A professional sports team that is a client of my Negotiations Institute had a long-standing relationship with a corporate sponsor — a real estate brokerage firm. The sponsor enjoyed the affiliation with the sports team and also got substantial exposure in the marketplace with prospective commercial and residential real estate clients. On a number of occasions during the past five years, the sponsor had spoken approvingly of the market position it had been able to achieve through the affiliation with the team.
Nevertheless, with six months remaining on the sponsorship agreement, the real estate company’s president informed the team’s account representatives that it would have to receive more inventory and a 25
■ Editor's note: In an excerpt from his new book, “Perfecting Your Pitch: How to Succeed in Business and in Life by Finding Words That Work,” (Hudson Street Press, 2013) longtime baseball agent and negotiation guru Ron Shapiro describes how crafting a script helped a pro team convince a sponsor that had demanded a price cut to renew at an even higher rate.
percent reduction in pricing in order to continue the relationship. The inventory in the sponsorship package included signage in the stadium, advertising in the team’s programs, promotion on the electronic scoreboards and a suite that the real estate firm could use to entertain clients. The pricing of the package was $500,000 per year. In addition to the requested price reduction, the real estate brokerage suggested that it would also need in-game radio ads as well as more prominent signage included in the deal if it was to go forward with the team.
Although there were other real estate firms in the marketplace that the sales team might call upon as alternatives to this client, the team really desired to hold on to the relationship because of the brokerage’s prominence and long-term connection with the team. Some of the sales team felt they should provide the client with the additional inventory and try to minimize the reduction to something in the range of 10 to 15 percent.
We advised the team’s corporate sponsorship group that their offer to the real estate firm ought to take some of the inventory off the table while emphasizing to the client the real benefits of the relationships, such as the exclusivity in the client’s business area. We also suggested to the sales team that they present a price increase in order to be consistent with other contracts being executed with sponsors — perhaps in the range of 15 percent.
After some resistance for fear of losing the account, the corporate sponsorship group agreed to pursue our recommendation. The sales executives also agreed that in this case a written proposal would express the team’s position with clarity and a certain level of unambiguous definitiveness. We then asked them to script out how they would make the initial presentation to the client, and after several rounds of devil’s advocacy the following e-mail on team letterhead was developed:
SELLING BUT HOLDING YOUR PRICE
Keep in mind:
■ Rather than just think about where to make cuts and how to reduce prices to satisfy the customer’s demand, focus on how to maintain the relationship without breaking pricing integrity.
■ Have a thorough knowledge of the marketplace so you can compare your situation, as much as possible, with similar situations.
■ The more confidently you state your thoughts or position, the more likely it is that the buyer will accept that getting a reduction is not achievable.
■ The scripting process reduces the seller’s insecurity stemming from ignoring the customer’s demand and builds a comfort level in the message.
■ The expression of the seller’s position should not be an “in your face” statement, but rather an attempt to help the client achieve its objective without losing sight of the importance of the seller maintaining its pricing and margins.
Dear (Client),
The (sports team’s) brand within the region is strong and is growing. Last year special events and concerts were added and over 80,000 flocked to (our athletic facility) to enjoy them. Customized activations and marketing programs were created. Attendance is up 36 percent vs. 2010, TV ratings are up 108 percent vs. 2010, radio is up 50 percent vs. 2010, page views on (our website) are up 119 percent, and Facebook friends are up 118 percent.
Simultaneously the (sports team’s) brand association and return on investment for partners is strong and growing. Numerous awards have been won by our marketing and promotions staff for marketing initiatives and in-game entertainment execution. Vendors have experienced double-digit sales growth. Within the past season we have added over a dozen new corporate partners and have had record in-season partnership sales. To deliver the most effective and valuable experiences for our fans and partners, we will continue to create and enhance opportunities. Some recent examples are programs for kids and social media initiatives.
Due to the factors above, the (sports team) has increased team expectations in regard to the value of team assets and exclusivity in partnerships. Due to the competitive nature of the marketplace, we have identified the real estate brokerage category as one where we must grow revenue with current partners and/or secure additional partners.
You have stated your need to reduce the financial investment in our partnership. At the same time, however, you should know that while we can adjust your investment terms, we are unable to maintain assets or exclusivity on a flat or reduced investment.
Please see the attached spreadsheet that has two options for your review. Option A, with a price increase of 15 percent, maintains almost all assets from the previous agreement, and also includes several additional assets which you requested. Option B, which uses your current pricing level, includes reduced assets and the elimination of exclusivity for your suggested investment level.
We hope you will find one of these options acceptable and look forward to the continuation of our mutually beneficial relationship.
Best Regards, (Team Executive)
After several more rounds of discussions and scripted face-to-face presentations (which denied the real estate company’s continuous requests for inventory increases and price reductions) a deal was made. Much to our client’s surprise, not only was the team able to actually hold the line on inventory, but it also achieved a 10 percent increase in the pricing of the sponsorship package for the next five years.
In fact, the team executives who led the negotiations later commented on the impact the scripting had on their success and said, “We reached a deal that was considerably above our highest goal and strengthened the relationship. The preparation, the scripting, and the counsel were outstanding.” They also said, “Not only did the scripting process produce an immediate return on investment; it also implemented a systematic approach for us to negotiate future deals more effectively.”
Best known as a baseball agent whose clients included Cal Ripken Jr., Kirby Puckett and Joe Mauer, Ron Shapiro has evolved into a negotiations expert whose firm Shapiro Negotiations Institute has counseled teams, governments, universities and Fortune 500 companies.
