Aaron Hernandez was arrested June 26 on charges of murder, and two days later the New England Patriots waived him from the team.
This past Saturday, the Patriots opened the team store early so fans could exchange at no cost their Aaron Hernandez jerseys for any Patriots jersey in the store.
By closing time on Saturday, more than 1,200 jerseys had been exchanged, a cost to the club of approximately $200,000.
Why would the Patriots voluntarily make such a costly offer?
A 2012 study commissioned by Aon, the multinational insurance company, concluded that when a reputation-threatening event occurs, “there is an 80 percent chance of a company losing at least 20 percent of its value (over and above the market) in any single month, in a given five-year period,” and “in each case, the value loss was sustained.”
Forbes magazine estimates the Patriots’ value at $1.635 billion.
It’s simple math. The Patriots figured $200,000 was a small price to pay to maintain their reputation as one of the most successful NFL teams in modern-era history.
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Business schools teach case studies. Hollywood blockbusters are inspired by true events.
Exceptional leaders are students of history. Decision-making comes with the territory.