In this episode of the SLN Podcast, John Peters is joined by Stephen Griffin, someone who’s never been afraid of the numbers. Stephen is a father, husband and worked his way up the corporate ladder as a trained accountant. Stephen eventually found himself helping private equity firms as a forensic accountant of sorts and would go on to work as a board member while helping diligence investment opportunities before ultimately becoming a private investor himself. Stephen later invested in Legacy Global Sports, one of the largest youth sports operators at the time. Legacy, who reportedly generated over $1MM / week in revenues, provided elite programming and events in youth soccer, hockey, lacrosse, and more. Today, Legacy is bankrupt and still under an ongoing criminal investigation by the DOJ. John spoke to Stephen about what went wrong and how he was inserted as CEO in 2018 to clean up the mess created by the founding team. This, as well as other life surprises, inspired Stephen to write a fictional book based on his experiences in the youth sports industry which serves as a masterclass on business ethics and corporate governance: “Front Row Seat: Greed and Corruption in a Youth Sports Company” is out now and available on Amazon and at StephenGriffinAuthor.com.
Podcast Highlights
6:00 – The youth sports market is anywhere from $15B to $20B: “My real first exposure to the youth sports market in its current state was as a parent. I was literally watching a youth baseball event in Cooperstown for my 12-year-old son. It was the first travel event we really had gone to and I was overwhelmed by the scope and scale of the event.”
“There’s a full range of estimates that people put out there but in the US, the youth sports market is a $15 billion to $20 billion market, depending on how you look at it.”
“We anticipated that large global brands would begin. Increasing the allocation of sponsorship dollars to these types of events and by extension, those dollars could be utilized to drive down the cost to participate to hopefully make the sports more available to a broader audience and deliver more value to consumers.”
9:30 – Why Stephen Griffin wrote Front Row Seat: Greed and Corruption in a Youth Sports Company: “ I started writing early one morning sitting on the beach on Cape Cod and it felt like a very therapeutic sort of purge. I wrote for every morning for 60 days and lifted my head up and realized that I had put together what appeared to be a business book.”
“It’s a story of my journey over several years as an investor in a youth sports company, and then taking over as the CEO of that company, after we uncover a number of different issues and the challenges that we faced as investors and operators, by stepping into a business that wasn’t what we thought it was.”
17:00 – Why people commit fraud and continue down the path of fraud: “I think very few people wake up and decide that today is the day I’m going to misrepresent financial statements or book an arbitrary general journal entry to record revenue. That’s inappropriate. I think it sneaks up on somebody typically, and they start making smaller, inappropriate decisions. And then it’s hard to dig out of those decisions. And then they find themselves at a really significant inflection point, which is, do I raise my hand and acknowledge that this business is not performing the way I’ve been reporting to my board or my stakeholders and bite the bullet and deal with the consequences at that momentO r do I continue to perpetrate?”
21:50 – The importance of due diligence in investing: “If somebody wants to mislead you or make misrepresentations, they can pull it off if you don’t really get into the weeds and demand access to source data which we ultimately didn’t do.“
28:25 – Operating on a foundation of trust. How this works in business, life, and partnerships: “On a real qualitative way you have to trust those people around you, and not only do you have to trust them, but you have to make sure that they’re getting the sense that you trust them. One of the worst things anyone could ever say to you is that they don’t trust you. So from an operating perspective, you have to believe that your team is on your team and they have the best and purest intentions.”
“As an investor, and this is sort of a lesson that I’ve learned through this is, as accountants, we’re trained to be professionally skeptical.”
35:10 – The day the DOJ executed a search and seizure warrant at the company’s largest division. Steve was overwhelmed to learn that there was even more fraud about to be uncovered. Steve decided to preserve through and help clean up these ups, despite being so overwhelmed: “The raid happened at 10 in the morning, but they didn’t come to my office and tell me about the raid until 3:30 pm in the afternoon, um, which I still find peculiar. I remember he handed me the search and seizure warrant gave me a brief explanation of what had happened.”
“I felt I had an obligation to myself and my family for that too. I felt like I had made a commitment to my board when I took that CEO role to try to be an agent of change, I guess. So I felt a responsibility to all those guys. I felt a real responsibility to our team in Boston. We had a great group of people.”
40:45 – Getting diagnosed with Parkinson’s Disease at the age of 50 while managing the stress: “I, later on, realized that I just sort of pushed it aside and hadn’t really acknowledged it or dealt with it at all. And then over the next six months, I realized that I had a pretty progressive form of it. So you take that coupled with the stress of work, coupled with trying to get used to a new medication, worrying about family and how my wife’s handling it and my kids are handling it.”
“It’s caused me to focus a lot more on my time with family and trying to be present, trying to live in the moment. I’m not where I need to be, but I’m getting better and better at that.“
44:37 – Finding inspiration from Andy O’Brien after learning getting diagnosed with Parkinson’s: “He was just a godsend at a time when I needed it. And literally, it was just that at the time, just that one call that changed the tone and tenor of my day. And I think it actually jump-started my path to acceptance of who I was and what I had. It was definitely a turning point, no question about it. I’m very thankful for that call from Andy and the impact it had.”
