From the sidelines, professional athletes have leverage that corporate negotiators can only dream of. Endowed with unmatchable skills and advised by top agents, stars like Alex Rodriguez, LeBron James, and Maria Sharapova can just name their price, threaten to walk, and receive untold riches, right?
Not quite. For anyone who has followed the saga of Terrell Owens, All-Pro wide receiver for the Philadelphia Eagles, it’s clear that even a star needs to play by certain rules. When Owens’s agent, Drew “The Shark” Rosenhaus, fumbled an attempt to secure a better contract for him, Owens vented his displeasure by insulting his teammates and was effectively terminated.
While Owens’s situation is an extreme example of how aggressiveness can backfire, other top agents say they are just as restricted by basic negotiation principles as the next guy. “There has to be some resolute willingness to push the envelope,” says sports agent Leigh Steinberg, head of Leigh Steinberg Enterprises and the inspiration for the character Jerry Maguire in the 1996 movie of the same name, but “you need to remember that all humans have ego and pride, so the key is to try and avoid confrontation.”
Can the intricacies of sports negotiation offer any lessons for finance executives? Sure, signing All-Star pitcher Roger Clemens to another year is much more glamorous than brokering a better compensation package, selling off a business, or quelling employee dissatisfaction. But the similarities outweigh the differences. Deal-making in the corporate world involves “the same dynamics” as negotiating sports contracts, says Peter Carfagna, who oversaw contracts for the likes of Tiger Woods while he was chief legal officer at International Management Group and now teaches negotiation strategy at Case Western Reserve University. Even when you have a good deal of leverage, he adds, “you have to use it selectively, so you develop a reputation for being reasonable.”
Make a List, Check It Twice
The first step, say many agents, is to catalog what you want. The longer and more varied your wish list, the better. “You should itemize a whole litany of requests, which become bargaining chips,” says Bill Duffy, agent for National Basketball Association stars like Yao Ming and Drew Gooden. That strategy essentially means padding your must-haves with nice-to-haves and not disclosing which are which. “You may have things that you’re willing to throw away, but your opponent doesn’t know that,” says Duffy.
Knowing the priorities ahead of time makes it easier to concentrate on the things that matter most to your client, says Lon S. Babby, agent for the NBA’s Grant Hill and Ray Allen. He gives clients a list and asks them to rank about 15 criteria, from salaries and incentives to state income-tax considerations. Such lists are just as critical in corporate deals, although they may not appear until the later stages of a negotiation. “A lot of people think it’s just about price, but it’s often more subtle,” says Peter Falvey, managing director at Revolution Partners, a Boston-based investment bank. In his experience, concerns like liquidity and employee provisions often take precedence.