What's So Funny 'Bout Peace Love and Understanding

2011 was a transformative year for sports.  The big three of the four major professional sports leagues all signed new Collective Bargaining Agreements.  One of them went smoothly, one went poorly, and the biggest, baddest one of all got done just in the nick of time.  In 2012, the NHL appears headed to a similar brink with its players' union (again), but as of this writing those two sides appeared to be progressing in the direction of a settlement.  Fans of all sports are hopeful that they may be entering a new era where long-term labor peace reigns over the teams, sports and stars they love.

But the biggest two sports stories in 2011 came from college football and both, to different degrees and in different directions, concerned power in sports -- the abuse of power in one case, and the consolidation of power in the other.

In the latter, the power football conferences finally cracked and scrambled like so many eggs at a tailgate brunch.  Missouri and Texas A and M bolted the Big 12 for the SEC.  Pittsburgh and Syracuse, a founding member of the Big East, both ditched that stalwart conference for the ACC.  Colorado and Utah left their homes to turn the Pac-10 into the Pac-12.  And other teams left lesser conferences to fill in the gaps.

These transitions, of course, were all about media rights, networks and bowl games, and how all of those factors blaze a trail to new revenue streams.  Following in the lead of conference networks like the Big-10 Network, and of school specific networks such as ESPN's Longhorn Network, which supports sports at the University of Texas, conferences and individual schools sought new ways to maximize revenues.  Ultimately, this would lead in 2012 to the biggest game-changer of all, the dismantling of the Bowl Championship Series after 15 years, and the commitment to a 4-team playoff from 2013-2025.

That story will ultimately be more important for business, but the shocking story of Jerry Sandusky's child sex abuse revelations at Penn State, and how they dismantled a legendary coach and the storied program he led, was certainly more salacious.  Ultimately, given the sanctions leveled at the University, this story too will have a shelf-life beyond its headlines, and will have a lasting impact on college sports.  In this case, the NCAA found ways to extend its authority beyond its previous borders, and took a proactive stance both in making a statement about the current case (in that it was all about the abuse of power, and the de facto dictatorship that existed in that State College culture), and in making certain that all schools understand the lengths the NCAA is willing to go to make sure no other case like it can ever happen again.

The effect of these two stories combined is that at the dawn of the college football season in 2012, the sport's landscape is unlike anything we have ever seen before.  When the season kicks off in full, new rivalries will be borne at the expense of historic ones.  Traditional powers will have been rendered impotent.  The governing body of the sport has used right to make might.  And the cool flow of money will eventually rinse everything clean.

Negotiations

In sports, there is little left unclear.  There is a final score.  There are winners and there are losers.  There is the thrill of victory, and there is the agony of defeat.

In the business of sports the latest evolution, at least at the corporate level, is to find win-win partnerships that are about mutual gain, as opposed to the older models of spending to purchase assets.   There are ways to create partnerships where everyone benefits from the associations and initiatives.

Ideally, the contract negotiations between athletes and the teams the play for would find similar common ground, but according to Ian Greengross, NFL Player Agent and Partner at Ultimate Sports Agency, that’s not always the case.  When it comes to applying the notion of principled negotiations to contract negotiations, Greengross says that “even those negotiations that are principled are still about leverage.  In the National Football League, teams almost always have the ability to force certain restrictions, like a franchise tag, so our negotiations are always about position and much less about principle.”

One of the primary issues that hampers principled negotiations in sports projects is that it is very difficulty to find objective criteria that can help create common ground.  Some positions, like offensive line, have few statistics.  Other positions can create players who are statistically poor but who provide other important pieces to victory.  In other words, objective stats don’t always provide the whole picture.  That said, the general spread of a contract is principled almost by definition.  As Greengross says, “It’s rare that we have a 7-million dollar difference between what a team thinks my player is worth, and what we think he’s worth.  Principle will set the range, but it’s the leverage that ultimately determines the final number.

Another big difference in athlete conference negotiations is there is a limited amount of supply and demand, and there is always a deadline.  There are various mechanisms in place that create a kind of artificial clock.  These instruments are designed to help players get under contract to the teams that first held their rights.  A player ultimately has a limited number of places in which he can sell his abilities.  This leads to difficulty for both sides as they attempt to create a BATNA.  Greengross says, “We HAVE to get to a resolution. There’s only two choices if we can’t agree – either I take their position or they take mine.”

All this being said, the way these deals get discussed in the media, fans might assume that player contracts are always contentious, difficult and full of dirty tricks.  Greengross says that’s not really the case.  He says most teams are “just trying to achieve their objectives.  They always want the player at the lowest reasonable price the team can accept.  My job is the converse, because it’s the highest dollar the team will reasonably accept.  Somewhere in between the competing forces we get a deal done.”

In the end, there’s simply too much at stake for men to behave badly.  If a team lies about giving a player an opportunity, or if a team rescinds an offer without giving a player and his agent fair warning, that bad acting will have residual effects.   To the agent, that indicates that the team, or that particular representative of the team, is untrustworthy going forward.  Ultimately, Greengross says,  “In a limited supply pool, I control some of the supply, and it not only affects future negotiations with this particular player, but of all of my future players because I can’t trust them.”

So in the cutthroat world of professional sports contract negotiations, the point is that the theory of principled negotiation can be effective, but only to a point.  The structure of the system ensures that principled negotiations will set the parameters of almost all contract discussions.  There’s too much at stake to do otherwise.  But when it comes down to the final completion of the deal, outside forces often cause sides to take up hard positions.  Ultimately, the leverage inherent in the market will determine which side wins out.