Scorecasting (17 page)

Tell that to corporate executives. Among the tens of thousands of earnings announcements and earnings estimates each quarter, very few firms miss by a penny. Just like aspiring .300 hitters, a huge number of firms each year meet their targets
exactly
or exceed them by a penny. How do they do this? Well, accounting rules offer some discretion for the way corporations deduct expenses, report income, depreciate assets, and so on, and all these things can be used to alter the bottom line slightly. If its earnings are going to fall a bit short, a corporation may take a tax deduction this quarter rather than next or defer the expense on new equipment until next year to bump up earnings this year. The following graph, from an academic paper by
Richard Frankel and
Yan Sun from Washington University in St. Louis and
William Mayew of Duke University, highlights this phenomenon. Plotting the frequency of corporate earnings “surprises”—the difference between the actual earnings numbers and the consensus forecast set by analysts—shows that a disproportionate number
of firms exactly meet their target, having zero earnings surprises. Another huge percentage of firms beat their targets by exactly one penny. In contrast, very few firms miss by a penny. From a statistical standpoint this is extraordinary. Randomness suggests that as many firms would miss by one cent as would meet or beat the target by one cent.

If the graph looks eerily familiar, it should—it resembles the number of .300 hitters plotted against the paucity of those hitting .299. Corporations, like professional athletes, continually work to “manage” (or game) their performance numbers. Athletes do this each year before the season ends, corporations each quarter before they’re evaluated by investors and analysts.

Early on, investors in the financial market, just like sports GMs, seemed to play along. Miss your target by a cent and your stock price plummets. Beat your target by a penny and your stock price rises. However, investors have caught on. Today, just meeting an earnings target isn’t enough. The stock price will drop. Why? Because investors have figured out that just meeting the target
probably means the firm did everything it could to make its earnings look good. Translation: The news is not quite as rosy as the earnings numbers indicate, just as many of the players who squeak by with .300 probably have averages that inflate their actual performance. Come salary time and after-season trades, GMs and owners take note.

THANKS, MR. ROONEY
 

Even without the benefit of hindsight, Tony Dungy seemed to be the perfect representation of what NFL teams look for in a head coach. He carried himself with a quiet but towering dignity, at once firm and flexible, stern and compassionate, fully committed to his job, his family, and his faith. His players revered him. His assistants aspired to
be
him. Even the doctrinaire members of the media spoke of him in glowing terms.
Mel Blount, the Pittsburgh Steelers’ Hall of Fame cornerback, played with Dungy in the late 1970s. “Even then you knew it,” says Blount. “Tony was born to be a head coach in the NFL.”

After a long stint—too long, many thought—as an NFL assistant, Dungy, an African American, finally got his chance. The
Tampa Bay Buccaneers hired him as head coach in 1996. Although Dungy acquitted himself well, he couldn’t alchemize his passion and professionalism into victories—at least not enough of them. In six seasons, Dungy’s teams won more than half their games and he took the Bucs to the playoffs four times, but the teams struggled once they got there. Two days after a 31–9 defeat to the Philadelphia Eagles in the 2001 postseason, Dungy was relieved of his coaching duties—a decision that seemed validated when his
successor,
Jon Gruden, coached the team to a Super Bowl win the next season.

At the time, Dungy’s firing left the NFL with just two African-American head coaches, roughly 6 percent. On its face, it was a dismal record, especially when you considered that African Americans made up nearly three-quarters of the league’s players. And this wasn’t an “off year.” In 1990 and 1991 there was just one African-American head coach in the NFL. From 1992 to 1995 there were two. There were three between 1996 and 1999, and there were two in 2002. This struck many as wrong, but statistics alone weren’t enough to show bias. One could just as easily claim that the disproportionately small pool of white players was, statistically anyway, more anomalous. It wasn’t unlike the English Premier League in soccer, where 75 percent of the coaches are British but the majority of the players come from outside England.

Yet Johnnie Cochran Jr.—the controversial lawyer remembered best for his glove-doesn’t-fit defense of O. J. Simpson—joined forces with another activist attorney,
Cyrus Mehri, and decided to challenge the NFL’s hiring practices. At the time, Cochran and Mehri had been working on a case targeting what they saw as biased employment practices at Coca-Cola. In the course of the Coke case, they had crossed paths with
Janice Madden, a sociologist at the University of Pennsylvania specializing in labor economics. Madden was in Atlanta, working on the same case, using a statistical model to demonstrate that women were not, as the company alleged, inferior salespeople. A thought occurred to Cochran and Mehri: Maybe Madden could initiate a similar study with respect to NFL coaches.

Although Madden shares a surname with former NFL coach, popular NFL announcer, and video game impresario John Madden, the football similarities ended there. She was not much of a fan. Her husband was a Philadelphia Eagles season ticket holder, but she preferred to spend her Sundays at home. Still, she made Cochran and Mehri an offer: “If you can put the data together for me, I’ll do this pro bono.” They did, and she did.

Madden found that between 1990 and 2002, the African-American coaches in the NFL were statistically far
more
successful than the white coaches, averaging nine-plus wins a season versus eight for their white counterparts. Sixty-nine percent of the time, the black coaches took their teams to the playoffs, versus only 39 percent for the others. In their
first
season on the job, black coaches took their teams to the postseason 71 percent of the time; rookie white coaches did so just 23 percent of the time. Clearly, black coaches had to be exceptional to win a job in the first place.

Perhaps, one could argue, black coaches ended up being offered jobs by the better teams: the franchises that could afford to pursue talent more aggressively. Madden reran her study, controlling for team quality. African-American coaches still clearly outperformed their colleagues. If this wasn’t a smoking gun, to Madden’s thinking, it surely carried the strong whiff of bias. If African-American football coaches were being hired fairly, shouldn’t they be performing comparably to white coaches? The fact that the win-loss records of African-American coaches were substantially better suggested that the bar was being set much higher for them.

When Madden went public with her findings, she was blindsided by the criticism. The NFL made the argument that Madden’s sample size—in many seasons there were just two African-American coaches—was too small to be statistically significant. Whose fault was that? Madden wondered. At the national conference for sports lawyers, an NFL executive dismissed Madden’s work, suggesting that she could have run the numbers for “coaches named Mike” and for “coaches not named Mike” and come up with similar results. (Curious, Madden ran the numbers and found that this wasn’t the case.)

Still, due in no small part to the work of a female sociologist whose football knowledge was admittedly modest, the NFL changed its ways. In 2003, the league implemented the so-called Rooney Rule, named for
Dan Rooney, the progressive Steelers owner who chaired the committee looking into the issue. The rule decreed that teams interview at least one minority applicant to fill head-coaching vacancies. Otherwise, the franchise would face a stiff fine.

In 2003, the NFL levied a $200,000 fine against the
Detroit Lions when the team hired
Steve Mariucci without interviewing any other candidates, black or white. (Mariucci went 15–28 and was fired in his third season.) The league achieved its aim. By 2005, there were six African-American coaches in the NFL, including Dungy, who had been hired by the Indianapolis Colts.

And how has this new brigade of black coaches done? Worse than their predecessors. Much worse, in fact. From 2003 to the present, African-American coaches have averaged the same number of wins each season—eight—as white coaches. They are now slightly
less
likely to lead their teams to the playoffs. Their rookie seasons are particularly shaky: They lose slightly more games than white coaches do in the first season. In 2008, for instance,
Marvin Lewis coached the
Cincinnati Bengals to a 4–11–1 record, which was only slightly better than the job
Romeo Crennel did a few hours’ drive away in Cleveland, where the Browns stumbled through a 4–12 season. Lewis and Crennel still fared better than yet another African-American coach in the Midwest,
Herman Edwards, who oversaw a misbegotten
Kansas City Chiefs team that went 2–14.

It’s worth pointing out that Crennel and Edwards were fired. The Bengals stuck with Lewis, and he promptly won NFL Coach of the Year honors in 2009, guiding Cincinnati to an unexpected 10–6 season. But as black coaches lose more games, Madden and other supporters nod with satisfaction. This “drop-off” is the ultimate validation of the Rooney Rule, an indication that black coaches are being held to the same standards as their white counterparts. “If African-American coaches don’t fail, it means that those with equal talents to the failing white coaches are not even getting the chance to be a coach,” Madden explains. “Seeing African-American coaches fail means that they, like white coaches, no longer have to be superstars to get coaching jobs.”

The Tampa Bay franchise that fired Dungy and replaced him with Jon Gruden? When the team let go of Gruden in 2009, management replaced him with
Raheem Morris, then a 32-year-old African American who was the team’s defensive backs coach and
had never before been a head coach on any level. Although no one admitted it, Morris was precisely the type of candidate unlikely to have been taken seriously before the Rooney Rule. In Morris’s first season, the Bucs went 3–13.

Amid the surge in losing, there have been triumphs. In Super Bowl XLI, Dungy coached against
Lovie Smith of the
Chicago Bears, the second time two black coaches in a major American professional sport had faced each other for a championship and a first for the NFL. Dungy would finally get his Super Bowl ring. Two years later, the Pittsburgh Steelers, orchestrators of the Rooney Rule, prevailed in Super Bowl XLIII—an example of a good deed going unpunished. The team’s coach was a Dungy disciple,
Mike Tomlin. Yes, he is “a coach named Mike.” He also is an African American.

COMFORTS OF HOME