“It Was the Craziest Thing I’ve Ever Experienced”

This is the second article in a three-part series profiling Carol Sawdye, recently named CFO at PricewaterhouseCoopers. Part 1 focuses on her move 12 years ago from PwC to become finance chief at Skadden Arps Slate Meagher & Flom, the world’s biggest law firm. Part 3 examines her new role at the Big Four accounting firm.
After eight years as CFO at Skadden Arps, Carol Sawdye was getting itchy. She felt her role at the mega-law firm had developed fully and there was “nowhere else to go.” She thought: “I’m only 46. Am I going to do this for the rest of my life?”
So when a recruiter called her in early 2010 with the eye-opening prospect of taking over finance for the National Basketball Association, she didn’t have to think very hard about whether she was interested. The chance to get back into the entertainment and media field, which had been the focus of her client-services work as an auditor and partner at PricewaterhouseCoopers from 1985 through 2001, was overwhelmingly compelling.
Recruiters typically find and bring several candidates to their client companies for evaluation. But in this case, after seeing Sawdye’s resume, NBA commissioner David Stern directed this recruiter to specifically target Sawdye. But why? Why her?
“David told me that when he heard about my background, he said ‘wow.’ Here is someone who understands how to be the CFO of a partnership, and sports leagues are actually partnerships of the team owners,” Sawdye says. And she was someone who understood how to work with big egos, a trait shared by elite law-firm partners and sports-team owners.
In fact, she says, the NBA league office is dominated by lawyers. Stern himself was an antitrust attorney and a partner at Proskauer, another big international law firm. Many other sports-league commissioners have been attorneys, too, including baseball’s Bowie Kuhn and Faye Vincent, football’s Paul Tagliabue, and hockey’s Gary Bettman. There seems to be a fit because of the need to avoid any activity that could jeopardize the antitrust exemptions Congress grants to the major sports leagues, allowing teams to jointly run a business (the league) yet compete with one another in games and the talent market.
“David Stern is a visionary person, but it took him a long time to realize he needed to have a different kind of CFO in the organization,” Sawdye says. Historically, the role was focused almost entirely on the league, rather than its teams. The league negotiates national television contracts to which all the teams are subject, allows the teams to tap into a league-negotiated credit facility, offers centralized financial and legal services to spare teams the need to staff up extensively in those areas, and negotiates the collective-bargaining agreement with the NBA Players Association.
It was that latter activity that motivated Stern to hire Sawdye. She came to the league in June of 2010, one year before it expected to enter its most contentious collective-bargaining negotiation ever. “Everyone knew we were headed for a lockout,” she says. “We had to prepare to miss an entire season. It’s the craziest thing I’ve ever experienced, essentially going to work for a company that was planning to shut down.”
Stern had seen, Sawdye says, that the league was ill-equipped to deal with two hugely important activities related to the negotiations. One was coordinating the collection and standardization of financial information on the teams in order to model the financial aspects of different collective-bargaining scenarios. “That was a big part of my job the entire time I was there,” she says. “The organization hadn’t had anyone who could do that.”
The second important duty was making sure the league and every team was financially prepared to deal with a lost season. At the time of the league’s most recent previous lockout, in 1998, it was nowhere near the massive international business it is today, with licensing and merchandizing agreements spanning the globe. “The idea of stopping the revenue while continuing the organization was not something that had been contemplated, modeled for, or budgeted,” Sawdye says.

So she worked with the teams to analyze their cash flows and debt-financing capabilities. “If a team didn’t have an owner who was willing to step up and say that no matter what funding was needed, they would get it, we went out and found limited partners to provide that funding,” says Sawdye. “That was so important, because the strength of our argument to the union was only going to be as strong as our weakest link.”
Indeed, one could imagine that if one of the owners were to start screaming that the sky was falling, he could panic the other owners into making a deal when the best strategy would be to hold firm as long as necessary to make a deal. Because what else could the players do to make millions of dollars a year? Asked to comment on that scenario, though, Sawdye declines.
But it seems that was the way the syndicate of banks the league worked with for credit agreements saw the situation. “In the end, the banks were saying, you guys can play chicken with each other all you want to, we don’t think you’re going to self-destruct,” Sawdye says.
It was an astute viewpoint. The new collective-bargaining deal reached on December 8, 2011 —
early enough to have a shortened season —
was widely perceived as a victory for the league over its players.
Sawdye’s NBA job had been intended as permanent. But after the labor deal was done, some of the spice was gone. Once again she found herself wondering where she was going.
“Now there is a 10-year deal in place,” she says. “It was a great opportunity to work for David Stern and work at a major entertainment and media organization on complex financial matters. But at the end of it, I realized that there really was no place for me to go. You might say, well, why did you need to go anywhere else? You could be the CFO of the NBA for the rest of your life, and that sounds kind of cool and fun, and lots of people would have said yes to that.
“But was I prepared to say, ‘this is it’? I couldn’t be the deputy commissioner, because we already knew who that was going be, and the reality is that I’m not a deep basketball person. No matter what I think about myself, I can’t imagine that would have ever made sense.”
Next: A triumphant homecoming.
CFO.com