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Friday, May 13, 2005

SPORTS SCOPE

Tsutsumi used culture to amass, retain iron grip on power


"If you want Sundays off, don't be a manager in my company."

Jack Gallagher

That statement speaks volumes about the way disgraced sports magnate and tycoon Yoshiaki Tsutsumi ran his businesses, teams and staff, prior to his recent indictment for stock fraud.

A hard liner all the way, Tsutsumi is now facing the music as he awaits trial on charges of making false shareholding reports and insider trading while out on bail.

Arrested in March and jailed for three weeks, the 70-year-old Tsutsumi has incurred an incredible fall from the heights of the financial and sporting worlds.

The latter culminated with his recent resignation as an "honorary member" of the International Olympic Committee.

A personal friend of former IOC president Juan Antonio Samaranch, who bestowed the title upon him, Tsutsumi was one of only four people to hold the prestigious rank.

My guess is that Tsutsumi never saw any of this coming, because this is what happens when people start thinking they are invulnerable -- and above the law.

It certainly appears this is what he believed for a very long time.

Tsutsumi, named the world's richest man six different years by Forbes magazine, inherited enormous wealth from his father Yasujiro and then used the "bubble economy" of the 1980s to exponentially increase the value of his holdings.

All the while he was moving into the upper echelons of sport.

He helped build the Seibu Lions into a pro baseball powerhouse after acquiring the club in the 1970s. He also owned the Kokudo ice hockey team, which contended for the title just about every season.

He became an IOC member and, in 1990, chairman of the Japan Olympic Committee, where he played a pivotal role in Nagano winning the right to host the 1998 Winter Olympics.

He was also chairman of the Japan Ice Hockey Federation.

Yes, it was quite an impressive resume he had built up, but today it isn't worth the paper it's printed on.

Something always rubbed me the wrong way about this guy. It just seemed that he had acquired way too much power -- in too many areas -- and was basically doing whatever he wanted, with no one able to stop him.

I often wondered why no one would ever challenge him.

Following his recent arrest, an employee of one of his companies provided an answer of sorts, saying of Tsutsumi, "He had more power than God."

He acted like it, too.

Everybody feared him and deferred to him, and this was precisely the problem.

In another country, in a different culture, I am confident that both the sporting and financial dealings of Tsutsumi would have been put under the microscope long ago.

He clearly exploited the system in Japan for his own personal benefit, and got away with it for decades.

How was Tsutsumi able to maintain so much control over his companies -- and just about everything else he became involved with -- and what do the recent revelations about him say about Japanese sports and culture in general?

For some expert analysis on the subject, I contacted acclaimed author Robert Whiting, who has been watching Tsutsumi operate for the past 30 years.

"Tsutsumi is one of the last remnants of the post-war era where 'one-man capitalists' ran their companies with total control, pursuing growth at the cost of everything else," Whiting said.

"His father once famously said, 'Those who don't get close to the prison door will never succeed; those who wind up inside failed.'

"Thus there was a fine line between success and failure and what you did to attain it."

Whiting noted that despite the fact Tsutsumi was named the world's richest man six times, he was never at the top of the list of individual taxpayers in Japan.

How was he able to do this?

"He used his companies to shield his personal wealth."

Whiting says that many people believe this is exactly what Tsutsumi was doing with the alleged manipulation of shareholding reports of Seibu stock.

"The crime for which he was arrested, some say, is evidence that he was trying to protect his family from inheritance taxes.

"He has always used bank loans to accumulate funds, not equity financing. Practices like this helped insulate his power and there was no board of directors to act as a check."

Whiting cited some glaring examples of Tsutsumi's abuse of power in the sports arena:

"He was head of the JOC and got his firm some nice construction contracts in Nagano for buildings that really didn't serve the community after the Winter Olympics were over."

"In baseball, back in the 1980s, Tsutsumi circumvented the draft by hiring players he couldn't obtain to play for his Prince Hotel team in the corporate league. Then, as the years passed and they were overlooked in the draft, he would sign them to a contract with the Lions."

"He would order his employees to attend the games of both the Lions and the ice hockey team to keep attendance up."

Whiting says that culture played a big part in how Tsutsumi was able to manipulate people to get what he wanted.

"Yoshiaki took Japanese trademark corporate obedience and raised it to new levels. When he visited his employees, they had to line up and bow at precisely the right angle.

"In the 1980s, the Seibu Lions players had to do close-order marching drills to hone their discipline. Seibu rules prohibited drinking, smoking and gambling. Star players on the Lions were not allowed to do commercials.

"Tsutsumi's nickname was the 'emperor.' "

Whiting believes that part of Tsutsumi's downfall was his failure to adapt to a changing world and changing times.

"His business model -- buying up land and then building leisure facilities on it -- was just right for the 1980s. He catered to the emerging well-off Japanese middle class of that era.

"But people got tired of that. The 1990s came, the IT era, and Tsutsumi got passed by."

Despite all of the recent machinations of the arrest and indictment of Tsutsumi, and the huge play it received in the Japanese media, I will be very surprised if he ever serves any jail time on these charges.

Why?

For the very same reason -- culture -- that he was able to amass all of his power in the first place.

Tsutsumi will likely be declared too ill or too old -- or both -- and be given one final deferential bow by the judicial system.

Jack Gallagher was named a top 10 columnist by the Associated Press Sports Editors for his work in 2004.


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