On March 2nd of 1969, the first Concorde jet took to the skies. It was a miracle of research and diplomacy, eventually earning the 2006 Great British Design Quest award due to its design. It was a passenger aircraft first conceived of in the 1950s, an incredible jet with the ability to hold around 100 passengers with a maximum speed of over twice the speed of sound. It required the combined efforts of England and France to design with its namesake, Concorde, actually deriving from the French word for concord, meaning an agreement between groups. The Concorde jet was an incredible achievement that took an alliance between two famously hostile nations and over 1 billion British pounds (over 7.5 billion in today’s money.) It was also one of the most ill-advised decisions in business history.
The Concorde jet was an incredibly expense aircraft with very little practicality behind it. Only Air France and British Airways actually purchased the plane to fly commercial flights, and the standard ticket cost well over $12,000 after adjusting for inflation. The jet also had an obvious issue to overcome that made it problematic as a commercial airliner. The jet had a maximum speed of over mach 2, meaning that even when operating at half of its maximum speed, the Concorde jet would cause a sonic boom. Now you don’t need a physics degree to understand the issues this would cause when the plane flew out of your local airport, but it doesn’t hurt to examine it. The pressure waves due to the displacement of a jet travel at the speed of sound and when an object is traveling faster than the speed of sound, those pressure waves are folded on top of each other as they are pressed together by the aircraft, eventually compressing into a single wave. This gigantic shock wave eventually is released in a cone behind the aircraft as it passes, trailing the aircraft throughout its entire flight. This is devastating for two primary reasons. The sound of a sonic boom is startling and could easily damage the human ear at a reasonable distance. It can also be so powerful that it can damage structures with shockwaves, even damaging buildings and roofing well below the traveling aircraft. Even with a large degree of planning for these issues, you could easily cause damage to both property and individuals far from the aircraft itself. In fact, there would eventually be a class action lawsuit resulting from approximately 15,000 complaints from civilians in England who had either suffered damage to their ear or property.
Ignoring the difficulties the aircraft would obviously suffer from its supersonic travel, the Concorde jet was also wildly impractical. The price tag for a ticket was approximately 30 times the cost of a bargain ticket at the time and its potential destinations were obviously limited. To make matters worse, the Concorde was extremely inefficient with fuel, consuming around the same amount of fuel as other commercial airliners that could hold over 7 times as many passengers. It also had serious safety concerns, as its immense speed and sleek design left it extremely vulnerable, resulting in a 2000 crash in which its landing gear was damaged early during takeoff resulting in over 100 deaths. On top of all of these problems, the jet also had monumental operational and maintenance costs. The airplane itself cost well over 100 million British pounds, adjusted for inflation from 23 million in 1977, and only 20 viable aircraft were ever produced and only two airline companies actually operated them, accounting for 14 jets. Those companies were only able to turn a profit because the French and British governments agreed to absorb most of the immense development costs, which had risen from the expected 70 million British pounds to about 1.3 billion due to poor estimates and delays. In the end, after fewer than 30 years in operation, the Concorde was retired due to its many flaws.
Beyond sharing the name “Jet” with our New York franchise, how do the Concorde jets relate to our New York Jets? Well, this cautionary tale is one of the first to be taught in many business schools. It is a cautionary tale because it reminds us of the risk of pride and the sunk cost fallacy in business. At the end of the day, the Jets are a business. The owner spends mountains of money on the team because it produces bigger mountains of money in revenue. A good owner has to operate the team like a business with a focus on winning games because teams that win make more money. Obviously a team in a major city like New York City has the potential to earn more than a smaller audience like the Buffalo Bills regardless of the team’s success, but that doesn’t negate the fact that more wins means more dollar bills. The Green Bay Packers have been a pretty consistently dominant team over the last few decades and according to a recent Forbes article, they rank 12th in team profitability despite a city population of just over 100,000 and a state population below half the city population of New York City. Teams that win get a lot more bang for their buck, and good business decisions by the owners will result in both wins and money.
With all that in mind, how can the Jets still employ a coach like Adam Gase after a pathetic loss to the tanking, winless Dolphins? Well, some might argue that Adam Gase is under contract and the Jets would waste millions if they fired him. It may also be a poor decision to force your young quarterback play in his third offensive scheme in less than two years. It’s definitely a bad look for a team to hire and fire a coach in a 10 month period. There’s a lot of arguments to be made about the damage you can potentially cause by firing a coach midway through his first season when he was hired to mentor a young QB. This is why we look at the jets of Concorde for advice about the Jets of New York.
These arguments are simply wrong, not from an emotional standpoint (and trust me, fans are emotional about Gase right now), but also from a business standpoint. The Concorde jet was a poor financial decision from the get, but the continuation of the program is baffling from a logical, business-minded standpoint. If the Concorde was going to be so expensive to build with such a limited market, why wouldn’t the project just be scrapped early on? This is where the issues of pride and the sunk cost fallacy come into play. The sunk cost fallacy is pretty simple to understand. If a company spends $50 million on a project, they are going to want to get something back for their money. If you invest $100 in a startup, you will feel similarly attached to the company. The belief is that this money feels like an investment that should pay off, but the reality is that the money is gone. If the startup is going to fail, the investor is best off cutting ties and accepting the loss. This isn’t easy to accept, but it’s fact. To give a Jets-related example, consider this; the Jets have Trumaine Johnson under contract for three more years after this one. Next year, Trumaine Johnson will cost the Jets $15 million against the cap next year, but cutting him will cost the Jets $12 million due to his guaranteed money. Let’s just assume that the $3 million difference would be the cost of replacing Johnson and somehow that replacement player is even worse than Johnson (unlikely, but for the sake of argument, play along.) Well, now the Jets have saved no money and have actually gotten worse! That’s just not how it works, however. If the Jets make this decision and then cut Johnson in 2021, it will still cost the Jets $8 million because Johnson will still have guaranteed money through 2022. Even though cutting Johnson next year will only save a net of $3 million against the cap in 2020, it will save them $11 million in base salary. In the long run, the difference between cutting Trumaine Johnson in 2020 rather than 2021 is $11 million. That guaranteed money is a sunk cost and there is simply nothing you can do to get it back. Continuing to employ Trumaine Johnson because of it would be a prime example of the Jets succumbing to the sunk cost fallacy. The makers of the Concorde jet continued to pump money into the program at times for similar reasons.
On the other hand, you have the issue of pride. For the Concorde to be built, it took millions of dollar and massive research treaty between France and England. The Concorde itself is one of the most revolutionary and technologically advanced achievements in aeronautics. Both countries were proud of their success in developing the most advanced aircraft of the time and it told the rest of the world that Europe was on the forefront of aeronautic technology and research. Admitting failure when the plane was collapsing under the weight of its development costs would have been a massive embarrassment for both governments. Other countries might have also just assumed that even with their collaboration, the two nations incapable of developing such technology. To save face on the global stage, the countries were determined to complete the project. It’s hard to miss the parallels here between the geopolitics of the Concorde jet and the NFL politics of the New York Jets and their ownership. Considering how poor Chris Johnson’s brief tenure as the Jets overseer has looked thus far, it’s easy to see how difficult his position is right now.
On a personal level, this example is particularly interesting to me. I began my college program studying aeronautics due to a fascination in physics. After changing majors and graduating from college, I went to business school to get my MBA in risk management due to a similar fascination in business. The Concorde jet is as impressive an example of aeronautical engineering as it is a prime example of bad business. The jet itself is a massive achievement, but it was wildly impractical and should have been abandoned early on, saving millions of British and French taxpayer dollars (or pounds and francs at least.) The Jets have never made me think so literally about their name than in 2019. Not many people are defending Gase at this point. It seems obvious that he should be fired. As an owner, the decision isn’t as easy. If I were Chris Johnson, I would be extremely embarrassed to admit that my first major decision in the owner’s chair was such a colossal failure. That would actually be firing Maccagnan after giving him the reigns to the draft and the biggest free agency spending spree in NFL history. Now you have to admit that your other big decision was possibly an even larger failure. Most people would be looking for an excuse to make these decisions look better. Any excuse you can make for retaining Gase at this point is simply an argument for pride and sunk cost. There are no excuses: Chris Johnson needs to admit he made a mistake. Gase needs to be fired and the Jets need to accept that they are going to need a multiple season rebuild to become a respectable franchise. I don’t get to make decisions for the team. I can only hope that the people who do will look at the facts and accept them.