In the U.S., there is the very real possibility that the national sport, American football, will not start its season on time because all of the players will be out on strike. What’s amazing is that the National Football League (NFL) and the players are currently more successful than they’ve ever been. The events that have lead us to this point and what happens next will provide opportunities for sales negotiators to watch and learn…
Football Has Been Very, Very Good To Many People
In the U.S., the sport of football is all about making (and spending) money. U.S. Football is the most successful professional sports league in the world. They are estimated to earn US$9B a year!
The NFL makes money in three different ways: they sell tickets so that fans can come and attend games, they sell broadcast fees to television networks so that they can show the games and sell advertising slots, and they sell corporate sponsorships to both individual teams as well as to the NFL itself.
Why A Football Strike Just Might Happen
If a strike happened, it could go on for months. When strikes like this have happened in other U.S. sports such as baseball, hockey, and basketball, billions of dollars have been lost.
The key point that may lead to a strike is simple enough: the owners and the players disagree about how to spend the US$9B in annual revenue that the sport of football generates. Right now, the owners get US$1B of that right off the top. The remaining US$8B is then split 60/40 between the players and the owners.
The disagreement has come about because now the owners want to take US$2B off the top and continue to split the remaining US$7B 60/40 with the players. The owners say that they need these additional funds because their costs have been dramatically increasing. What this means is that the players would be taking a 12.5% decrease in pay.
Just to complicate matters, the owners want two other changes: they want to play an additional two games every season (more tickets, more broadcast fees) and cut pay for rookies.
The players say that they don’t want a longer season because football is a rough sport and more games would mean that they’d have a greater chance to get injured. They are ok with the rookie pay cut, but they want the money saved to go to veteran players – not into the owner’s pockets.
What A Football Strike Would Mean For Everyone
If a football strike happens, there’s going to be a lot of money lost. First off, ticket revenue is going to vanish – if you don’t play a game, then you’re not going to be able to sell any tickets. Next, the corporate sponsorships are going to go away – if you’re not playing games, then the companies are not getting their brands out in front of potential customers and so they are going to have to find other places to spend their money.
It’s not quite clear yet, but there is a good chance that a federal judge may require the football team owners to place at least part of their US$4B in television broadcast-rights fees into an escrow account until things get worked out. If they don’t have access to this cash, at least some of the owners are going to be scrambling to find ways to pay the loans that they’ve taken out.
What All Of This Means For You
From a sales negotiator point of view this very expensive possible strike should provide all of us with a fantastic learning experience. As I’m writing this article, both sides have already been in negotiations for over 10 days. They’ve agreed to extend negotiations by a week and the talks continue.
What you should be looking for is what both sides say publically. The press will be used to communicate bargaining positions to the other side. We should also watch to see what both sides actually do: are they preparing their members for a strike to happen, are they telling them that it’s going to be a long strike?
Most of us won’t be negotiating a US$9B deal anytime soon. However, all of the standard rules of a sales negotiation apply here: you need to prepare for the negotiation, power is a fluid thing that will change sides many times during a negotiation, and it’s always better to show up with a good team that knows their roles.
Watch the news, read the newspaper and take it all in. Hopefully they’ll find a way to resolve this issue and the U.S. football season won’t be impacted, but no matter what happens we’ll all be better negotiators once it’s over!
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: If you were representing the NFL players, what point would you compromise on? What point would you stand firm on?