It took about four years, but many athletes in the National Football League (NFL) were pleased when they signed a 10-year labor agreement with league owners back in 2011, according to Kevin Mawae, a former NFL player who was president of the NFL Players Association (NFLPA) during the negotiations. The story of how perceptions—and fortunes—shifted serves as a win-win negotiation case study.
Can a win-win negotiation look like a lopsided deal?
Back in early 2011, as they tried to negotiate a new collective bargaining agreement (CBA), the NFL and the NFLPA reached an impasse on the issue of player salaries. Arguing that league profits were declining and that more funds were needed to build new stadiums and bolster small-market teams, the owners asked the players to sacrifice $1 billion of their earnings off the top to help fund such investments before revenue sharing would begin. The NFLPA demanded proof of need, but the NFL refused to share the full set of financial statements the association demanded.
The impasse led to a player lockout that threatened the 2011 season. In the end, though, creative thinking allowed the parties to move forward. Rather than continuing to debate what percentage to give players of all NFL revenues, the parties divided revenues into three separate “buckets”: one for television money, another for local revenues, and a third for merchandising, Newsday reports. The players agreed to accept a larger percentage of broadcast revenue (55%) in return for a lower percentage of the other two buckets.
The negotiators involved viewed the arrangement as a win-win situation. The players got a larger percentage of income that the owners weren’t funding, namely broadcast revenues, while allowing the owners to keep more of the income generated from their investments, Sports Illustrated reports. The players, for their part, placed an educated bet that TV profits would skyrocket in the years ahead as the NFL negotiated new contracts with the major networks.
The 10-year deal may have seemed like a win-win contract to the parties at the table, but it was widely panned by the NFL rank and file. Because the CBA would reduce the players’ salary cap overall over the next two years, players largely responded to it with “outright contempt,” according to Newsday. “Everybody looked at the numbers, the writers and the agents, and people said it was a terrible deal,” Mawae told Newsday.
Seeing a win-win negotiation situation
Within months, the NFL had struck new broadcast deals with networks NBC, CBS, Fox, and ESPN that totaled $30 billion. The players didn’t celebrate at first, because they’d agreed to a salary cap for 2011 and 2012 that prevented them from fully capitalizing on their 55% of broadcast revenues.
Beginning in 2013, however, the salary cap began to rise, and with it, broadcast revenue sharing. The cap rose from $120 million per team in 2011 to $153.3 million, reports Newsday. Moreover, another new deal term negotiated in 2011 required teams to spend a combined 89% of the salary cap, which has led to historically underspending teams to pay higher salaries.
Meanwhile, the “explosion” of television money and new stadiums has given owners “billions of reasons to feel good about their financial investments,” according to Newsday.
“The players’ leverage has turned 180 degrees,” agent Jason Rosenhaus told Newsday. “I think it’s a win-win. It’s obviously a very good deal for the owners, and it’s a very good deal for the players.”
Although some NFL insiders interviewed by Newsday still believed the 2011 CBA was slanted in favor of the owners, most agreed it had become a win-win situation, thanks to the growth in television money and rising salary cap.
From a win-lose to win-win negotiation contract
Let’s look at the lessons that arise from this win-win negotiation:
1. Look for tradeoffs across issues. The owners reached a breakthrough in their 2011 negotiation when they realized they valued television revenue less than income-generated revenue. Consequently, they offered the players significantly more from this “bucket” in return for a lower percentage of league revenue overall. To identify such tradeoffs in your own negotiations, identify what each side values, then capitalize on your differences.
2. Take a long-term perspective. The 2011 CBA might not have been a win-win contract from the start, but for many, it became one down the road, thanks to lucrative TV deals and rising salary caps. The NFLPA’s leadership foresaw that what seemed like a bad deal, in the beginning, could be quite rewarding down the road. In your negotiations, carefully analyze how a deal might play out over time and consider trading short-term sacrifices for long-term payoffs.
3. Sell the deal to your constituents. The NFLPA did an ineffective job of promoting its long-term approach to its members and the media. Consequently, most observers and participants framed it as a win-lose deal that favored the owners. Even if an agreement looks like a win-win contract to you, don’t overlook the importance of making a strong case back at the office.
What else have you learned from this unlikely win-win negotiation?