Du Malone writes: This is the fourth of a series of posts on the theme of contracts, negotiation, and agents on FM.

A common practice on FM is to begin contract negotiations by striking out clauses and bonuses.

“No, you’re not getting a percentage sell-on”: DELETE!

“No, you’re not getting a goal bonus”: DELETE!

It is possible to feel each such strike-out as a victory. You may feel like a fast bowler who’s just removed the opposition’s opening batsmen for ducks.

And strike-outs might indeed prove to be victories. But they’re a number of reasons why this might not in fact be the case.

This post deals with one of these reasons, which is that by striking out parts of the contract, you might be making it more difficult, or even impossible to reach agreement.

Making a deal

The reason for this is that a contract is a form of deal — and deals depend finding a match between differing valuations.

For example, the business I run employs an accountant to perform services for us. To give some examples: she does our book-keeping; she files our VAT returns; and she files our corporation tax returns. In return we pay her fees.

We could do these things ourselves. We have done so in the past. But we find them tedious and even onerous, so we’d rather pay her to do them. We have, therefore, signed an agreement with our accountant.

The reason we’ve been able to reach agreement with her is that we value things differently. We value freedom from the above chores more highly than the money we pay her; she values it less. We can do a deal because we value the same activity differently.

Similarly I have made a wager with a friend. I told him that my wife and I plan to move to the north of England. He doesn’t believe we’re actually go though with the plan. If, within an agreed timescale, we move north of a line between the Humber and the Mersey, he pays us: if we don’t, we pay him. The bet works because we price the risk differently.

The possibility of deals arises from differences in valuation.

Juggling

A corollary of this is that, the more components you’re negotiating over, the more likely you are to find some component that you value differently from the other party.

For example, the player may believe he’s in with a real shout of playing for his country, while you may believe he’s unlikely to get picked. In that case, the two parties will value an international cap bonus differently. The opportunity of a deal arises.

But if you strike out that clause, it disappears. You have then to hope that at least one of the clauses you’ve left in is valued differently.

The more clauses you strike out, the lower the probability that will occur. If, for example, you find the only things left to negotiate over are the wage and loyalty bonus, you may still be able to do a deal, but it’s become harder to achieve (and it may be you find you have to give more ground on those things than you’d hoped).

Trade-offs

In business, I’ve found that keeping several balls in play makes it more likely that we’ll strike a deal. You can start doing little trade-offs. “I recognise that you want X. I’m not entirely happy about that. But I suppose if you could see your way to giving a little ground on Y…”

Previous post in the series: When negotiations take you to your sticking point

Next up in the series: Assess the contract not only clause by clause, but also as a whole

Image credit: Gandini jugglers by Paul Jenkins, generously made available under a CC BY-NC-SA 2.0 licence.

 

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