Introduction
The negotiation process is typical not only for the business industry but also for sports. This implies a discussion regarding the payment of athletes, their working conditions, or transfer to another team. The case in the book “Negotiation: Readings, Exercises, and Cases” examines the bargaining strategy when negotiating in Major League Baseball. Evaluating the issue of conflict, mistakes made during the process, interests, goals, and possible solutions and strategies for participants is valuable for gaining knowledge about effective negotiations.
Historical Conflicts Between Players and Management in the Sport
Before proceeding to the analysis and evaluation of the main components of the negotiations, it is necessary to understand what they were and what the main reasons for conflict between the players and management in the baseball industry were. Therefore, the basis of interaction in the baseball industry implies the conclusion of contracts between various leagues and teams. Kim et al. (2019) pointed out that “the more baseball players identified strategies to overcome constraints, the more specialized they were in their activity” (p. 41). They represent the most considerable negotiations involving significant financial aspects in this sport.
The main problem for significant teams and their managers was their growing competition. Due to this circumstance, many athletes left the teams due to more significant financial compensation from the opponent. To limit this problem, it was decided to include a “reserve clause” in the contract, which implied that the player could not rest the team for a particular time (Barry et al., 2014).
If a baseball player still decided to leave, he was immediately placed on the blocklist of players (Ashcraft & Depken, 2020; Krautmann, 2019). This condition was first discussed with the athletes during the negotiations on the terms of the contract but gradually became a mandatory point of agreement. The Reserve Clause lasted until the 1970s, despite attempts to prove its illegality and restriction of the rights of baseball players.
Negotiation Mistakes and Their Impact on Outcomes
One of the most striking examples of negotiation problems is finding a solution when determining the 3rd Basic Agreement between the Major League Baseball Players Association (MLBPA) and the Major League Player Relations Committee (PRC). The main reason was that “the disparity between the two sides stemmed from the amount the owners were willing to contribute to the players’ pension fund” (Barry et al., 2014, p. 664). The parties’ inability to agree resulted from a strike by the athletes. Even though the players received pension contributions, they lost wages for the days they did not work due to the strike (Barry et al., 2014). This has become one of the main problematic situations in the history of baseball.
Interests and Objectives of Players and Management
Players, teams, and leagues have similar interests and goals when negotiating in the baseball industry. Henceforth, each of these parties to the process wants to get the most favorable offer that can bring significant profit. At the same time, it is essential that the party that decides to take part in the negotiations remains at an advantage or at least does not fall into conditions in which it will only suffer damage. That is why, at the beginning of baseball history, many players left their teams to find a better offer in another league (Barry et al., 2014). At the same time, it was not profitable for team managers to lose and constantly look for players, which motivated the inclusion of a reserve clause in contracts.
During the negotiations between the MLBPA and the PRC, each side was also invested in fulfilling its interests. Thus, the Baseball Players Association was interested in providing benefits for athletes, and the Player Relations Committee pursued the goal of preventing high financial costs. Another necessary bargaining process within the framework of the case study was the Curt Flood Act. This negotiation involved a discussion between Congress and the Major League Baseball Players Association regarding introducing a “luxury tax “and a competitive balance draft (Barry et al., 2014, p. 667).
At the same time, the association opposed this initiative because the party offered a 50 percent tax on all salaries, spending over $84 million (Barry et al., 2014). This non-agreement could have resulted in another strike, but the parties had to make a deal to prevent it and agree to a luxury tax with higher thresholds than initially proposed. Both sides pursued the interest of providing the most comfortable and unrestricted conditions for athletes, who, at the same time, would satisfy the teams, their owners, and managers.
Strategic Solutions and BATNA Analysis for All Parties
It is worth paying attention to the strategies the parties involved in the negotiations used. Hence, each participant in the negotiations pursued a rather aggressive and persuasive policy, especially in the cases of the Curt Flood Act and pension contributions. Because the negotiations did not come to a consensus, there was a threat of strikes and discontent among athletes, which is undesirable. In the first case, the best alternative to a negotiated agreement (BATNA) was a 50 percent tax on all salary spending over $84 million, when the desired rate for the Baseball Association was significantly lower (Barry et al., 2014). Nevertheless, the parties had to agree in favor of the association, which won these negotiations.
Other negotiations worth paying attention to were labor negotiations. They were held in 2005 between MLBPA and Major League Baseball regarding the conclusion of the 10th Basic Agreement. It included drug testing programs, contracts, luxury tax, revenue sharing, salaries, arbitration, pension contributions, strikes, and public perception (Barry et al., 2014). In this case, the BATNA for the MLBPA was determined by Donald Fehr, who knew that “he could retaliate by going to the media with the astronomical industry revenue figures that baseball was currently realizing” (Barry et al., 2014, p. 670). Thus, thanks to this advantage, he was sure that he could demand the fulfillment of his conditions regarding the 10th Basic Agreement.
Conclusion
In conclusion, the study of negotiations in the sports industry provided valuable insight into the complexity of this process. This is because it includes many parties responsible not only for the financial side of the issue but also for the welfare of athletes and the public safety of teams and leagues. This work also concluded that all negotiation participants used a sufficiently persuasive and tense negotiation strategy based on information about the profitability and success of the proposed proposal. At the same time, a high level of risk of strikes often became a decisive factor in the surrender of the positions of one of the parties to the negotiations.
References
Ashcraft, J. K., & Depken, C. A. (2020). The introduction of the reserve clause in Major League Baseball: Evidence of its impact on select player salaries during the 1880s. Cliometrica, 14(1), 105-128. Web.
Barry, B., Lewicki, R.J, & Saunders, D.M. (2014). Negotiation: Readings, exercises and cases (7th ed.). McGraw-Hill Higher Education.
Kim, J., Ferguson, M., Hickerson, B., & Mowen, A. (2019). The association of constraints, negotiation, and social influences with recreation specialization among recreational baseball participants. Journal of Park & Recreation Administration, 37(1), 40-58. 1. Web.
Krautmann, A. C. (2019). The baseball players ‘labor market’: An update. The SAGE Handbook of Sports Economics, 298-307.