In corporate finance, the agency problem usually refers to a conflict of interest between a company’s management and the company’s stockholders. The manager, acting as the agent for the shareholders, or principals, is supposed to make decisions that will maximize shareholder wealth even though it is in the manager’s best interest to maximize his own wealth.
I was thinking about this while reading Joe Hilderbrand this morning on the Folau saga.
Even leaving the moral question aside you have a national football team whose primary sponsor is an out and proud Australian company in the form of Qantas. It’s a bit rich for Folau to effectively say to its CEO: “Hey, you’re going to Hell — but can you please keep giving me money?” Let alone saying it twice.
Indeed, one might easily accuse Folau of gross hypocrisy by happily taking a gay man’s patronage while at the same time condemning all of his kind and then crying poor when the money runs dry.
At first glance that seems to be a reasonable point. It is a bit rude and somewhat hypocritical. But Qantas CEO Alan Joyce is not the patron here. He too is an employee and has the job of maximising the Qantas share price. Now I understand that Qantas needs to advertise and having their logo on the Rugby Australia jumper is a form of advertising and so on.
But that commercial relationship is not patronage. It should not be seen as patronage – the money Qantas gives (or service in lieu of money i.e. zero-price flights etc) to Rugby Australia belongs to the Qantas shareholders. Now I don’t know if Alan Joyce is a rugby fan or not but I would hope that sponsorship decisions are viewed as being purely commercial relationships.