A Lesson in Sports Negotiation

One of my favorite parts about the SDSU sports MBA program encompasses assignments that allow us to put our sports nerd hat on while practicing general MBA concepts.

That was certainly the case in the player contract negotiation paper that we recently got back for our sports management/law class with visiting Penn Wharton faculty member Scott Rosner.

In this assignment, students paired up to oppose each other in a negotiation on the contract of a fictitious baseball player with five years of Major League service time. One student represented the player and the other the team.

We were also given confidential fact sheets with externalities about the respective team and player’s situation that became relevant in the negotiation. Along with the financial value of the contract, we negotiated incentives, no-trade clauses, weight clauses, charity contributions and a signing bonus. We were graded on how well we protected our side’s interests as well as the quality of the paper.

In addition, we were given stats and salary history for 15 comparable players which we used to frame our argument for the player at hand. Some comparisons favored the kind of contract the player would want and others the team. In the paper we wrote about the comparisons we used and how we came up with our negotiating strategy. The player enjoyed a solid 2012 season but had been plagued by inconsistency and injury issues in previous years, making it difficult to judge his true value in a contract.

Once the bargaining commenced, both sides exchanged an initial offer and negotiated from there. After speaking to several of my classmates about their final deals (after the paper was sent in of course!), our class showed great creativity negotiating a wide range of deals.

Another aspect of the paper involved writing about areas where we made mistakes, and I certainly had lots to say in this section. I learned how difficult it is to negotiate a contract and how the smallest bit of lost leverage can cost millions of dollars in a deal.

In all, this was an exciting experience in which we pretended to be our favorite MLB general manager or player agent and discovered firsthand the thrills of negotiating a player contract