Sunday, January 2, 2011

A Goldman Sachs Controversy to Start Off the New Year

Goldman Sachs is supposedly a behind the scenes advisor to the NFL.

According to NyPo:

Goldman's role was outlined by a union leader for the players -- himself a former Goldman executive who worked under CEO Lloyd Blankfein -- who chastised team owners for refusing to open their books during the increasingly contentious negotiations.

"It's hard to find that Goldman Sachs would ask any of its clients to do a deal without full transparency," said George Atallah, an assistant executive director of the players' union and a former senior analyst and trader at Goldman.

"I've worked for Goldman and know what it believes," he said. "So it's doubly disappointing to me that they are so respected but apparently won't advise their clients to observe the most basic tenet of business."

The NFL disputed the union's comments that Goldman is involved in the labor negotiations.
I have no idea if Goldman is an advisor to the NFL, but Attalah is comparing apples to pop corn. Where Goldman would want full transparency, and advise such, is in the purchase of assets. There is no way a buyer is going to bid up for an asset unless he understands the revenue stream and cost structure.  It is, thus, in general to the sellers advantage to be transparent.

In labor negotiations, there is no need for transparency. Indeed,  it is likely that Goldman bars its employees from discussing with each other what they received as bonuses. There is no advantage in a labor negotiation for an employer to reveal his income statement (unless, of course, the employer is on the edge of bankruptcy).

By comparing asset sales negotiations to labor negotiations, Attalah is just attempting to muddy and confuse the situation, which is something he probably did learn from Blankfein.

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