“It was one of Maccabi’s worst nights,” Shimon Mizrahi, veteran chairman of the Maccabi Tel Aviv basketball club, admitted last Thursday after the team suffered one of the most excruciating losses in its history, 83-58 to Crvena Zvezda at the Pioneer Arena in Belgrade. As Mizrahi went on to say, Crvena Zvezda had been exactly where Maccabi began its story when it won the European Championship for the first time in 1977.
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For Mizrahi and the club, it was exactly the wrong way to close the circle. The loss in the Serbian capital to a team of youngsters reinforced by two Americans was not an aberration. Three days before, Maccabi had lost at home in Tel Aviv in the last second of the game to Gilboa Hagalil, whose budget is a tenth of Maccabi’s at best. And that followed a series of games against inferior rivals that Maccabi managed to reverse and win at the last seconds.
The day after the Belgrade loss, Maccabi coach Rami Hadar resigned after just 62 days on the job. He had been Maccabi’s fourth coach in 13 months. At any organization, a churn rate that brisk at such a senior position signals managerial sickness.
Taken alone, Hadar’s resignation seems odd: Maccabi might still meet the goals it set itself at the start of the year – to win the State Cup, the national championship (first place, at this stage) and rank at least eighth in the Euroleague (right now, after losing at home to CSKA Moscow, its fourth loss in a row, the team is in 11th place). But as an organization, Maccabi never has been tolerant of losses and the patience of its loyal subscribing fans has long since run out.
Maccabi’s performance has been deteriorating almost continually. The team had been champion in 45 of the years between 1954 and 2005. It then went on to lose the championship in no less than five of the last 11 years. Evidently Maccabi Tel Aviv’s absolute control over Israeli basketball for five decades is a thing of the past. Israeli basketball has become more unpredictable and less boring, with lesser-known teams like Hapoel Holon and Maccabi Rishon Letzion winning championships. Competition stepped up another notch when the high-tech entrepreneur Ori Allon led an acquisition group to buy Hapoel Jerusalem.
Maccabi’s decline halted briefly in 2015 when the coach, David Blatt, led it to victory in the Euroleague, despite a markedly inferior roster and budget compared with the teams it beat: CSKA Moscow and Real Madrid. Yet the triumph did not distract Blatt from the fact that mere weeks before, Maccabi’s owners meant to fire him, nor from their ceaseless meddling in his management, mainly by David and Danny Federman. A month later he moved to the NBA’s Cleveland Cavaliers. Maccabi remained with his assistant, Guy Goodes, who became head coach but lost some of the stars who helped win the Euroleague. It quickly became apparent that Maccabi’s victory had been a blip in its slide.
In Goodes’ first season as head coach, Maccabi lost to Fenerbahce Istanbul in the playoffs 3:0. For the first time ever, Maccabi sat out the Israeli Final Four after getting beaten by Hapoel Eilat. Goodes began the second season but was fired in November 2015 after a series of losses. Blatt meanwhile led Cleveland to the NBA finals and was a whisker from winning, and that without two of the team’s stars.
Goodes was replaced by the Croatian coach Zan Tabak, a friend of the team manager Nikola Vujcic, but he also failed the basic test of regaining Maccabi the championship. Tabak was succeeded by Erez Edelstein, formerly the coach of Maccabi’s bitter rival Hapoel Tel Aviv, despite qualms about his suitability for the post. Edelstein lasted two and a half months and was fired as the team continued to lose, and over disagreements about the composition of the team and a sort of players’ rebellion led by the star Sonny Weems. (Today Edelstein coaches the national team.)
The churn of coaches and the ease with which they were axed (“It was an easy decision,” David Federman said about Edelstein) point at the people who hired them in the first place: The team owners, who also sit on the board, bear the responsibility for the team’s sorry situation.
Muddy hierarchy and personal travails
The root problem at Maccabi is the awkward ownership structure of the group and management’s conduct. In contrast to Hapoel Jerusalem, Maccabi has multiple owners. The result is an unclear hierarchy and an imprecise distribution of powers and responsibilities.
Over the years, characters came and went from the board, such as Kobi Alexander of Comverse notoriety, who fled to Namibia from American prosecutors for securities fraud; Miami-based Israeli businessman Raanan Katz and the brothers Avi and Danny Reik, owners of Flying Cargo. Their common denominator was their function: to provide cash for the show run for decades by Shimon Mizrahi, a leading lawyer in transportation circles and a son-in-law of the Carasso vehicle importing family; David Federman, formerly owner of Elite food industries and today among the controlling shareholders of Israel Petrochemical Enterprises; and to a lesser degree, businessman Oudi Recanati.
Federman and Recanati each own 29% of the shares in the club; Mizrahi owns 14.5%; Ben Ashkenazy, an Israeli real estate man in North America who once eyed purchasing Clal Insurance, owns 10%, and Richard Deitz, who runs a private equity fund, owns 17.5%. Ashkenazy and Deitz live outside Israel and are barely involved in Maccabi’s management. Ostensibly Federman and Recanati shouldn’t have any more influence on the team, but in practice, Federman calls the shots. Mizrahi has been chairing the team for nearly 40 years but his status was badly weakened together with his ability to provide financing for the team. Moreover, the dominant forces in Maccabi are aged: Mizrahi is 77 and Federman is 72.
Additionally, Mizrahi and to a lesser degree Federman both experienced personal difficulties in the last year, which hampered their ability to do a thing expected of them as owners of any basketball team – infuse money, and a lot of it. Mizrahi divorced and dissociated from the Carasso family (which had been among the owners of the IDB group in the pre-Nochi Dankner era). The family still owns the Carasso import company, worth 2.4 billion shekels on the Tel Aviv Stock Exchange.
Federman owns 2.7% of Petrochemical Enterprises, which in turn owns 20% of Oil Refineries, the bigger of Israel’s two refining companies. But Petrochemical Enterprises has lost 99% of its value in the last five years, reducing the value of Federman’s holding to just 6.5 million shekels. Still, Federman has considerable wealth from selling his holdings in foods giant Elite to the Strauss family, and from his days as a trader in the London commodities market.
Managerial mayhem and shattered spines
Nor does the composition of the board support an orderly, methodical process of decision making. It consists of the five owners; Shay Recanati, Oudi’s son; and Danny Federman, son of David Federman. It is the board of an old-time family company whose members are at odds and resort to alliances to advance appointments, and in trying to frustrate recruitments by the other owners.
The marks of the split ownership, the rising involvement by the younger generation (Recanati’s and Federman’s sons) in management and the deficiency of clear hierarchy are evident in the managerial chaos that has characterized Maccabi in recent years.
It is no coincidence that since the days of Pini Gershon and Blatt as coaches, the status and pay of the Maccabi head coach has eroded from the million dollars Gershon got in the 2009/10 season, to $650,000 per season for Blatt to $500,000 for Edelstein. The board members, chiefly Federman, grew tired of opinionated, well-connected coaches like Gershon and Blatt, who could hire players with a few phone calls and didn’t take diktats. Post-Blatt, the Maccabi management started closing contracts with roster players for the next season themselves, sometimes even before naming a coach, and not necessarily based on purely professional recommendations or considerations.
Edelstein, for example, was named only after most of the roster had already been hired, and was fired shortly after telling management that he didn’t believe the players were good enough to reach the Final Eight in the Euroleague. He even had the nerve to press to import a foreign center in the stead of the two Israelis Yogev Ohayon and Gal Mekel.
A manager cannot take managerial responsibility unless he is given the powers to carry out his task. The Maccabi management broke the rules. Its members think their knowledge and experience qualify them to build the roster and entitle them to interfere in the coach’s decisions. This is manifested in Maccabi being the only basketball team in which its owners sit on the bench next to the coach during games and nudge him with whispers and gestures. Any coach of Maccabi needs iron nerves and a steel spine to survive this kind of emotional abuse.
Hadar, Edelstein’s successor, lost his cool during a game, dismissing with a wave of his hand Mizrahi’s attempt to stop him from benching the center, Mekel, just 18 seconds after he had taken to the court. From that second, it was clear that Hadar was toast.
Mizrahi’s and Federman’s attempt to control the team’s management at both the macro and micro levels at any given moment is like testing the achievements of an investments manager on a daily basis, and it is costing Maccabi a heavy price in terms of both achievement and financing. The invasive involvement in the coach’s actions and effort to force players they don’t want on them angers the coaches and damages the players and the team, and brings each coach’s inevitable breakdown ever nearer.
This short-term attitude, which demands immediate achievements, prevents Maccabi from stabilizing a team that can run for years with a few tweaks each year, improving the coordination between the players, who implement the coach’s strategy of play. The serial changes in coaches and players also means that this year, Maccabi will pay the full wages of three coaches – Edelstein, Hadar and Ainars Bagatskis, the incoming coach, which amounts to inefficient use of its budget.
Federman’s credibility and deranged choices
Just this week Yedioth Ahronoth reported who is responsible for the present team structure. Mizrahi was behind hiring Dagan Yavzury for $250,000 a year. David Federman brought Mekel for $650,000 a year, whom neither of the last two coaches wanted, to management’s open chagrin.
The team’s professional manager, Vujcic, brought Maik Zirbes, a meager center, and Quincy Miller, both from Belgrade. Vujcic also brought Weems. Edelstein brought Victor Rudd and Colton Iverson. Avi Even, the team’s scouting head, brought D.J. Seeley. Clearly, when you have six people hiring, there’s no question of planning or giving the coach the power to build a balanced team with superstars and drones, defensive and offensive players.
Thus Maccabi invested gigantic amounts in recent years in bizarre choices that left no mark at best or turned out to be utter flops at worst, including the center Arinze Onuaku and the Brazilian center Vitor Faverani, formerly a Boston Celtic who had suffered serious injuries. Faverani signed on in 2015 for $250,000, though he hadn’t played for a year and a half. They let him go after three months. The Australian center Aleks Maric replaced the fans’ favorite Sofoklis Schortsanitis in the summer of 2014 and lasted four months, contributing 2.3 points and 2.3 rebounds in eight minutes, on average. Hiring Mekel is also considered to be a bad mistake.
After a series of poor choices, some outright deranged, with almost no achievements, one might have expected the board to start wondering about the performance of the two persons responsible for this, Vujcic and Even, or to take responsibility for the past failures, for instance when making decisions that conflicted professional advice. But the two remain and so does the meddling by Federman & Co. in their decisions.
In February 2016, at the worst of the slump, Federman openly admitted that it had been his decision to hire NBA player Jordan Farmar for $1.6 million a season, with Taylor Rochestie. The professionals categorically recommended against it and the combination was a disaster waiting to happen. But management thought that two stars would boost ticket sales. Yet Federman repeated the mistake this year, hiring Andrew Goudelock and Weens for $1 million and $1.5 million, respectively; the two on the court together is a powder keg.
Federman also badly handled fans’ expectations when promising them a rosier future in the 2016/2017 season, with 12 players worthy of taking on Real Madrid, Barcelona and CSKA in the Euroleague. Not only did Maccabi lose at home to those three teams, but also to Germany’s Brose Bamberg, which isn’t among the lions of the Euroleague. Evidently, more than one of Maccabi’s team isn’t quite Euroleague standard.
Federman’s status among fans and subscribers has never slumped this low. Maccabi never had difficulty selling 11,000 subscriptions to its games, and even the present crisis of confidence seems unlikely to hurt sales for the coming season. But because of the unique structure of Maccabi’s revenues, Federman and his colleagues shouldn’t test the fans too far.
The team’s budget for this season is over 100 million shekels, said Hagai Badash, the new CEO, its highest yet and the eighth biggest in Europe. Fans provide 38-40 million shekels a year, or, 35% of that budget. The rest comes from the Euroleague; 19 million shekels a year from the Sports Channel for broadcast rights; and various amounts from sponsorships and the owners, who give significantly less to the team than do the owners of teams like Real Madrid or Barcelona. The team charges subscribers 1,500 to 11,200 shekels a year, averaging about 3,500-3,600. That is not a small sum, and from it stems the demographic of Maccabi’s subscribers: the “Rolex crowd” – celebrities, businesspeople and executives.
These people probably can’t be counted on to root for Maccabi when it’s down, but can be counted on to identify bad management, chaotic decision-making driven by whim and gimmicks, and an unclear organizational structure ridden with factions and internal politics. For these fans, the game is a social event and identification with the brand is part of their self-branding as managers. But that identification loosens with each loss, particularly at home.
Just another colorless team
Maccabi’s near-term future seems safe. Its place in the Euroleague is locked in for nine more years, even if it doesn’t win the Israel championship. Its agreement with the Sports Channel is valid for five more years. But its more distant future should have Maccabi’s management worrying.
The team has also been losing its Israeli identity. Its Israeli players are nowhere near being stars of the magnitude of Miki Berkovich, Doron Jamchi, Oded Katash or even Nadav Henefeld. They play a negligible part, if any, in Euroleague games. The loss of Israeli identity has accelerated the erosion of Maccabi’s status as the national darling, and contributed to dwindling interest by teens in its games. Its rating has also suffered from its matches being relegated to a niche channel, rather than mainstream channels 1, 2 or 10.
The owners know that Maccabi needs to ditch the family-company habits in favor of professional management with clear organizational structure based on the standards of public companies. That’s why they hired Hagai Badash as CEO in mid-2016, based on his good results at managing Psagot, Israel’s biggest investments house. Yet it’s hard to see how Badash can change the team for real. The owners are aged, set in their ways and used to control, and they have those agreements with the Euroleague and Sports Channel.
Badash will need all his managerial and political wiles to survive and advance this quarrelsome quintet of Maccabi owners. And as long as no real financial crisis looms over Maccabi’s owners, in the short run, the decline of the team that had once been an example of managerial excellence and the strongest brand in Israeli sport will probably continue. Maccabi will become just another dull Israeli sports team, unorderly, unmanaged and not particularly successful.
Cost of the brand’s erosion
The summer of 2014 was a magic time for Maccabi Tel Aviv. It had won the Euroleague, vanquishing a superior rival against all odds, pulling out its magic in the last moments of the game. But that same Maccabi rabbit-in-a-hat DNA, the genome of an organization controlled for decades by financiers, lawyers and businessmen, has some commercial chromosomes. The group wanted to translate that glory into cash. At about that time, the Electra group terminated its sponsorship after seven seasons, after cutting support for the team by 50% to $850,000 in the last season. Electra, which had replaced Elite as chief sponsor of the team after 39 years, had been giving Maccabi between $1.8 million to $2 million each season, about what Elite had been paying at the height of its partnership with the team.
The timing seemed ripe for a big move and the Maccabi management tapped Teva Pharmaceutical Industries, which had hired Erez Vigodman – formerly the CEO of Strauss Elite – as CEO. Vigodman knew well the special relationship with Maccabi. Like most places in Israel, Teva has its contingent of Maccabi fans who embraced the idea. But the Teva professionals did their homework and concluded that Maccabi – the national darling, a national brand, a synonym for consensus, excellence, commitment to victory and the ability to turn the tables and win under any conditions – had changed. Maccabi has become controversial, arousing extreme reactions of fanatical adoration among some and positive loathing among others.
The matter of Moni Fanan probably didn’t help Maccabi win sponsors’ hearts. Fanan, the team’s ex-manager, committed suicide in October 2009 after his business of gray market loans and investments for clients, including Maccabi players like the legendary center arūnas Jasikevičius and Nikola Vujcic, hired as a center and today the team manager. These two and many others lost hundreds of thousands of dollars they deposited with Fanan.
Teva decided that the fluctuations in Maccabi’s results and the antagonism that supporting it might arouse could imperil its own brand. After its rejection, Maccabi signed a sponsorship agreement with the Fox clothing company, which is estimated to have promised $800,000 a year, but Fox has the option to terminate at any time.
The author is a fan of cross-town rival Hapoel Tel Aviv.