Notes on Negotiation
Written by Marty Latz, Latz Negotiation Institute
Sports superstars are a different breed. Many have been treated like prima donnas since they first exhibited otherworldly physical skills in their chosen sport, some as early as 10 years old.
As a result, they often have different interests than the rest of us. This was crucial in the negotiations between Nike and perhaps the greatest basketball player ever, Michael Jordan, as depicted in the movie “Air.”
In last month’s column, I identified three negotiation lessons from that movie: 1 - Do your strategic intelligence gathering about your counterpart, 2 - Exhibit perseverance and creativity, and 3 - Don’t underestimate the value of brainstorming.
Here are five more.
1. Home in on your counterpart’s core interests
In 2005, the Phoenix Suns basketball team had just made it to the conference finals led by NBA MVP Steve Nash and All Stars Amar’e Stoudemire, Shawn Marion, and Joe Johnson.
A year prior, the Suns’ owner Robert Sarver and Johnson couldn’t reach agreement on a $50 million contract extension despite only being $833,333 a year apart.
The next year as a restricted free agent, Johnson signed with the then lowly Atlanta Hawks for $70 million. Importantly, Johnson asked the Suns NOT to match the Hawks’ offer – expressing a clear desire to leave Phoenix.
Why did he leave a team that would have competed for a title as the money would have been the same? Johnson “felt like the Suns tried to lower his value” by not making him an offer, according to The Arizona Republic.
Johnson felt disrespected, a core fundamental interest for sports superstars.
Likewise, Jordan in the movie felt that Nike basketball’s global marketing efforts would revolve around his unique charisma and abilities. Yes, money was a factor. But Jordan’s non-financial core interests were also crucial.
2. Create leverage by differentiating from your competitors
Nike’s Sonny Vaccaro brilliantly maximized Nike’s leverage by urging Jordan’s Mom to focus on what Nike and its two competitors could do to promote her son. How? He told Jordan’s Mom that Nike’s competitor Converse could never maximally market her son as it was already committed to then NBA superstars Larry Bird and Magic Johnson.
He also suggested she ask Adidas, Nike’s other competitor, about its decision-making structure. Why? Vaccaro knew Adidas was experiencing internal management challenges that could limit its ability to promote Jordan.
Bottom line: Vaccaro knew his competition inside and out and how Nike differed in its ability to satisfy Jordan’s long-term goals.
3. Super aggressive goal-setting can pay off
“If we’re going to make it, we gotta take risks,” Vaccaro told his Nike bosses. And he put his job on the line for it. Now, I am not suggesting you put your job on the line in all your negotiations.
But sometimes it’s worth going for that big home run.
4. When you meet makes a difference
Vaccaro traveled over 2,000 miles to meet Jordan’s Mom and make his pitch. After sitting down with her, he asked if he could meet Michael while he was there. She said “you don’t need to see him, it’s not time for that.” She was right.
When, how, where and with whom you meet should be strategically decided (and are essential elements of my 5th Golden Rule, Control the Agenda).
5. Precedent helps a lot but may not be dispositive
I urge everyone in my training programs to research the precedent in their negotiations. Find out what provisions have been agreed to in the past by your counterpart in similar circumstances.
Humans have a psychological tendency to try hard to be consistent. So finding and highlighting what your counterpart agreed to in the past will increase the likelihood they will agree to it again.
This can help a lot, but it may not get you across the finish line. In “Air,” Vaccaro responded to Jordan’s Mom requesting a unique term by saying “I agree with you, but that’s just not how the business works."
That was true. But Nike’s founder Phil Knight decided to change the way his business worked. That provision is now precedent in almost all basketball superstar endorsement deals.
Latz’s Lesson: The Nike-Michael Jordan negotiation and partnership ended up being a slam dunk for both parties. This team effort involved core interests, differentiation and leverage, aggressive goal setting, meeting at the right time, and precedent.
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Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts' proven research. He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com
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