pitched the concept of a Yankees network in 1996, and the YES Network came online in 2002, Gutkowski waited until 2009 to sue, so his suit was late.

But beyond the legalities, should we feel bad for Bob Gutkowski? If what he claims is true, George Steinbrenner, a very, very, rich man, got much richer off his ideas and work, and didn't pay him what he was due. The fact that he's much less wealthy than Steinbrenner immediately makes him an object of sympathy, since the relationship was unequal. On the other hand, his claims also sound a bit like the outrage of a girl who's shocked--shocked!--that her date is trying to get to second base during the limo ride after the prom.

(Not a reference to personal events, by the way. It didn't help that my prom date had a boyfriend, and that a food allergy rendered me mute for most of the evening. Long story.)

This is how business works. Coming up with good ideas is not the hard part. This week's announcement of the iPad has experts coming out of the woodwork, all claiming that they could do Steve Jobs's job better than he did, by giving the device a better name, different features, whatever. The big difference, to them, is that Steve Jobs has Apple's considerable resources at his disposal, while they don't. How unlucky for Apple that that hack Jobs is still at the wheel!

Seriously, the hard part isn't getting the brilliant ideas, it's getting paid for them. People with brilliant ideas usually have to hook up with people with resources to make their idea a reality. From the point of view of the person with resources--if you've ever owned or created anything of value, you've probably experienced this--the world is full of people with bright ideas who want to share their ideas with you. Usually, their pitch amounts to some variation of "give me part/half/all of your money/assets/intellectual property, and with my knowhow and contacts, I'll make us a fortune!" These offers come with a differing levels of legitimacy--ranging from emails from a Nigerian prince to a phone call from Bill Gates's garage, circa 1976--and as the party risking more than their time and effort, the person with resources has to be very careful who they listen to. The flipside is also true. People with resources will often string people with ideas along with a lot of handshakes and "that sounds promising"s and vague promises, and if the idea people haven't taken steps to protect themselves, they'll find someone else executing (and, if it's good, profiting from) their idea.

That last scenario is what Bob Gutkowski's claims look like: he had a bright idea, an idea which, to work, required a resource he didn't have and couldn't buy (the Yankees). So he went to the Yankees' owner with his bright idea for a Yankees network, and in return he got a bucket of false promises and betrayals. Simple, right?

The part that makes it complicated is what, according to Gutkowski's complaint, happened in 1998. At that point, he formed a company to help the Yankees create their network, and they gave a presentation in which they laid out their whole strategy. They presented the Yankees with a contract, saying that to get started with their plan, it would take $25,000 a month, for a minimum of six months. The story Gutkowski tells is that Steinbrenner didn't sign, but directed them to go ahead with the plan anyway. He then paid only one month's worth of the contract, and nothing else.

So obviously, they took him to court over the $125,000 the Yankees owed, right? Apparently, no. Instead, Gutkowski signed a short-term consulting agreement with the Yankees, based, he says, on smooth talking and promises from the Boss himself. OK, so that sounds reasonable, kinda, but still: 125 grand!

Maybe that just wasn't enough money to go to war over, but surely things must've changed in 2002. That's when the Yankees started the YES Network, without Gutkowski's participation. According to him, they stole his idea! But did he sue? No, he signed another short-term consulting contract, and then another one in 2004. Why would someone hire on to work for a guy who stole his ideas, not once but multiple times? Again, the answer offered is that the Boss and his lackeys persuaded Gutkowski with false promises that never actually included concrete discussion of salary figures or percentages of ownership in the YES Network Gutkowski would get. In the complaint, it sounds like George Steinbrenner is the most persuasive person ever born, with near-magical powers of mesmerism to make Gutkowski keep playing Charlie Brown to his Lucy van Pelt.

(A quasi-theological corollary to this: if the Boss had magical persuasion powers, why wouldn't he have used them to talk the Red Sox out of winning the 2004 ALCS?)

Back to Gutkowski, given his admitted actions, it just doesn't make sense that he really thought that anyone had anything other than a moral obligation to do right by him. And sadly, in the worlds of business and law, moral obligations ain't worth much, probably much less than he netted from the consulting contracts he kept signing.

(Huge hat tip to Ben Kabak, whose post over at River Avenue Blues inspired this rant.)