Dominated by world class athletes, top salaries, player contracts, broadcast media, and team marketing, the professional sports industry has evolved from a simple pastime into a multi-billion dollar business venture. And, with the added factors of unions, endorsements, and naming rights, top negotiation skills are crucial for all agents, executives, and team representatives.
On November 12, attendees at The Philadelphia CFO Leadership Council’s monthly speaker event had a wonderful opportunity to gain some useful tactics and strategic advice from local industry executives during a presentation of The Business Of Sports: Locker Room Negotiations For CFOs.
Our speakers included:
Here’s what they told us:
Easy Access To Contract Information Can Affect Negotiations
Because salary specifics and athlete contract details are readily accessible through unions, negotiations can get very competitive. Information accessibility is not always a positive factor since, in many cases, players generally want what others have. And, as the competition levels increase, it is the responsibility of every agent to create balance between teams and players, presenting each athlete in the most positive way. However, compromise is not always a simple solution. Contractual obligations to protect players only go so far and, as a result, some of the most heated negotiations tend to focus on the length of time that it will take for a player to recover in the case of an injury.
Success Is Not Based Strictly On Revenue
Despite the number of large scale celebrity events and publicity within the industry, revenue strength is not about squeezing out the last dollar. It’s about creating a first class environment that values players, staff, and fans. But, even more important, many industry CFOs agree that they do not measure success by the money generated. Instead, it’s the number of championships that are won. In other words, it’s all about the rings, not the dollars.
Positive Media Relationships Are Key
Maintaining a favorable working relationship with the media, both traditional and social, is crucial, even in the case of negative publicity. With professional sports, everything is “under a microscope” and it is important to protect players’ confidentiality, keeping in mind that the foundation of the industry is built upon solid, trusting relationships. And, in an environment based strongly on reputation, it is imperative that agents establish themselves with the level of respect that will encourage teams and players to recommend them rather than avoid them.
Budgeting Goals Should Be Flexible
In many cases, it’s not just the money that is important. It’s a balance of many items that go beyond financial data and take into consideration the overall goal of winning a championship. As a negotiator, it is crucial to think as a business partner, not as a financial analyst, and always fully understand what players, staff, or vendors need to attain the most successful outcomes. Skillful negotiation goes far beyond the “show me the money” mindset and focuses more on personal needs, such as the quality of a team facility or the relationship between a player and a coach.
As for general advice that can be applied to all industries, here are our panelists’ recommendations for success:
- Negotiations should not be adversarial. Instead, they should help to promote partnerships.
- Be cognizant of what the other side is getting.
- Keep in mind that, sometimes, what works in the short term might not be a solution for the long term.
- Understand your limitations and always remember that, if only one side wins, nobody wins.
If you have any questions, comments, or suggestions or if you would like more information about any of our outstanding topics and speakers scheduled for 2016, please contact us. In the meantime, we encourage you to register today for our next chapter event on February 11, Due Diligence Pre- M & A.