art gallery
fiction
columns
kids
humor
memoirs
essays
profiles
reviews
contributors subscribe links trumpet fiction back issues exit

Explaining Enron as a Sports Metaphor
Gideon Evans

 


While everyone is up in arms about the Enron debacle, many Americans are having trouble understanding the complicated details of what happened. Therefore, as a service to the "layperson", I am going to explain the Enron situation as a sports metaphor. I like sports a lot, and I find that using sports terms to represent other things helps make things easier to understand. I hope this clears things up.

Okay, let’s say Enron is the New York Yankees…

So the New York Yankees started in Houston from the merger of two pipeline companies in 1985. It quickly become a profitable company, however, as competition grew, the Yankees started to get into other areas of business, including energy trading, broadband, metals, and steel, as well as advertising time and space. There were various problems with some of the Yankees’ foreign projects, like its 1998 investment in a British waterservices business, and its 65% stake in the $3 billion Dabhol power plant in India. Financial problems arose, so the Yankees hired Andrew Fastow, a financial Wizard at leveraged buyouts, who along with former CEO Jeffrey Skilling allegedly created partnerships with names like Jedi and Chewco, where The Yankees’ debt was hidden. Liquidity was also an issue since much of the money that changed hands among companies and employees was in stock options rather than hard currency.

Because of the murkiness of all these dealings, nobody outside of the Yankees knew that they were losing money, and brokers and business writers continued to recommend Yankees’ stock. As a result, the Yankees’ stock was up 87% in 2000. The company was rated sixth worldwide, and yet it was actually failing miserably. To compound matters, accountant Arthur Anderson, whose independence is questioned since it is employed by the Yankees and paid millions of dollars by the Yankees, never accounted for any of the debt that actually existed.

In the midst of all this confusion, the Yankees top brass, namely Fastow, Skilling, and Lay, began to cash out on their stock options while they prevented employees from cashing out on their own retirement plans. Therefore, many of the Yankees employees in Houston and around the world could only sit by and watch as the 401k plans that they worked for years to establish lost all of their value. The Yankees finally declared bankruptcy in December, laid off many employees, and are now embroiled in numerous hearings in Congress and governmental regulatory bodies. With the exception of former CEO Jeffrey Skilling, most of the witnesses are "taking the Fifth" and not testifying. Now, the questions are, "Who among the Yankees knew what and when?" and "Will any of the Yankee top executives go to jail?", and "How can another Yankees be avoided?"

 

email us with your comments.