An Analysis of Increasing Negotiation Effectiveness in the Sports Industry

Sports stakeholders should understand the key elements of negotiations and ways to increase the effectiveness of their negotiation skills to reach the most beneficial deals. There are two types of negotiations, disruptive negotiation and integral negotiation. Also there is process to follow in to achieve success. Eight steps are considered to have an effective negotiation. First preparation, second gathering information, third leverage evaluation, choosing the negotiation approach, opening phase, bargaining phase, offer and counteroffer phase, and finally closure phase. To increase negotiation effectiveness, a negotiator must have empathy highlighting concessions, speaking for a purpose and using the BATNA. Negotiation is a dialogue between two parties who intend to attain beneficial outcomes over a common issue. Following main principles to effective negotiations can maximize offers and get better services/ products.

An Analysis of Increasing Negotiation Effectiveness in the Sports Industry

Negotiation is a conversation or a dialogue between two or more parties who intend to attain a beneficial outcome over a common issue. The interaction between parties requires compromise on matters of mutual interest to optimize their capabilities. The dialogues’ outcome can be a win-lose situation where one party gains at the expense of their counterparty, or a win-win situation where both parties feel satisfied with what they are gaining or compromising. Negotiations get aimed at resolving conflicts, closing important deals, gaining profits, and establishing relationships. While negotiating, the parties have to trust each other well enough to put their grievances forward in the hope that the opposing parties may consider their position and theirs. Negotiations have brought about competition and raised standards of every industry out of the belief that there are always greener pastures. For instance, the sports industry considers negotiations a main principle to teaming up with contracts that offer the best services. Therefore, sports stakeholders should understand the main elements of negotiations and ways to increase the effectiveness of their negotiation skills to reach the most beneficial deals.

During negotiations, the parties make suggestions, and the other parties offer counteroffers. Each side employs its tactics in the efforts of attaining the maximum outcome. The risk in negotiation is that there are no guarantees that the results will be in your favour, and often the concessions of the parties influence the outcomes. According to Coburn (2020), there are two types of negotiations that the parties employ.

Disruptive is the first one, and sometimes people refer to it as hard-bargaining or positional. The nature of this negotiation approach is a win-lose situation where one party gains at the expense of the other party. The basis of disruptive negotiation is a fixed position on one side, leaving no room for versatility. One party adopts an extreme position, understanding that their terms may not be accepted and seeks to get the most advantage as they can before the deal closes. A disruptive negotiation involves people who have never interacted before and are not likely to soon. Price negotiation for a car or a home counts as an example of a disruptive negotiation as both assets have fixed value prices. This type of negotiation does not happen in the service industry, where both parties have invaluable assets to offer.

Integrative negotiation is the other type of negotiation. Negotiating analyst also refer it to principle negotiation since it is interest-based. Integrative negotiation uses a set of techniques that aim at improving the quality of the negotiating agreements by taking advantage of the different values offered by various parties. Whilst disruptive negotiation assumes a fixed position for each party, integrated negotiation attempts to create value while negotiating through trade-offs, which is compensating the loss of one thing with gains from another or recreating win-win situations through reconstructing the issues of their differences for both parties to benefit.

During negotiations, the concessions aim to solve problems that better the relationship of both parties and maximize their outcomes. Integrative negotiation’s success gets measured by how well both parties approached the underlying interests of the involved parties rather than their starting positions and how well the mutual problems got solved at the end of the deal rather than personalizing the battle. Integrative negotiations call for high levels of trust and establishment of relationships.

The sports industry uses the integrative negotiation approach. The contracts drafted for the players lay out the benefits of both the client and the contractor. Both sides aim at receiving the maximum benefits and growth. The deals leave room for negotiations to even out the plain field and allow both parties’ expression when they feel strained. The agreements on contracts do not get signed against until both parties feel that their concessions have been met. That said, there are a few stages that the negotiation process takes before it gets cleared as successful.

As flexible as the sports industry is on its negotiations through personalization, the negotiations’ stages are paramount to achieving the best outcomes. Zohar (2015) explains that the basic stages are preparation, opening, bargaining, offers and counteroffers, and conclusion of the deal. All stages are interconnected, and a discussion on one phase determines the next.  The preparation stage is the first step and is very instrumental in the negotiation process as it generates confidence and an upper hand (Kukreja & Kukreja, 2020). During preparation, the parties conduct a list of activities to identify an ideal angle to approach their opposing parties.

Gathering information is one of them. The negotiators research on what the problems are and the certain ways that they can solve the problem. Leverage evaluation is the next activity where the parties identify their leveraging position and ways to increase their leverage capacity to maximize their outcomes. One requires to establish a rapport to understand their opponent and how cooperative they are. With such facts in place, the team can now determine what approach to use while negotiating. Preparation sets the tone of the negotiation process, hence paramount, for instance, in the sports industry, the managers, agents, and players research what company offers the best services based on where they want to propel their career. The companies must share the same vision as the player; this way, the player guarantees that his interests get considered.

The next stage is the opening phase, which includes presentation and justification from the parties involved. Each party present their concessions and grievances to each other. This stage creates impressions of both parties on each other to deeply understand their intentions, objectives, and interests. The opening phase births the bargaining phase. The parties get closer and narrow down their objectives to try and find a middle ground that will work for both parties. This phase may take a while since both parties try to accommodate each other. Ferrari-King (2017) narrates that most players who got the best deals held out for their negotiating parties to concede. The basic strategy is to convince each other that the demands are appropriate and reasonable enough not to concede.

When the bargaining phase does not yield any solutions, both parties go back to the drawing board to review their demands, which brings about the offer and counteroffer phase. The parties offer compromises that will satisfy both parties or create a win-win situation. When the two sides find reasonable offers, a closure contract gets drafted by the legal personnel for litigation purposes. Both parties meet face to face for closure or the concluding phase. For players in all sports, every stage should be a face to face meeting to avoid misinterpretation. Although the agents represent their players fully, the dynamic of the industry may lead to contract renegotiations. For both parties to benefit from the negotiations, the parties should find ways to dialogue effectively. Sports (2019) explains various ways that negotiators can increase their negotiation effectiveness in sports.

Most discussions in sports are negotiations of what both parties want. One cannot satisfy the other party if they do not intrinsically understand what they want. Effective negotiations are not easy, and it is not a skill that anyone can master. It is vital for all stakeholders involved in the negotiations to understand that the scenarios include partner and sponsorship agreements. From such a standpoint, then both parties comprehend their positions and what they have to offer.

Sports (2019) explains that for any negotiation to be effective, one must be an active listener. A good negotiator differentiates the person from their concessions. Understanding how the clients are attached to the interests is important to validate their concerns in the negotiations. Changing one’s perspective may reveal some possible solutions that will benefit both parties. Actively listening means asking the difficult and intimate questions that are relatable with the clients. Recalling statements made by the client also counts, such reactions develop rapport on different levels with the clients, hence building trust.

However, actively listening is just the beginning. One has to put themselves in the other party’s shoes. Showing empathy is another way to effective negotiation. Demonstrating a level of understanding helps the counterparty to open themselves up to you and explain more of what they want and how they want it. Focusing on what the other party wants instead of discussing your side, may prompt compromise. The opposite side gets comfortable in dealing with you, which conceives progress on the negotiations. For both parties to feel catered for, some of the demands have to get compromised.

Highlighting the concessions is another main element for effective negotiations. All negotiators understand that hardly do both parties get what they want. Therefore, when conceding to some of their demands, it is important to set markers on them appealing to the counterparty, which prompts a tendency to reciprocate. Another way of effective negotiation is physical meetings. The advancement of technology has made it easy for people who are miles away to communicate within seconds. Although, this may save time and money, it may not lead to effective negotiation. All sports stakeholders have their intentions and interest. It is important to represent one’s interest by being present, besides a rapport is best created face to face.

Speaking for a purpose is also a main element. Too much information may be harmful to your party and may jeopardize the negotiations. Before laying out an important point, discern if it’s the right call or not. Determine what you want to communicate and comprehensively use the information to serve its intended purpose.

Additionally, using Best Alternative to a Negotiated Agreement (BATNA) can yield effective negotiations (Corporate Finance Institute, 2019). BATNA is most advantageous when the negotiators cannot reach an agreement. Understanding one’s BATNA can potentially improve the negotiation outcomes and allow the party to set higher goals. The alternatives offered should be of equal or higher value, and they should be actionable. The sports industry is likely to create more competition by offering better deals and effective negotiation procedures when using the main principles to effective negotiation. All stakeholders should understand their positions’ potential; this way, they can give better offers for themselves and other negotiating parties.

People negotiate daily consciously and subconsciously. Negotiation involves a dialogue between two or more parties who intend to attain a beneficial outcome over a common issue.  It is not easy to reach an effective negotiation since both parties have to compromise and find a middle ground. Therefore, sports agents and players should understand the main elements of negotiations and ways to increase the effectiveness of their negotiation skills to reach the most beneficial deals. By following the main principles to effective negotiations, all sports industry stakeholders can understand the potential of their positions and ways they can maximize their offers and get better services from their counterparties.

References

Coburn, C. (2020, November 13). Negotiation Types. Retrieved December 7, 2020, from https://www.negotiations.com/articles/negotiation-types/

Zohar, I. (2015). “The Art of Negotiation” Leadership Skills Required for Negotiation in Time of Crisis. Procedia-Social and Behavioral Sciences, 209, 540-548.

Kukreja, S., & Kukreja, S. (2020, January 14). Characteristics of Negotiation and Steps of Negotiation Process. Retrieved December 7, 2020, from https://www.managementstudyhq.com/characteristics-and-steps-of-negotiation-process.html#:%7E:text=The%20four%20stages%20of%20the,opening%2C%20bargaining%2C%20and%20closure.

Ferrari-King, G. (2017, October 3). 20 Infamous Sports-Contract Holdouts: Who Won? Retrieved December 7, 2020, from https://bleacherreport.com/articles/2573085-20-infamous-sports-contract-holdouts-who-won

Sports, G. (2019, November 19). How to improve your negotiating skills in sport business. Retrieved December 7, 2020, from https://intelligence.globalsportsjobs.com/how-to-improve-your-negotiating-skills-in-sport-business

Corporate Finance Institute. (2019, November 30). BATNA. Retrieved December 7, 2020, from https://corporatefinanceinstitute.com/resources/knowledge/deals/what-is-batna/#:%7E:text=What%20is%20BATNA%3F,negotiations%20fail%20and%20an%20agreement