Thursday, March 08, 2007

Negotiate ‘Off The Line’

In late Feb. ’07 the Edmonton Oilers ice hockey team dealt away one of their top players, Ryan Smyth, to the NY Islanders. Many were surprised, because Smyth is a native Canadian, (he grew up near Edmonton in Banff) and Canadian teams don’t often trade away Canadian players—it ticks off the locals. Why they did may have been a miscalculation by Smyth’s agent, Don Meehan.

Apparently, and I have no inside information (I read, Meehan and team G.M. Kevin Lowe were talking right up to the trade deadline, and were about $300K apart out of $5 million a year on a five-year deal. (Imagine the airborne testosterone.) Who is going to blink first? Meehan supposedly did not think Lowe would do a trade, but would blink first and kick in the extra 6%. Instead, Lowe picked up a phone and traded Smyth away.

Doing that, he ticked off fans but also scared every player negotiating with him for several years, until the memory fades. He probably pays a lot less for the player he gets for Smyth, giving him money to buy other players and maybe wins more games each year over the long haul. Also, he wounds Meehan’s reputation, perhaps helping himself even more, since Meehan has several players in his stable. There’s another hooker: not having signed a 5-year contract as they were discussing, Smyth apparently becomes a free agent in a few months, and Lowe can try to get him back, but maybe at his price.

I am not going to second guess what should have happened in the emotional last 30 minutes. I am instead going to talk about how difficult it is to bargain when you insist on inching along the line that separates the two parties on price, each making small concessions.

Bargaining experts suggest you get “off the line.” Here’s what I mean—and from here I allow myself a bit of fiction, since I don’t know the facts about this hockey player. Maybe the length of the contract could also have been put in play. Depending on his age and injury history, Smyth might want a contract longer than five years, to protect himself. Lowe (management) might really have wanted a shorter contract, if Smyth’s future beyond three years or so is uncertain.

Meehan, the agent, might have offered to do a four-year deal, but with a guaranteed fifth year if Smyth scores so many goals the fourth year, in exchange for the $300K per year. Presumably, he knew his client’s needs exactly at this time, and had “chess-boarded” what might happen at the last moment. What if Lowe, the G.M., sees a long future for Mr. Smyth and refuses that? Then Meehan can suggest—or Lowe might—a longer deal than five years, with a few more bucks per year.

Or there could be bonuses each year for goals scored, or opponent goals blocked (or major opposing players sent home on medical leave—maybe not).

The point is that it is no longer a pure blinking contest. When there are continuing relations between the negotiators, no one really wins a blinking contest. It makes everything a personal contest, with the players as pawns. Better to get into shared problem solving. (Better, also, not to bargain in the last 30 minutes, but humans tend to procrastinate, including me.)

Bargaining ‘off the line’ is an example of what negotiation pros call moving from the personal to problem solving—treating the situation as a problem both sides want solved, and working together despite different interests to satisfy the both interests as well as possible. It’s a lot less stressful than horse-trading and gets better results.