New ASU Law course teaches the art of sports negotiations

The tension is palpable as the two NBA executives confer in the hallway. They are about to meet with the team’s star player to negotiate a new contract. He wants more than they can realistically afford, but the team’s owner has told them a deal must be reached, and their own jobs may be at stake.

They go over their numbers one last time and rehearse their talking points. They try to psyche each other up, knowing it’s going to be a challenging negotiation.

“We got this!” one says to the other.

“We got this!” the other agrees, slapping a notebook shut.

They then burst through the doors and stride confidently toward the negotiating table — under the watchful gaze of their instructor and classmates.

* * *

Welcome to "Negotiations and Alternative Dispute Resolution in the Sports Industry," the newest course at the Sandra Day O’Connor College of Law at Arizona State University.

Added this spring for master’s degree students in the Sports Law and Business Program, the class gives unprecedented insights into sports negotiations of the highest level. Students learn what it’s like to secure new contracts for legends like Tom Glavine and Tim Duncan, strike a deal to land Herm Edwards as your school’s next football coach, or sit down and hash out a sports league’s collective bargaining agreement — directly from the professionals who were involved in those deals.

“We are excited to have added the negotiations course to our curriculum this semester,” said Sports Law and Business Executive Director Glenn Wong, who is one of the course’s co-instructors, along with a star-studded lineup of industry veterans. “Not only is this an important addition to our wide array of course offerings, it will be of great benefit to the students as they move forward in their careers in the sports industry.”

The aim of the negotiations course is not just to educate students on the theory, strategy, and practice of negotiating — although that is a major component — but to help them understand how these skills can be transferred into any workplace environment and their personal lives.

Through in-class exercises on topics such as salary arbitration in Major League Baseball, mock negotiations on coach and player contracts, and the opportunity to hear different perspectives on negotiations — including from Diamondbacks’ general counsel Nona Lee — students are seeing negotiating and dispute resolution from a variety of angles. The course’s capstone project has students breaking into groups to negotiate a sports league’s next collective bargaining agreement, and then reporting back to their classmates on their outcomes and reactions.

Guiding and directing the students’ work is an instructional team with a wide variety of negotiating experience from across the sports industry:

• ASU Athletic Director Ray Anderson, who previously worked for the NFL and Atlanta Falcons and also represented players and coaches

• Gregg Clifton, currently a principal in Jackson Lewis PC’s Phoenix office and the co-leader of the firm’s Collegiate and Professional Sports Practice Group, who brings his substantial experience in MLB salary arbitration and college sports litigation

• Lon Babby, who recently enjoyed a run as the Phoenix Suns’ President of Basketball Operations after a successful career as a player agent

Wong believes if teaching the art of negotiation is the goal, there is no better group to do it.

“This is one of the more impressive groups of instructors we’ve been able to bring together,” he said. “We’re fortunate to have a vast amount of sports law, negotiating, and alternative dispute resolution expertise in the Phoenix area, and even more fortunate that those leaders — who are among the most respected attorneys in their respective areas of the sports industry — share their time with the students.”

Coaches’ contracts have been a hot topic on campus in recent months, with the Sun Devils landing former NFL coach Herm Edwards to take over their football program in December, then signing men’s basketball coach Bobby Hurley to a contract extension in January.

As both an instructor for this class and the school’s athletic director, was Anderson able to share any details from those negotiations with the class?

“Yes, I did,” Anderson said. “I wanted to present to them scenarios they were probably at least familiar with from all the media coverage. So we talked about some of the aspects of Herm’s negotiations, and we talked about some of the aspects of Bobby Hurley’s recent negotiations that we completed a few weeks ago. I think part of what made it more real for them was to actually talk about those two very high-profile negotiations that went on with some of their own head coaches and their ADathletic director here.”

Clifton says the class offers invaluable experience that he and the rest of the instructors simply didn’t have access to when they were going to law school.

“A course like this, like so much of the curriculum that ASU is developing, is helping the students in two areas,” Clifton said. “They’re becoming better trained practitioners prior to completing their degree. They’re getting hands-on experience, learning from professionals, which is incredibly important. And it’s also helping them identify the different paths and opportunities that are available in sports law and sports business and in entertainment industries that, frankly, we didn’t even know existed 25 or 30 years ago.”

Babby has seen the industry growing increasingly more complex as revenue and salaries have soared exponentially.

“The rules always get more complicated,” Babby said. “The rules, the collective bargaining agreements have gotten so much more detailed and complicated and nuanced that you really need to understand in a very sophisticated way what the rules of the game are. And there’s just much more analytical information. The whole process has gotten more professional, more intellectual.”

* * *

At one end of the negotiating table are the two students representing an NBA front office. On the other end, the player and his agent. The two sides are far apart.

The team executives are feeling the pressure, because their owner has told them that signing this player to a contract extension is a top priority. But the player and his agent are asking for far more than they expected.

They make several concessions, but the other side doesn’t budge.

The pressure is mounting.

* * *

Constantin Blaha has already had a career in sports. After diving for ASU as an undergrad student, he was a professional diver for three years for Austria. Knowing that he could only do that for so long but wanting to continue working in sports, he was drawn to the SLB program.

And the negotiations class had special appeal because, as Blaha says, everything in life is a negotiation, even if it’s something as simple as deciding what movie to see or where to go for dinner. He’s been amazed by what he’s learned already, citing, among other things, some behind-the-scenes stories about the NFL from Anderson.

It’s information that Blaha wishes he had had before embarking on his diving career.

“I negotiated my own contracts, but my leverage was very limited, because as a diver, you take what you get, basically,” he said. “So I was happy that anybody offered me something. But I wish I had taken this class before doing that, because I’m sure I could’ve done better and could’ve prepared more going into it. I could’ve come up with some numbers and some creative ways of gaining an advantage. Maybe not what they pay you but maybe like performance-based clauses. There are just so many things you don’t initially think about.”

Mackenzie Nickerson is another student in the class, and her dream job is in tennis, either as an agent, or in player relations for the women’s or men’s professional tours.

“With the jobs that I want to pursue after college, I figured that this class would be great experience with negotiations,” she said. “And this class has been fantastic so far. We have many amazing professionals that come in and speak to us about their experiences within high-pressure negotiations.”

Nickerson has particularly enjoyed the mock negotiations.

“The most important takeaway that I’ve learned so far was from week one,” she said, “when Lon Babby spoke on the culture of the five P's: preparation, poise, perseverance, pride and performance.”

* * *

The two sides of the negotiation are getting closer but are still far apart. The team executives have increased their offer, but there’s a salary cap to consider, and they don’t have much more leeway. And they feel the player, as much as they want him, is overestimating his value.

The player and his agent know the team is desperate to sign him. They also know the executives are nearing the end of their contracts and have a highly personal stake in getting this deal done.

The player and his agent seem to have the leverage, and they’re using it to their full advantage.

* * *

Although the business side of sports has always involved big money, the dollar amounts of a few decades ago pale in comparison to today’s numbers.

“They’re huge businesses that have been wildly successful in terms of TV revenues and marketing relationships,” Babby said, explaining the astronomical revenue growth of the past few decades. “All of these sports involve sharing of revenue between the players and management, and the whole concept all along was that if you worked in partnership, you would be able to grow the pot. And that’s exactly what has happened.”

As revenue has grown, Clifton said, so have the individual profiles of the athletes.

“A player is no longer a player, a player has become more of a brand, and what I mean by that is he reaches outside of the sport,” he said. “The endorsements are no longer limited to the tools of the trade, like shoes, gloves, balls or bats. The athlete has become a brand in the sense that other companies out of the sports industry are very interested in aligning themselves with the star appeal that these athletes possess.”

* * *

The negotiation ends. No deal. Blaha and Nickerson, who were playing the roles of the NBA front-office executives, could not come to terms with the player, despite the owner’s wishes.

They made repeated concessions, and almost wound up matching the player’s initial offer. But they just couldn’t go any further.

* * *

“We were a little disappointed, because our owner told us that he really wanted to keep the player, and we didn’t up getting a deal,” Blaha said.

But this was supposed to be difficult. Babby had constructed the scenario, drawing on past experiences to come up with real-life numbers.

“What we tried to do is set up a hard negotiation, we set up what the pressures were on both sides, aside from just the details of the player’s abilities,” Babby said. “On one side we had a general manager and management people who were coming to the end of their contract, so they had that pressure. The agent was trying to build his practice up, so he had that pressure. I think they got a feel for what it’s like and how complicated it is, and how important it is to find a way to be persuasive, because that concluded with no deal being done, which really wasn’t what either side wanted.”

Nickerson said it was a disappointing outcome, but a great learning experience.

And Blaha said it was an outcome they were prepared for.

“That’s one of the things that they taught us in the very first class,” he said. “One of the strengths of negotiating is to know when to walk away. Sometimes, there is just no deal to be made.”

And all parties got some parting advice from Babby.

“My message to them is figure out what you’re going to do next,” he said. “Don’t walk out of the room saying ‘We’re done.’ They always say don’t let it fall out the window. Set up the next meeting.”