Many authors and authorities have written about the skills and tactics in negotiating contracts. “Getting to Yes: Negotiating Agreement Without Giving In” by Roger Fisher and “Trump: The Art of the Deal” by Donald J. Trump and Tony Schwartz are just two examples of works praised by many as exemplary to learning the art of deal making. In deal making, most times the parties have opposing interests, but common ground being that those involved want something from the other.

Deal making is something that is practiced, learned, and perfected through experience and wisdom. Before entering law school, sure there were real life negotiation experiences with parental figures and employers that concluded in “The Good, the Bad and the Ugly” ways. As American Actor/Director Clint Eastwood once said, “A man’s got to know his limitations.” It was the law school education and experiences with clients, both as an intern (“the apprenticeship” if you will) and working with clients as an attorney that communicated the most about getting to yes without selling the farm.

Sports negotiations are no different. Sports negotiations may be more televised, reported on, and reviewed, but in the end, it is two parties who want something from the other and they want it bad enough to come to a contractual agreement to make the exchange. A colleague once said, paraphrasing, the true test of skill in a negotiation comes down to salesmanship because if the other side does not want what you are selling you must show why the deal should be made. You see, in the sports, and in the entertainment business, industry leaders will tell you that talent always sells itself.

A famous movie director, whose name escapes me during this current thought, once quipped that it is truly a miracle that offers to sign talent are ever made because in a world of high performance and excellence, there is always the next best thing. However, when two or more parties are courting each other, the question then becomes at what terms, length, and cost. Interestingly enough, when it comes to the terms, length, and cost, deal making is as much about foresight into the future as it is about insight into your client’s needs.

 

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Here, we will look at the five essential skills negotiators must utilize prior to and during a negotiation.

Step One: Insight

Listed first for a reason, insight, or rather research and knowledge of your client and the opposing party in a negotiation is the most important aspect in all negotiations. If you do not know your client’s interests and limitations, how can you know what to negotiate for? If you do not know the interest(s) or limitations of the team or otherwise employer of talent and their representatives, how can you know where to begin with the first offer or acceptance of any offer? If you are not familiar with similarly situated talent in past negotiations and contracts, how can you compare and contrast what your client is worth or whether a deal makes sense to make at all. Knowing your client and the proverbial or real person sitting across the conference room table is the first and most important step to begin and end any deal.

In other words, preparation prepares you and your client for changing circumstances and predicting outcomes. Anything less than full preparation is, at least in the legal realm, unethical, and in any setting, impractical, inconsiderate, and unprofessional. Simply, preparation will prevent you from offering or accepting an ill-conceived contract. Research and knowledge of your client, all those involved, the industry in general, past contracts and deals, and limitations of any collective bargaining agreements, laws, or regulations, will set the best foundation for you to make the best deal for your client. In addition, both sides will be happier with you having done your research.

At the least, you can utilize information to make a better deal for your client knowing that salesmanship through promises and predictions begin with insight in deal making.

Step Two: Foresight

When comedian and Seinfeld star Jerry Seinfeld negotiated for syndication rights, he ended up being the one smiling all the way to the bank, while his co-stars in the show conversely sought upfront payments. Former New York Mets outfielder Bobby Bonilla is still getting paid by his former club, but why, and more importantly, how? Per ESPN Senior Writer Darren Rovell,

“Bonilla’s agent, Dennis Gilbert, was an insurance agent at the same time he developed into a superagent (Gilbert’s clients included Bonilla, Barry Bonds, Jose Canseco and Danny Tartabull), so he was more uniquely prepared to understand annuity-type payouts than other agents.”

Here, we have experience, and experience that led to foresight, and foresight that led to more favorable terms for the client. That being said, the employers of talent also benefited because upfront money was harder to come by in the beginning before payouts so that led to opportunities to be creative in the negotiation. Foresight, as the saying goes, is worth its weight in gold.

Step Three: Adaptability

The Seinfeld and Bonilla examples also demonstrate adaptability, and in some sense using adaptability to change or create leverage. Seinfeld was unlikely to be paid much more than his co-stars in upfront money so he and his representation foresaw an opportunity. There was less leverage on the front end to make out financially, so Seinfeld took less up front to leverage larger payouts through syndication on the back end. It was a risk, but when you bet on you, it usually pays out. Seinfeld “adapted” his perceived lack of leverage and it resulted in a terrific deal. Furthermore, and let us be honest, NBC and all involved made out financially as well.

Bonilla’s situation was a bit different, but similar to current sports contracts with some of your favorite stars. A team’s ownership may lack resources up front, but it takes a risk for longer term payouts, with interest, thinking that when we sign this player, we will see an increase in ticket and merchandise sales, while also increasing our chances in winning games, and therefore more ticket and merchandise sales. In today’s market, this also means more television dollars and media rights to be sold at higher values. It also means more advertising dollars from business partners through today’s grown-up version of street corner sign holding and spinning. Bonilla, conversely, could have requested more money up front from the franchise or sought to sell his services elsewhere, but because he and his agent realized the short shelf life of a professional athlete, they took less up front to make more long term.

In some sense, adaptability is about logic and humility, which, leads us to the next point.

Step Four: Limitations

This section may as well be called overreaching. Alternatively, in a world of unresearched and unchecked fandom, fantasy sports, and arrogance, “Pride [always] comes before the fall.” (Proverbs 16:18.) In some cultures, like in Japan and China, deal making is more about relationships and honor than it is about concepts and terms. Overreaching may as well be an end to a negotiation before it begins.

An example of overreaching is that of Michael Orvitz, former head and co-founder of the Creative Artists Agency (CAA). This is a story of the talent rep becoming the talent. Well, in this case, the all-powerful talent representative turned talent was negotiating his own contract to take over Universal/MCA Studios. Per Larry McShane with the New York Daily News:

“Ovitz had made the deal for Edgar Bronfman Jr. to buy Universal Studio in 1995, he negotiated an astounding deal to run it — bringing along a team that included [co CAA founder Ron] Meyer.

Ovitz kept pushing and pushing, until the final package, over $400 million, seemed too good to be true. It was. Bronfman swiftly backed off those numbers and the deal fell apart just as Ovitz’s supposed triumph was hitting the press.

More humiliation loomed. David Geffen, among others, convinced Meyer to take the Universal job. That left Ovitz alone at the agency in a zombie-like state as Meyer ascended. [Eventually Orvitz landed at Disney on a lesser deal that he came to regret and quit two years later.]”

There are limitations in every negotiation. Limitations set by the talent’s abilities and the employer’s pocketbook and expectations. Finding that spot between the two is an art form that takes times and research. Again, as Clint Eastwood once said, “A man’s got to know his limitations.” In negotiating, you have to know your limitations and theirs, equally.

If you care about negotiation strategy and want to know more, a quintessential piece on that and the sports/entertainment industry, yesterday and today, read James Andrew Miller’s Powerhouse book. It is a telling combination of aspirations and limitations.

Step Five: Closing

“A.B.C.: Always be closing,” Alec Baldwin said in Glengarry Glen Ross, combined with the similarly legendary “Show me the money” retort by Tom Cruise in Jerry Maguire, play well together and demonstrate the above skills coming together to make a deal. A baseball general manager colleague once said in passing, “I love making deals. If we are not making a deal, why meet?” Are you more afraid of success than failure? Some are, and while only moving through and past your fears will close the deal, it is the recognition of understanding why two parties are at the table in the first place that begins and ends an agreement.

Remember, talent wants security, for themselves and their families, and a team to play for, for the right price. Teams and employers want talent that sells to the public and their current and prospective business partners. In many ways, talent promises results, while employers predict results. Both are attempts that come at a cost, with terms and conditions.

The above five essentials to deal making can be applied to any negotiation. For example, a team wants to trade one talent/player for another or any other potential deal you can envision. Remember:

First, insight brings information and protection against bad deals.

Second, foresight allows one to measure the market and future opportunities.

Third, insight and foresight can lead to adaptability to continue a deal, while standing your ground where needed. The negotiation annuls of history are fraught with stories of those who said no to deal only to get a better deal down the road.

Fourth, limitations are a part of insight, foresight, and adaptability, showing what a person, place, or thing can and cannot do. Avoid overreaching by doing your homework.

Lastly, fear is not a part of negotiating. Lack of knowledge begets fear. Fight fear with insight, and there we have come full circle. Remember why you are at the negotiation table. If you are not closing a deal, then why meet?

 

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About The Author

Editorial Writer
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Jeremy M. Evans is the Managing Attorney at California Sports Lawyer®, representing sports and entertainment professionals in contract drafting, negotiations, licensing, and career growth. Evans is an Outreach Captain for the Sports Lawyers Association and is an award-winning attorney and community leader. He can be reached at [email protected] or via his website: www.CSLlegal.com.

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