you need to - amazon s3 · you want the deal and understand exactly why you want it let’s begin...

2 © 2011 The Mackay Roundtable

Learn how to develop your negotiation skills so that the other side never feels like they’re losing

Before we get started today, I want to tell you about a terrific example of

negotiating skills that I saw at the barbershop the other day.

A young boy entered the barbershop and the barber whispered to me,

“This is the dumbest kid in the world. Watch this.” The barber calls the

boy over, puts a dollar bill in one hand and two quarters in the other and

asks, “Which do you want, son?”

The boy takes the quarters and leaves the dollar.

“What did I tell you?” said the barber. “That kid never learns! I’ve

been pulling that trick on him for the last couple weeks. He always takes

the quarters.”

When I left, I saw the same boy coming out of the ice cream store and

I said, “Hey, son. Why did you take the quarters instead of the dollar bill?”

The boy licked his cone and replied, “Because the day I take the dollar,

the game’s over!”

Who really won here?

Not only that, but who will continue to win? My money is on the boy,

who will someday own the barbershop and turn it into a national chain.

This young man has learned some of the most important negotiations

skills at a very tender age.

Today, we’re going to talk about how to develop our negotiation skills so

that the other side never feels like they’re losing.


You need to know what you want the deal and understand exactly why you want it

Let’s begin …

Our first negotiation teleseminar was chock full of information and

tips. The edges offered by Herb Cohen and Roger Dawson were unbeat-

able. I hope you’ve had a chance to review the transcripts before this

second session. Bookmark all the key ideas.

What you will learn today builds on concepts from our first conference.

Let me start out with a piece of priceless advice from Fred Jandt, the

author of Win/Win Negotiating.

Fred Jandt tells negotiators to:

“Keep in mind that the better you understand what you

want and why you want it, the better your chances will be

of acquiring it.”

Let me repeat that:

“Keep in mind that the better you understand what you want and why

you want it, the better your chances will be of acquiring it.”

I can’t tell you how often I’ve encountered a lack of clarity about

goals. Seasoned negotiators plop down at the bargaining table. They may

have studied the competition to a tee. Still they don’t really know exactly

why they want this deal.

l They have a gut feeling it will make them better strategically,


Push yourself, and you can learn some incredible things

l Or that it will somehow damage the competition,

l Or — and this outlook is a whale of a favorite — this is an under-

valued asset they simply must have. It will somehow blossom into a

showpiece of breathtaking beauty in the right hands.

None of these answers is good enough.

Challenging yourself on this measure is absolutely central. Press people

for the specifics: And all too often everything evaporates!

Push yourself, and you can learn some incredible things. When I

bought Mackay Envelope, I knew the margins in the envelope business

were paper thin.

It wasn’t until I actually owned the company that I learned my profit

margin literally hinged on how efficiently I managed the waste coming off

the production line. I was such a greenhorn!

Production control has gotten incredibly efficient in industries like

ours. Back then, efficiently selling off waste paper was pivotal if you were

going to be in the black. And I didn’t even have a clue when I signed on

the dotted line.

Know exactly why you want something:

l What will you do with it and how will you do it?

l What else could you buy that would be about as good?


Know exactly what the other guyis lookingfor — his real price

l What special expertise will you need to achieve your dreams, and

how you will acquire the knowledge you need?

l What are the important and unimportant parts of the asset you’ll get

and how will you spin off or shut down what’s undesirable?

For example, do you think that the acquisition you’re contemplating is

going to make you look a little better … or at least demonstrate that you are

as good as everybody else?

That’s “Keeping up with the Joneses thinking.”

And it’s very dangerous.

Because you know what happens when you catch up with

the Joneses? … They refinance.

Know why you want something, and:

l You will be in a much better position to make exactly the right

concessions.

l You will have a more exact idea of what the deal is worth to you.

l You will enjoy a far clearer focus on what the real deal-makers and

deal breakers are during the negotiation.

Know exactly what you want. Also know exactly what the other guy

is looking for — his real price, not the wish-list price he’s testing the

market with.


You need to clone yourself by hiring a substitute for you

That brings me to the next tactic in the negotiation toolkit. Say you

want to buy a house, or a business … a big-ticket, one-of-a-kind item. If

it’s buying a house, it doesn’t matter if it’s a home for yourself or a first

home for one of your children. Nothing’s tougher than finding out what

the seller’s real price is.

That matters a lot when the average home price today is about $180,000

and the average Manhattan apartment now costs over a million dollars.

There’s a way. You clone yourself. You hire a substitute — a ringer.

There’s a man who actually makes a living doing this in L.A., and there

probably are many more across the country. If you can’t find one, create one.

A lawyer or an accountant will do nicely.

Let’s say we’re talking about a house. The ringer meets the seller and asks

the price. The seller says $489,000. The buyer reaches into his pocket and

pulls out his checkbook. He begins to write out a check, a low-ball check.

“I’m prepared to write you a check right now for $375,000.”

With that statement he doesn’t kick the tires … he just matter of fact

tells the seller he has a beautiful home and that’s all he can afford. At this

point we begin to get the true price. The seller reacts:

l either by getting offended and refusing to deal,

l or by trying to keep the deal alive.


The mother lode of all negotiation tools is information

People selling their own homes sometimes often fantasize they’re parting

with the crown jewels. If your clone accomplishes nothing else, he’s spared

you from being blown out of the water before you even get your toes wet.

Let’s say the seller is irate and won’t deal. We know that his price is, for

the time being, $489,000.

But seven times out of ten, your seller, probably seeing a real live buyer

in front of him for the first time in ages, begins to take him very seriously

and starts to negotiate.

He may counter on the spot. Let’s say, $440,000. In which case, you now

have a much better idea of what he’s really willing to take. Or he may stall.

Regardless, if there’s any glimmer of hesitation, you now know more

about his price than he knows about yours. And, that’s before he’s ever met

you. You may have begun to tap into the mother lode of all negotiating tools.

And what is that? You guessed it: information.

The next step is to wait a week, then send in another ringer, with a

slightly different line. He may offer a higher price and be impossible on

terms. Or he may even try a slightly lower price. I’ll pay much more if you’ll

let me name the terms. (More on that specific gambit later.)

He’ll pick up more information. And he’ll help drill a lower price into

the seller’s skull as the level at which buyers are willing to deal.


If you’re considering buying a business on the other side of your town, sending in the clones is a priceless tool

If you still want to step in, you not only have a good idea what the

real price is, you have also conditioned the seller to expect a lower-than-

advertised price. And you have arrived at this happy state of affairs without

yourself having antagonized the seller with a low-ball offer.

It sure worked for me when I was trying to buy out my biggest, toughest,

hard-nosed competitor. By the time I came into the picture, I not only had

an excellent idea of the original price, I also had their figures, accounts,

records, the works. It doesn’t always succeed, of course.

But if it works once in a lifetime, that’s enough.

That’s how I found out that 35 percent of their business came from

one customer. Something I’d always suspected—but not to the tune of 35

percent—something it would have taken a year for me, their most hated

competitor, to pry out of them if I had started to deal directly with them

at the outset.

Let’s say you’re considering buying a business on the other side of your

town. Sending in the clones is a priceless tool. Let’s say you’re based in

Omaha. Never in a million years will a similar business in Omaha share data

with you. Nor if you’re in Lincoln or in Des Moines.

Holy cow, you’re a flesh-and-blood competitor!

But let’s say an interested party from Albuquerque or Anchorage

walks through the door. Where is the perceived risk, sharing informa-

tion with someone light years away from your home market? Send in the


It’s great for you to know everything you can about your competitor

clones! A potential seller might even give you their customer list. I’ve

had that happen.

Of course, more and more people realize we live in the same global

village. But psychologically, for most people, great distance seems to

equate with competitive safety.

Not everything in negotiation works the same way in both directions.

Using clones is one of them. Having superior information about your

competitor is another.

Let me spell that out.

It’s great for you to know everything you can about your competitor. It’s

not so hot if your competitor knows chapter and verse about you. The more

they know, the more predictable and controllable you become.

So let’s get to our first resource for this session.

He recently announced that he is seeking the Republican nomination

for President of the United States in 2012, and I predict that Tim Pawlenty

will be very competitive.

He recently completed a stellar 8-year run as the Governor of Minnesota,

where his negotiation skills were consistently tested by a Democratic legisla-

ture. I first met the governor during his five terms in the Minnesota House.

He’s from a humble working class family in South St. Paul and gradu-

ated from my Alma Mater — the University of Minnesota. And like a true


The more your competitor knows, the more predictable and controllable you become

Minnesotan, he played high school hockey. In fact, he still plays when he

has time, which won’t happen anytime soon.

Roundtable members … let me pass the puck to Tim Pawlenty.

TIM PAWLENTY

Harvey: Well, Governor, before we get started, I just wanted to tell

you that since your official announcement, I can’t begin to

tell you how much I admire, salute, and applaud your under-

taking of the highest office in the land.

What you’re about to embark on is beyond my comprehen-

sion as to the difficulty of managing the press; the intensity of

debates; 20 hour days, I might add 8 days a week, probably; and

bringing up to speed and being brought up to speed on world-

wide events that change every nanosecond; the relentless day

after day pressure. So I just want to say congratulations.

Tim: Well, it’s an honor. It’s a labor of love, Harvey. I believe in

the cause of trying to get this country back on track. I’ve got

the experience and the skills to do it.

So as my wife says, Hey, look, it’s a voluntary duty; nobody’s

making you do it. You make your own path and make your


A good leader can hold strong views, yet still be a kind and likable person

own choice, and it’s something I want to do, because it’s

important work and it’s really important to the country.

Harvey: Well, thank you.

Let’s go right to the questions. Question number one: During

your remarkable political career, which mentors and role

models have had the greatest influence on you and why?

Tim: Well, I’ll give you one in each category. In terms of a role

model, somebody I admire greatly as a leader and as a person,

of course, is Ronald Reagan. One of the things I admire most

about Ronald Reagan was just his leadership style.

This was a person who had very strong views, very strong

perspective, but was a decent, civil, kind, likable person. I

think people were drawn to him, not just because of his views,

but because they liked him. I think that has a magnetic effect.

There were a lot of people called the Reagan Democrats,

which is the family of origin that I grew up in, where you

had people say, “I don’t always agree with Reagan, but I like

him.” They’d give him the benefit of the doubt, and they’d

give him a fair hearing. So there’s a lot to be learned from

him. That’s one thing.


You need to have role models and mentors from whom to learn the art of negotiation

I would also say in the mentor category is the Speaker of the

House, when I was coming into the legislature and came up

through the ranks of the Minnesota legislature. His name was

Steve Sviggum. He’s somebody that you knew and continue

to know. But he’s a very joyful person; strong, energetic

person; but really was about getting ready to pass the baton to

the next group and the next generation.

He viewed life not as a sprint, but as a relay race. He knew

that part of the race was not just to hit the finish line and

the tape and raise his hands up and say, “Look at me. I did a

great job; I ran the race.” But he was willing to put time and

energy into getting those people coming up behind to take

the baton, and I really appreciated that.

Of course, you’ve been an inspiration to me, too, Harvey.

You’re a person with a lot of amazing talents, but I love your

joyful spirit. I love the energy that you put out and the dedi-

cation that you put out. Of course also you are incredibly

nimble and gifted of a mind that shines through in the way

that you solve problems and negotiations as well.

So those are some examples of role models and mentors.

There are many others, but those three stand out.

Harvey: Well, I sincerely appreciate those kind words.


You can apply the principles of win win negotations in any arena

When you mentioned Steve Sviggum, I just think of core

values. He took a look at the big picture and was just unshak-

able and unflagging on his core values.

Next question: How do you best apply the principles of win-win

negotiation in the political arena? Could you provide us with a

memorable example or two from your own experience?

Tim: Sure. When I was the Governor of the State of Minnesota,

we had, at times, an overwhelmingly Democratic legislature,

and in the best case one body of the legislature is Republican

and one side Democrat.

So we never had the ability to just ram something through

with a lopsided victory; although, there was some of that,

of course. But oftentimes we had to create that win-win

environment that your question asks about. And there are

many examples.

I’ll give you one, just as a case study. Some years ago when

the scourge of methamphetamine was really impacting the

country, but particularly in the Upper Midwest, we had

just a horrific amount of meth use and meth production

in Minnesota. And one of the things that people thought

could solve the problem was to bring over the counter drugs

that had precursor chemicals that you could make meth out


Even if you have differences with the people whom you are negotiating with, you can subordinate them to a more important goal

of behind the counter, and require people to present them-

selves at the pharmacy counter with ID and to log in before

you could buy it.

It was very controversial because, at first, the retailers in the

business community thought it was an overreach by govern-

ment. Of course, my Republican friends and I heard a lot

about that from them, and then, of course, the Democrats

were less concerned about that.

We were able to put those differences aside for a bigger goal,

a bigger vision, and a bigger cause, which is we’ve got this

horrific drug just ruining the lives of young people all across

the state, tearing up communities, causing all sorts of violence

and the other problems.

So the lesson from all of that was, Did we have our differences?

Yes. But could we subordinate them to a more important goal

and focus on that? And the answer, of course, was yes. And

we were able to come together. That bill passed. And the rest

of the story is after we did that, meth production in Minne-

sota dropped by over 70 percent within 18 months. It was a

dramatic turnaround on that issue.

Harvey: That’s a remarkable story.


When costs are climbing so high and so fast that no reasonable assumptions about revenues can possibly keep up or make it work, there has to be a restructuring

The nation has been watching the situation facing Governor

Scott Walker in Wisconsin very closely. The same dynamics

are now spreading to other Midwestern states, such as Michigan

and Ohio. What’s at stake in the Wisconsin confrontation?

And what do you believe should be the cornerstones of the

negotiating strategy with public sector unions?

Tim: Well, that’s a great and timely question as well. I think what

you see in Wisconsin, and to varying degrees what you’re

seeing and will see unfold in other states, including Cali-

fornia and Illinois and New York, is the sights and sounds

of a government financial structure that is really built like a

Ponzi scheme. So you can set aside the rhetoric of the right

and the left, but just look at the likely revenues coming in the

door over the next 10 years or 15 years. You can also see the

spending commitments that have already been made; and the

two lines keep separating.

That’s true in most areas of government. So they have to be

fundamentally restructured.

It’s no different than with General Motors of 10 or 15 years

ago, when management and labor were running up the costs

so far, so high, so fast, that no reasonable assumptions about

revenues can possibly keep up or make it work. Therefore,

there has to be a restructuring.


Sometimes a single mediator can be used to work through negotiations, but some negotiations must be made in a public arena

In the private sector, of course, if it was a private entity,

they’d probably declare bankruptcy and have somebody in

a black robe come out and eliminate old obligations and

relieve old debts and the like. But the government, the

states, in particular, don’t have that option. So it has to be

restructured in a political arena.

Is it loud? Yes. Is it confrontational? Of course. Does it involve

a lot of powerful interests? Yes. But it has to be done.

In terms of unions, I come from a union family with a union

background, Harvey, but there’s no question that they’ve

overreached, in particular in the public sector. They used to

be underpaid and over-benefited, and that was the trade off

of public employment. But now, compared to their private

sector peers, they’re both over-benefited and overpaid. They

simply have to be brought in line with the private sector. We

can’t afford it anymore.

That’s what Scott Walker is trying to fight for, and I applaud

him for his courage.

Harvey: Thank you. One of the toughest negotiations any presiden-

tial candidate faces is in reconciling the party platform with

your own campaign direction. What will be your key priori-

ties in tackling this challenge?


In any business, including the economy, we must keep a budget under control in order to be successful

Tim: Well, the key priorities for me happen to be consistent with

the Republican party, and that is this country is drowning in

deficit spending and debt. It has to be brought under control

and reduced; and we’ve got to get this economy growing

again — not by expanding government, but by getting entre-

preneurs and would-be entrepreneurs and business leaders

to start businesses and grow businesses in the private sector.

Harvey, the federal government is spending, in debt, $40,000

a second. Forty cents of every dollar that they spend is a

deficit or debt dollar. They take in $2.2 trillion a year, and

they’re spending $3.7 trillion a year. It can’t go on. It will

take the country down from within.

I’m running for president, in large part, because I feel so

strongly about the need to get that budget under control, get

spending down, and get the private economy, not the govern-

ment economy, moving ahead.

Harvey: I was trying to do the math here — $40,000 a second, times

60, times two and a half minutes, as you answered the ques-

tion. I can’t get the answer; I’ve got too many zeros.

Tim: It’s a lot. It’s a whole lot.


When you are negotiating, you must lay the groundwork and start out with good communication from the get-go

Harvey: That’s at the rate of some very difficult numbers.

Let me throw a “PS” in here. What’s one of the biggest nego-

tiating mistakes that you may have made in your career, that

you might have learned from? Anything come to mind?

Tim: Sure. I’ve made a number of negotiating mistakes. I think

one was: We have in Minnesota, like other states do,

gaming, but in our case, it’s a monopoly by Native American

groups. They enjoy that status under some agreements that

were given to them in the past.

Many of the other Native American groups in Northern Minne-

sota don’t benefit from it. So we tried to say that we’re going

to introduce some additional gaming for the North American

tribes and for the benefit of the state, more broadly.

We didn’t give the incumbent tribes much notice or much

buy in to it. We just kind of unveiled it in a very sudden

way. We didn’t really set the table, lay the foundation, or

even give a kind of courtesy heads up to the groups that

we were going to be challenging on these issues. And they

weren’t going to agree to the proposal initially or ultimately,

probably, anyhow.

It set it off on the really wrong foot when the first thing they

heard was a surprise. It started out adversarial right out of


If you start out on a friendly and respectful note, you will have a better chance at finding that avenue for success

the gate, rather than at least having the respect of a proper

communication, laying the groundwork. Even though we

may have ultimately disagreed, at least it would have started

out on a more respectful and friendly note, and perhaps that

would have given us a better avenue for success.

Harvey: Well, that’s certainly just packed full of solid common sense,

Governor. As you race across the country today, in your auto-

mobile, and I know you have someone driving for you so you

could concentrate on this interview, I sincerely appreciate it,

as do the Roundtable members.

We will be in touch. And again, I can’t thank you enough.

Tim: Harvey, you’re an inspiration. Keep going and keep teaching,

because you’ve got a lot to offer, and we’re grateful for you.

Harvey: Thank you. Bye bye.

Well, I want to stick with the public sector because it is such a rich

source of principles about negotiation.


High-ranking officials dedicate themselves to negotiation as their top career task

In my experience, government negotiators may have more to teach

business people than vice versa. Why?

l Maybe because it’s hard to put a price-tag on history. So negotiation

is your only doorway to the history books, short of warfare.

l Maybe it’s because high-ranking officials dedicate themselves to

negotiation as their top career task. Sometimes they do it for decades

just to achieve a single treaty.

America can be very proud of some of its landmark negotiators. Dean

Acheson, President Harry Truman’s Secretary of State, was a remark-

able guy and a negotiator without equal — Marshall Plan, Berlin Airlift,

Korean War.

Acheson learned a lot about negotiation, duking it out with the Soviets

in the early 1950s.

At the time, an entirely new world order was settling into place. The

Soviets were trying to strangle Western access to Berlin and causing the

historic Airlift of food and supplies. Communist China made Korea the

pressure point in the Far East.

What did Acheson discover?

Let’s say you make concessions in Arena A (like Asia). Then the Soviets

would expect you to be willing to make the same sort of concessions in

Arena B (as in Europe).


When you concede anything, rein in that compromise with iron-clad precision

The broad-brush lesson: Be careful when you make any one specific

concession. Your counterpart will often try to transform (and exploit) it

into a blanket concession.

Your adversary will want to make it as broad and far-reaching as possible.

Moral: When you concede anything, rein in that compromise with

iron-clad precision.

The converse: Be very careful about claiming that you are doing some-

thing because the “principle is right.” Americans may be one of the few

people in the world who argue that we should do something because the

principle is morally right. The rest of the world bases action on where it gets

them in pragmatic terms.

Here’s what you have to watch out for. Let’s say you argue that Course

X is right in place A because the principle is right. There is an inevitable

side-effect. If it’s right in place A … you are now on record, saying it’s right

in B, too. Principle anywhere becomes a universal obligation everywhere.

I’ll never forget a one-on-one session I had with Fidel Castro. I

remember that before we arrived, the CIA had openly admitted to trying

to kill Castro 13 times. This is what I call a high-soprano trip.

I was the chairman of the first delegation of U.S. businessmen to visit

Cuba after Castro had taken power.

I owe my entire success in this encounter to preparation. I went in armed

with three crucial knowledge advantages. I knew:


Prepare ahead of time by getting to know as much as possible about the person you are negotiating with

1. Castro was extremely vain.

2. He was athletic.

3. He spoke fluent English, even though he would never give an

American the satisfaction of speaking in English, so he always

worked through an interpreter.

Before he got into revolutions, I had read Castro had been given a try-out

by the old Washington Senators Major League baseball team.

My first words to Castro were: “Comandante, I noticed that you are in

excellent physical condition. How do you do it?”

Castro’s eyes lit up. He went on to describe through a translator that

he had installed a bowling alley in the basement of the Palace of the

Revolution … a bowling alley!

Then Castro reached into his breast pocket and pulled out a little

notebook. He kept a running tally of his scores and the results of his

matches with his generals. The final column showed who owed him. No

surprise: They all owed him. He had beaten everyone.

Then I rolled my strategic strike straight down Castro’s alley. “Coman-

dante, what an amazing coincidence!” I said. “I happen to have won the

University of Minnesota bowling championship three years in a row.”

He got so excited he said in English, “Oh, you did?” All pretense of his

being unable to speak the language vanished.


With negotiations, there is unexpected power in an emotional tipping point

Suddenly the Iron Curtain divide vanished. We were both part of that

great fraternity of fellow bowlers.

Here’s another illustration of just how powerful such edges can be in

a negotiation. This vignette comes from Joachim de Posada. Joachim is

today an international motivational speaker and moderator. (By the way,

Joachim is a cousin of the five-time Yankee All-Star catcher and desig-

nated hitter Jorge Posada.)

Joachim de Posada had an adventure that shows the power of a hugely

underestimated factor in negotiating success. It’s what I term the unex-

pected power of the emotional tipping point.

After getting a degree in psychology in Puerto Rico, Joachim had some

bang-up years in sales. Then he embarked on a career as a consultant.

One of his clients was Cargill Investor Services, which is based in

Chicago. It’s a subsidiary of the massive grain brokerage and food company.

Cargill, the Twin Cities-based parent, is one of the largest privately held

companies in the world.

After a consulting engagement doing sales training for Cargill in 1983,

the company hired Joachim for a permanent job, but not as a sales trainer.

Cargill felt that his earlier training as a psychologist would be a formi-

dable advantage. Then Joachim was promoted to Vice President of Cargill

Investor Services for Latin America.

Cargill had a particular first task for Joachim in mind.


A strong negotiator will spend a lot of time studying the transactions and mindset of the person with whom they are negotiating

For years, he says, they had been trying to persuade the vice president of

a Swiss Bank to move their largest customer’s commodity account to Cargill.

Cargill believed Joachim’s skills as a psychologist — coupled with the

excellent experience he had earlier at Xerox — would be able to dislodge

this account. This was one Swiss Alp of an account! It was $3 billion a year.

At one point, it was the largest speculative account in the world.

Joachim studied the prospect. He spent months scrutinizing their trans-

actions … with whom and how they did deals … and their mindset.

He learned everything he could about their decision-makers, their

likes and dislikes, and how they made decisions. “When I was finally

ready, I took a trip to the Bahamas — a favored tax haven for many big

European and American banks. There I met with the bank’s decision-

maker,” Joachim says.

Things didn’t go exactly as planned. Joachim dug in to his sales pitch,

using every last crumb of information he had extracted. Suddenly the

banker looked at the left lapel on Joachim’s suit. He saw a Rotary pin. Then

he asked Joachim: “Are you a Rotarian?”

“Yes sir, I have been one for nine years,” Joachim answered.

The banker stood up, came to his side of the table, grabbed his hand,

hugged him, and said, “I am a Rotarian too. I do business with Rotarians. We

are men of principle. Let’s get the papers signed.” Joachim got the business.


Casually reference positives you could weave into a potential bond-building connection

It was a major victory for Cargill and netted a hefty year-end bonus

for Joachim.

You always look for the personal tipping point. It could be one of a

hundred little personal details. Never make it a force job, but casually refer-

ence positives you could weave into a potential bond-building connection.

Start the journey with your opening pleasantries.

Forget the weather … Don’t waste your shot blabbing about the road

construction. So what if it slowed down your arrival?

Target your small talk. Your goal is to put your counterpart at ease. Create

a beautiful mood. And build a bridge.

Study this person’s Mackay 66 Customer Profile. (You’ll learn more about

that invaluable tool at one of our upcoming sessions.)

Target high-velocity personal content that is dear to your counterpart:

l Say … the daughter that was just admitted to medical school.

l The sister who is recovering from a hip replacement.

l The dreamy Porsche Panamera the chairman just plunked down 120

grand for.

l Or the fact that his Alma Mater Kansas State just made the second

round of the NCAA Final Four. (I may not be a Kansas State alum,

but I’m a passionate Final Four fan. My admiration runs high for any

team scrappy enough to join the ranks of these contestants.)


Beware of any comments that burn bridges

On the one hand, build bridges. On the other, beware of any comments

that burn bridges. You would never, ever think of pointing to a photo on

some executive’s desk and remarking: “My, what an ugly baby!”

Yet how many people blunder their way through business small talk by

trampling on the other guy’s business or community “sacred cows” with

utter abandon:

l You tear into the community college’s new president. (Of course,

you’re unaware your counterpart headed the nominating committee

who picked her.)

l You make a point of dissing lunch. (The restaurant, it turns out, is

owned by your adversary’s brother-in-law.)

l And so on … and so on. The big point about little comments is to

keep them positive and focused. Serious negotiations are charged

with enough electricity to start with. You don’t need any distracting

short-circuits.

Let me tell you about a good friend of mine from Chicago who blew a

big-time negotiation with the late Carl Pohlad, owner of the Minnesota

Twins and one of the largest Pepsi bottling companies in the country.

My friend phoned me and asked if I knew Carl, which I did, and if I were

close enough to him to set up a luncheon meeting. My friend was a very

successful real estate developer and had his sights set on developing one

key section of downtown Minneapolis and needed Pohlad’s help to make it

happen. So I called Pohlad, and he agreed to have lunch.


To negotiate well, you need your entire arsenal of skills — the little and the big

As the waiter was taking our food order, my friend ignorantly asked for a

Diet Coke. To which Mr. Pohlad shot him a foul look and placed his hand

on the forearm of my friend, looked at the waiter, and said, “No he won’t.

Bring him a Diet Pepsi.”

Within a nanosecond, my friend had self-destructed. By not doing his

homework, he had taken himself out of the picture.

Here we go again: the unbeatable psychological importance of the

little things.

To negotiate well, you need your entire arsenal of skills — the little and

the big … the subtle and the forceful.

When we think about negotiation, certain psychological traits inevi-

tably leap to mind: Assertive, aggressive, unyielding, hard-punching.

There are moments when gunslinger traits are surely indispensable.

There are also times in the negotiation process when you want to be just

the opposite: Thorough, quiet, reflective, and composed.

Let’s start with thorough. In our first session, Herb Cohen mentioned

the importance of writing things down. Make a list, read it, and be sure

you didn’t miss anything. Before every negotiation, practice what you

want to go through.

If it’s a major negotiation, you may want to cover 25 substantial

points. I write them down on a legal pad or tap them out on a notebook.


Before entering a negotiation, make a list of 25 substantial points, organize the list, and then commit the list to memory

Then I organize them into groups and commit them to memory. Inter-

nalize your target list.

This improves your command of the negotiation. It also creates an order

in which you want to address the topics. When I start any negotiation,

this list remains in my briefcase. Only at the conclusion of the first round,

do I take out my list and explain to my counterpart that this meeting is so

important that I made a list of points to cover. Please allow me to check it

so I don’t miss anything.

Another part of this sense of quiet control is arriving early. Some people

like to make fast-paced, grand entrances. They want to emphasize how very

valuable their time is. Forget the theatrics.

It’s much more to your advantage to arrive 15 minutes early. Sit down

and quietly collect your thoughts. Organize your priorities. Refresh yourself

on your strategy. Some people even meditate to put on their “game mind”.

If you won’t have a preparation “Green Room” at the meeting site, prep

yourself in the privacy and silence of your own car.

The most important tool in any negotiation is your brain. Not your

aggression. Not your ego. Always make sure your brain is clearly receiving

all the important signals around you.

For example: When you negotiate, you always need to be sure …

absolutely sure … that you’re talking with the right people.

That’s especially so if you want to make a point.


When you negotiate, you always need to be absolutely sure that you’re talking with the right people

Take the hot-shot CEO who was hired to turn around a failing Fortune

500 company.

The company was riddled with bureaucracy. There was even a committee

that kept charge of all the committees. The payroll was as bloated as Topsy

the Elephant. Slackers were everywhere. It had been a good 30 years since

the last deep housecleaning.

On one of his fact-finding manufacturing plant tours, a meeting room

was bulging with assembly-line workers and office staff ready for a Town

Hall session to start. They were all chattering about the new CEO and the

big-league changes he has promised.

The new CEO marched in. You expected hand grenades to be dangling

from his lapels. Totally in command, he stirred memories of General

Patton himself.

Our fearless CEO spotted a guy sprawled against a wall in the meeting

room, with 3-day grunge on this face, reading the sports page in USA Today.

Aha, the CEO thought, this jerk with the newspaper is the perfect

object lesson!

The CEO strode up to the guy slouching against the wall. With a

thundering voice, he demanded to know: “Buddy, how much money do

you make a week?”

The guy with the papers said, “I dunno. Maybe 400 bucks.”


Always think total picture in any negotiation and stretch yourself to anticipate what you might not be taking into consideration

The CEO pulled out his wallet and snapped out $1,600 in hundred dollar

bills … one crisp bank note after another. He barked, “Here’s four weeks’

pay, pal. Now get out and don’t come back!”

The guy with the grunge shrugged his shoulders, mumbled “Whatever,

dude” … and shuffled out the door.

Feeling pretty good about himself, the CEO looked around the room and

asked, “Does anyone want to tell me what that lazy slacker did around here?”

For a moment, the silence was deafening. Then, a worker with guts piped

up: “Boss, that was the pizza delivery guy from Domino’s.”

Always think total picture in any negotiation. Always stretch yourself to

anticipate what you might not be taking into consideration.

That leads me to one of the great commandments of superior negotiation.

You set the price. I’ll dictate the terms.

You may remember that there was once a rival basketball league to the

NBA. It was called the American Basketball Association, and it was around

from 1967 to 1976. Ultimately it merged with the NBA.

This is a story on two levels. First, if the ABA’s ultimate goal was to

negotiate a merger with the NBA, they did a masterful job. At least the

owners of 4 of its teams did. San Antonio, Indiana, Denver, and the New

York Nets were all franchises that ultimately joined up with the NBA.


You can let the other person set the price, but you must dictate the terms

The ABA worked hard to add something to the professional game. The

new league managed to recruit 4 of the best referees from the NBA. That

endowed the new league with legitimacy. And the ABA fostered a free-

wheeling, offense-driven style of play.

Basketball is a star-centered game. That’s what drives the gate. Most of

all, the fledgling ABA was starving for stars. And, to everyone’s amazement,

stars they got: Moses Malone, George “Ice Man” Gervin, Julius “Dr. J”

Erving, Artis Gilmore … and a bundle more.

The problem with the ABA was making its contracts attractive enough

to attract star-power players. How could they possibly lure big-time talent

and compete with the senior league? Where would they find the money?

The answer was simple: It was all a matter of price and terms. And, back

in those days, players and agents were not nearly as sophisticated about

terms as they are nowadays. Joe Sweeney will back me up on that fact.

The case of 7’-2” tall Artis Gilmore — known as “The A-Train” —

Gilmore is worth studying. He played five stellar seasons with the now-defunct

Kentucky Colonels.

Coming out of Jacksonville University, Gilmore entered the ABA in

1971 and was acclaimed as both rookie of the year and most valuable

player. His contract was then an eye-popping $3 million. Remember, this

was 40 years ago!


Sometimes the payout might be high, but if you dictate the terms, the payout span can be spread over many years

For the time, these numbers were unheard of. I remember the St. Paul

paper printing a graphic, depicting how many cars and yachts and mansions

$3 million could buy. Such numbers were unfathomable to the layman.

Ultimately, the mystery vanished. $3 million — Sure!

But what was the payout span? The life of the contract turned out to be

30 years! And how did that shave down the net present value of the deal

terms? To roughly $100,000 a year during his playing days. In other words,

the team signed him for $600,000 present value.

Like I said: You name the price. I’ll dictate the terms.

Our second resource is considered to be the most influential player agent

in the history of the NBA. Most of you know David Falk as the agent of

Michael Jordan, but he’s represented more than 100 other NBA players —

Charles Barkley, Moses Malone, John Stockton, James Worthy, Dominique

Wilkins, Allen Iverson, and on and on.

During the peak years of David’s career in the 1990s, he was often

considered the second-most powerful person in the NBA behind

Commissioner David Stern. He and his company represented as many

as 40 players at a time.

David negotiated the then highest contracts in NBA history for Patrick

Ewing and Danny Ferry. He also negotiated professional sports’ first $100

million contract for Alonzo Mourning.


If you can’t do business with your friends, then you’d be “swimming with the sharks”

Roundtable members … I give you a slam dunk of a negotiator —

David Falk.

DAVID FALK

Harvey: David, thanks again for joining our Roundtable. I would be

remiss if I didn’t share with our members your close friendship

with Jimmy Walker. As I recall, he credits you for helping

him be able to write life insurance on Michael Jordan, so that

was certainly a kind act.

David: Well, I’ve known Jimmy for about 35 years, and if you can’t

do business with your friends, then you’d be “swimming with

the sharks.”

Harvey: Very good. Well, let’s just jump right in.

First question: Please comment on the Air Jordan deal you

negotiated with Nike for Michael Jordan, which was a block-

buster transaction back in 1984. If you could, just set the stage

for us regarding the ups and downs of the negotiation. Then,

secondly, what gave you the confidence to have Michael

Jordan opt out of the NBA’s league licensing program?


Sometimes you must negotiate from a different angle and create your own identity

David: Well, in 1984, Harvey, the landscape of the NBA was dramat-

ically different than it is today. The league, first of all, was

having very significant financial problems. There was a risk

of maybe as many as seven of the teams going under. Players

really weren’t individually marketed.

The superstars like Magic Johnson, Larry Bird, and Dr. J were

really part of “super teams,” and the overriding identity at the

time in the league were the team rivalries — the Lakers and

the Celtics, for example.

When Michael came out in ‘84, he was the star of the last

college Olympic team to win the gold medal in the United

States, in LA, where he dominated the stage on a world stage.

No one really knew back in 1984 how good he’d be, but you

could tell he was going to be a very electrifying player.

So my game plan for him and his parents, when we sat down

in 1984 to create a marketing plan, was to try to capitalize on

his all American good looks, his upbringing, and his success

in the Olympics. We wanted him to have his own identity.

So we went to the various shoe companies, all of them —

Adidas, Nike, Converse, New Balance, Puma, Pony — and

we told them what we wanted for Michael was different. We

wanted him to have his own line. None of the companies

were really willing to do that, except for Nike, which at that

point, was probably about a $3 million company — which is


Be willing to find new ways to identify an individual or a company when necessary

very hard for the audience to even understand. Today they’re

a $20 billion company.

I had a very close relationship with the head of marketing in

Nike, named Rob Strasser, and it was our personal relation-

ship that really enabled the deal to take place, like many big

deals. In the heat of the battle, Strasser said to me, “David,

we’re happy to do a line for Michael, but we’re not going to

call it Michael Jordan.”

I said, “Well, that’s great. How do you identify an individual

who is an athlete without using his name?”

And he said, “Well, that’s your challenge.”

He said, “The era of slapping on designer labels, whether

it’s Oscar de la Renta or Diane von Fürstenberg or Chanel

or whatever, Americans are tired of that. They need some-

thing more authentic.”

As we sat there, on a very hot summer afternoon, it was just

the three of us — myself, Rob Strasser, and Peter Moore, who

is their graphic design expert. Nike had just come out with a

new line of running shoes with a new technology called “air

soles,” which was supposed to cushion your feet in running.

And I said, “I’ve got it; we’ll call it Air Jordan.”

The minute the words came out of my mouth, Peter Moore

started sketching a logo with a basketball in the middle and


Oftentimes, we look to the past to determine our future, but this is not the case with negotiating about marketing

sort of like U.S. Air Force wings on the side, which was the

original logo, before the “Jumpman.”

So it was really a breakthrough deal. It was a breakthrough

for me in my career. I worked for a large firm where they had

negotiated deals for a lot of tennis players, but this was my

solo effort. It really, really changed my whole career.

Harvey: About the 3 million to 20 billion, I love to call that “Only

in America.” Also, it was a real thrill for you to mention

‘84. I’m an Olympic junkie, and I was there. I saw all of the

basketball games in ‘84. That’s right. Nobody knew how

unbelievable Jordan would be, but that was a thrill just to be

able to recall that date when you mentioned it.

Next question: You’ve broken all the barriers when it comes

to securing endorsements for your clients. I know most of the

sports agents in the country have learned from your expertise.

Can you share a few secrets with us on how you would accom-

plish these kinds of endorsements?

David: Well, you know, it’s interesting. By training, Harvey, I’m

a lawyer, and lawyers are generally taught to look at prec-

edents of things that happened in the past, sometimes way


With marketing, you need to look to the future to get a sense of where the market is going and try to exert creativity

back in the past, to determine what the likelihood of future

cases will be.

I think that as a marketer, you have to do exactly the oppo-

site. You sort of have to see what Bill Gates called in his

book “the road ahead.” Where are things going? Where do

opportunities lie?

So for me, I always felt that if all I was doing was reiterating

the success of other agents with other players, I really wasn’t

adding much value. So I wanted to try to get a sense of where

the market was going and try to exert a little creativity.

Once it got going and you gained a little confidence, you

try to understand, what is it that makes an athlete market-

able? Is it his speed? Is it his jumping ability? Is it his

smile? His strength?

I think with every celebrity, you have one overriding idea

in your mind, when you see that person, of what they stand

for. I think in Michael’s case, obviously Air Jordan came to

symbolize what his style was. He was a player who played

up in the air.

Ironically, the year after he graduated, we represented

another superstar named Patrick Ewing from Georgetown.

We sat down with Nike to discuss a deal for Patrick. My


You have to have great discipline to stay within the boundaries of what makes you marketable

friend, Rob Strasser, said to me, “Okay, Big Time, what’s it

for this guy? Air Ewing?”

I said, “No, no, no. Michael is the air force; Patrick is the

infantry. What we’d like to do for Patrick is to have a line

called ‘The Force,’” sort of like from the Star Wars Trilogy.

We actually never ended up signing with Nike; we signed

with Adidas.

I used to try to really understand, as a consumer, what is it

that makes you want to buy products? What is it that makes a

celebrity believable? You have to have great discipline to stay

within the boundaries of what makes you marketable.

So, for example, if you’re living in Detroit — I was always

amused, in the early days, when a guy like Isaiah Thomas,

who was a star player in Detroit, wanted to sign a deal with

Toyota. You think, here you are in Detroit where unemploy-

ment is about 20 percent; you have an African American

athlete from the city representing the city, sign with a

foreign car company. Not a good way to market yourself. I

think people resent that.

So overall, I just think it’s really an understanding of where

the market’s going and where the opportunities lie.

Harvey: Very good.


You need to have an understanding of where the market is going and where the opportunities lie

Next question: You were a pivotal figure in both the 1995 and

1998 NBA lockouts. When you look at the present NFL labor

confrontation, what would you identify as the biggest errors

that both the players and the league may be making in the

lockout and the stalemate over a new collective bargaining

agreement. And then, if you can just keep this in your brain

bank, if I can piggyback on that and say, Can you give us the

odds or probability that there will be an NFL and an NBA

season? Kind of a loaded double question there.

David: Sure. Well, first of all, I think that in 2011 we’re in sort of the

“perfect storm” environment. Owners in all the sports leagues

have individually lost very substantial amounts of money in

the stock market crash of 2008. The economics, certainly in

basketball, of many of the teams are difficult.

Football, by contrast, is literally printing money. I mean, I

think football has truly become America’s sport.

I think that the biggest mistake that both sides are making

in both sports is the fact that in 2011, in many places in

America, such as Detroit, as I mentioned earlier, is a prime

example, where the auto industry has been hit so hard.

Unemployment is probably upwards of 20 or 25 percent in

many of these areas.


Both sides of the negotiating table need to look in the mirror and understand what is really at stake

The fans, the people who support the game, simply can’t

afford to go to the games and bring a family of four and pay,

let’s say, $75 a ticket, which is $300, and parking, and buy

some food and drinks for the kids, maybe some T-shirts. It

might be a $400 or $500 outing.

They really have absolutely zero — and I underline the word

“zero” — sympathy for billionaire owners who are complaining

that they’re losing a few million dollars a year in operating

expenses to run a business, which is really a hobby. And they

have just as much sympathy for multimillionaire players who

are complaining that they’re only making $5 to $6 million a

year and should be making more.

I think that both sides need to look in the mirror and under-

stand that we’ve got to make the game better. It’s not about

who makes more money. It’s about, “How do we make the

game better and more fan friendly?”

It’s because that’s where the sport lies. If people stop watching

football or basketball and they start watching something else,

it’s very difficult to gain the fan base back. So I think that

both sides are making a grievous mistake.

I think in the case of football, because the economics are

so strong, I absolutely believe that they will make a deal

and that there will be a season. I think that will happen

relatively quickly. I think all the jockeying going on in the


When a person makes a significant investment, he ought to have a reasonable chance to make money or business won’t continue

courtroom will end up in the boardroom, and I think they

will make a deal.

In basketball, I think it’s much more difficult because I

think the owners had asked for rollbacks at a time when the

economics were much worse. Two years later, the ratings are

at an all time high. Attendance, in many places, is high.

I don’t think that the level of change that needs to be made is

as great as the owners are asking for.

On the other hand, I think that we need to have a framework,

when people pay $400 million to buy a team, that owner can

have a reasonable chance to make money or there won’t be

more franchises.

So as a person who has represented players my whole career,

for 37 years, and a person who has owned several businesses,

I really have a certain sympathy for both sides and a certain

impatience with the fact that the public is really fed up with

reading about injunctions and courts of appeal and decertifi-

cations. They just want to see the guys play.

Harvey: Wow. Well, that’s a pretty good feel, touch, and pulse, I think,

for our listeners in our Roundtable.


As a professional negotiator, what you are selling is your track record

The next question: Throughout your career, did you limit

the number of athletes whom you directly represented? If so,

what criteria do you use to choose those lucky few?

David: Well, I always felt that your time as a professional is limited.

And I have also felt, Harvey, like in any other business, I think

you end up attracting a certain type of client or customer.

If you’re Neiman-Marcus, you’re not advertising for the kind

of customer that’s going to shop in Wal-Mart and vice versa.

People who shop at Wal-Mart probably aren’t going to spend

too much time in Neiman-Marcus because it’s too pricey, and

those are two of the top retailers in America.

For me, most of the clients we represented were referred to

us by their college coaches, in the majority of cases. Most

of them came from North Carolina, Duke, Georgetown,

Indiana, and Kentucky, where some of the top coaches

in the country coached, like Coach K at Duke, and John

Thompson, Rick Pitino, Dean Smith at North Carolina,

and Bobby Knight at Indiana.

They always told us we were good at our business, but we

weren’t very good at recruiting.

I guess I never really wanted to be very good at recruiting,

because I think, as a negotiator, that what you’re really


You need to develop a solid track record for negotiating in your field of expertise

selling is your track record. In some ways, I try to tell the

clients — and I don’t want to sound arrogant in saying this

— I would like to be thought of as like a Warren Buffett of

basketball. A lot of people go to Warren Buffett because he

has the best track record of any investor in America over a

long period of time.

I think we developed the best track record for negotiating

contracts and marketing our clients of anyone in the country.

So we try to keep the number of players relatively small.

At the height of my career, our company had 25 people

working for us, and we represented 40 players, of which I

probably personally represented about 10.

As I look back, in a very short window of time, between 1982

and 1986, in that four-year window, we first signed James

Worthy of North Carolina, who was the number one player

in the country and one of the top 50 players of all time. Two

years later, we signed Michael Jordan, and then Patrick Ewing.

In football, during the same period of time, we signed James

Lofton, who is a Hall of Fame wide receiver with the Green

Bay Packers; and Chris Doleman, who is the fourth all time

sacker, from your backyard, in Minnesota; and Boomer

Esiason, who was the quarterback.


If you specialize in being the best in your field, you won’t need to take on as many clients to be successful

So if that was my only six clients of my whole career, I think

I would have been very fortunate and had a great career. So I

didn’t want to have too many players.

I sold my company in 1998 to SFX, and I got it back in 2007.

Today, I want to be a lot smaller. I’m never going to have

more than ten clients. We have nine right now, and I have a

ceiling of ten. So we’re going to sign a few of our older clients

like Juwan Howard, who has been with me for 17 years. If he

retires in the next few years, we’ll add another young player.

Eventually we’ll probably add five more young players and

end up with ten.

In an era when everyone is trying to grow the business and

make these mega agencies, which we did in ‘98 through about

2002, I want to be a contrarian. I want to be ultra small, ultra

petite, and be able to offer my clients the most experience of

anyone in the country, and in basketball, that has done this

business with the fewest number of clients.

Harvey: Well, you’re entitled to be called “Warren” instead of “David,”

all right?

Next question: Can you share with us the biggest negotiating

mistake you’ve ever made in your career?


When you’re young, your judgment isn’t as good as it is when you mature

David: I would say it wasn’t a tragic mistake, but it was actually a

very funny story. I think when you’re young, sometimes

your judgment isn’t as good as it is when you mature. It’s

like a bottle of wine — maybe it’s well made, but it’s just not

quite ready to drink.

In 1986, I represented a quarterback named Frank Reich,

who graduated from the University of Maryland and has the

distinction of leading the greatest comeback in the history

of NCAA football and the greatest comeback in the history

of NFL football. And a very professional gentleman named

Bill Polian, who was the general manager of the Buffalo

Bills back then, came to see me in my office, which is sort of

a mark of respect.

I really wanted to get Frank Reich a three-year deal, for a total

of a million dollars. Bill came in, and he knew that we were

experienced, and he offered us a three-year deal at 900,000,

with some incentives. We spent the day, went back and forth.

We ended up at about 950,000. I was really, I would say,

determined — I guess “stubborn” is probably a better adjec-

tive — stubborn about trying to get to a million.

So time went by. We waited, and Bill really implored me to

make the deal, but I wanted to get the million. So I waited

and waited. It took about seven weeks, from the time we

started, to get the extra $50,000 total over a three-year period,


No matter how aggressive you want to be, you have to know when to say when

which is about 17,000 a year. When you take out taxes and

fees and things, Frank probably didn’t make enough to put a

down payment on a car, but we got the million.

The seven weeks it took, Frank was out of camp, he didn’t

get any preconditioning. Buffalo turned around and traded

him for Jim Kelly, who was coming in from the U.S. Foot-

ball League, and any chance that Frank probably had of

competing for the job of being prepared and ready was

blown by his young aggressive agent trying to get from 99

percent to 100.

I really learned from that. I look back on that and think that

no matter how aggressive you want to be, you have to know

when to say when. You have to know when you’re really at a

point when you’re at diminishing returns, and the additional

benefits you’re getting in a negotiation are outweighed by the

good will that you’re losing and the ability to get in and to get

yourself established to do a good job. I look back at that and

feel that I hope I never make that mistake again.

Harvey: I could listen to you forever.

Finally, when you sold your agency to the SFX, which you

just mentioned, Entertainment Concern — that’s SFX again,

Entertainment Concern, for $100 million, what were the


When you’re operating in an area that you don’t have expertise, you need to hire people who are good at it

toughest deal points to negotiate in that sale? What were your

proudest achievements in making the sale? I know, again, you

just mentioned you got it back.

David: Well, I’d say my proudest achievement was being smart

enough to know that when you’re operating in an area that

you don’t have expertise, you need to hire people who are

good at it. So we went out and hired Goldman Sachs to be

our investment advisor.

I had met Hank Paulson, who was the chairman of Goldman

at the time, and obviously went on to be the treasury secre-

tary. I met him three or four times, and he was a big Chicago

Bulls fan. He was from Chicago, very extremely humble

guy. We were dealing with, obviously, a much more junior

advisor in the company because we weren’t selling AT&T

or Chrysler or anything.

One day, on a Sunday, and consecutively for probably about

two months, Hank would call me up every Sunday and

give me sort of an update on where we were and a sense of

where we needed to go. I was very nervous about it because

I didn’t know what an appropriate sales figure would be.

Hank absolutely gave me a sense of confidence of where the

deal was headed.


Hiring someone with experience in the field will give you a sense of confidence of where your deal is headed

At the eleventh hour, I really sat down with the owner of

SFX, Bob Sillerman, who is one of the smartest guys I’ve ever

met, and I said to him, Our investment advisors are telling us

the deal’s worth about 70, and your people obviously think it’s

worth about 70. But I have to explain that having nothing

to do with the metrics or the numbers or the EBITDA or the

multiples, I’m not going to sell the company for 70, because I

don’t want to work for somebody.

I had a very unpleasant experience working for my first boss for

17 years, ended up in sort of an almost abusive relationship,

and I don’t want to ever have to go back and do that again.

So I’ve set an arbitrary number. It’s got nothing to do with

any of the multiples you’re looking at, which is 100. If the

deal’s not worth 100, you won’t offend me in the least, but I

won’t sell for less than a hundred. If we don’t make a deal this

summer and you come back to me next summer, it’ll prob-

ably be 200, because every year I stay on my own and see my

name on the door and enjoy the independence of not having

to work for somebody, except my clients, I’m going to be less

receptive to selling it.

I don’t think that I wowed him or persuaded him. I just think

he really wanted to buy it and probably felt that even at 100

it was a very good buy. But the combination of dealing with

a very, very bright buyer in Bob Sillerman, and an extremely


Negotiation is a huge part of life whether it is in business, in government or in your personal life

talented, competent, and supportive advisor in Hank Paulson,

made what otherwise, Harvey, would have been an extremely

nerve wracking experience a lot more comfortable for me.

Harvey: Yes. Well, I love business people who know that they don’t

know. That’s where you just hit the nail on the head there,

that that’s why you went out and got Goldman Sachs in a

different field of expertise than you were.

Well, what can I say, David? I’m sure our Roundtable members

are just thrilled and ecstatic that you joined us today. I’ll say

hello to Jimmy for you. Thanks again.

We all know that negotiation is a huge part of life. When it happens

in international affairs, we see negotiation for what it is. Other times,

negotiation is the active ingredient, only we call it by another name.

Marriage is a never-ending negotiation … so is raising children … so

is getting your building contractor to think like you do when he runs up

against a snag building your house.

We may not think of it in these terms, but an auction is also a form of

negotiation. It is a case where the bidder is negotiating with their under-

standing of what they believe the marketplace to be.


When it comes to negotiation, it doesn’t have toend in a winner and a loser — both sides can win

The most exciting moment at an auction is when a spirited bidding war

breaks out. Someone wins. Someone loses. Right?

Wrong.

Consider the kinder, gentler milieu of the charity auction, where

everyone can wind up a winner, as in Celebrity Fight Night — a fund-raiser

for Muhammad Ali’s Parkinson Center in Phoenix.

About 17 years ago, Celebrity Fight Night came to life through the

vision of Chairman Jimmy Walker. Jimmy thought it would be possible to

raise money for local charities through a celebrity charity event.

With the help of Charles Barkley and Dan Majerle, who fought in the

ring with oversized boxing gloves, the first Celebrity Fight Night was a

smash hit. The following year Kenny Rogers joined the event by performing

a 40-minute concert.

Suddenly we had live musical entertainment by major marquee enter-

tainers. It changed the dynamic of Celebrity Fight Night from a sports bash

to a celebrity-filled charity event.

In its third year, Celebrity Fight Night took a big leap forward into the

national spotlight. Muhammad Ali accepted an invitation to become the

featured guest. The world learned about the Muhammad Ali Parkinson

Center at Barrow Neurological Institute in Phoenix.

After 15 years of support, Celebrity Fight Night has become synonymous

with the Champ’s name. The Muhammad Ali Awards were established at


Make sure that demand exceeds supply

Celebrity Fight Night IV as a way to acknowledge leaders in the sports,

entertainment, and business communities.

These best represent the qualities associated with the Champ and his

fight to find a cure for Parkinson’s disease.

Past Ali Award recipients have included Robin Williams, Billy Crystal,

Larry King, Donald Trump, Sharon Stone, Magic Johnson, Wayne Gretzky,

Jack Nicklaus, Joe Montana, John Elway, Jim Carrey, Halle Berry, Kevin

Costner, Tony Hawk, and Howard Schultz. It was an unforgettable moment

for me when I was an award recipient several years back.

Nobody knew, after the first Celebrity Fight Night event which raised

$100,000, that it would become one of the largest-grossing charity events

in the country, raising over $6 million at the most recent Celebrity Fight

Night XVIII. Since its inception, the event has raised over $70 million,

with the Muhammad Ali Parkinson Center as the primary beneficiary.

For Fight Night IV in 1998, Jimmy Walker rented the ballroom of the

best hotel in town, put up a full-size boxing ring, scaled the house for all-

ringside tables. It was black tie only (just 500, so demand exceeded supply …

Marketing 101) and sprinkled local and national celebrities throughout the

tables … Kenny Rogers, Troy Aikman, Paula Abdul, Lou Gossett Jr., Sugar

Ray Leonard, Barry Manilow, and of course, at table #1, Muhammad Ali.

Now for the fight card. Let’s get ready to rumble.

The opening bout is always a massive mismatch. Maybe the biggest

tilt in Celebrity Fight Night history was when 2’8” Verne Troyer (Mini


It is not always the biggest opponent that wins

Me of Austin Powers fame) squared off against 6 foot 3 inch, 235-pound

Evander Holyfield.

For Celebrity Fight Night VI, the pairing was a shade less dramatic,

but strong enough to rivet your attention. In one corner, straight from the

eighth at Turf Paradise, standing five foot four inches and weighing 110

pounds, one of the track’s leading jockeys.

His opponent, just off the hardwood, standing six foot eleven and

three quarters inches and weighing 280 pounds and four ounces, an NBA

starting center.

Touch ‘em up.

The gloves are bigger than the jockey, but he manages to land a vicious

blow to his opponent’s kneecap.

I mean, I’ve heard of below the belt, but below the trunks? The ref misses

it completely. He’s putting a move on the round-card lady in the bikini. The

center comes crashing down like a 2,000 year-old redwood.

“One … two … ten … Y’er out.” (What happened to three, four, five,

six, seven, eight and nine?)

Next on the card …

One of the celebs gets into the ring. His ring attire consists of boxing

shorts about six sizes too big with gloves to match. He manages to throw a

tremendous punch. It’s a knockout. Himself.


When negotiating a price, it is wise to set the mood before the negotiations begin

When the show is over, with everyone in a great mood, the live

auction begins.

It’s the usual trips, condos, tickets, dinner with the celebrities, and the

star attraction, Ali, takes a bow. The lights dim. The featured entry is about

to go on the block.

The professional auctioneer has the round-card lady circle the ring three

times holding up an oversized painting of Ali at the height of his career,

done by one of the country’s best-known sports artists. Oohs and ahs.

“Do I hear $2,500?” Several hands go up.

“$5,000? More hands.

“7,500?” Yes.

“$10,000?” Yes.

“$12,500?” You got it.

“$15,000?” A big hand waves in the air for the first time. It’s Mr. Phoenix

himself — Jerry Colangelo, former majority owner and CEO of the Phoenix

Suns and the Arizona Diamondbacks.

“$20,000?” Someone tops Colangelo.

“$22,000? The auctioneer looks at Colangelo. Colangelo nods approval.

“$24,000?” A new player enters the bidding.


Some experiences can be sold more than once, especially if it benefits a good cause

“$26,000?” The auctioneer looks at Colangelo. He smiles and folds his

hands … across his chest.

They continue to move up by $2,000 increments until they reach

$78,000, the high bid, edging out a second-place bid of $76,000.

The place was buzzing. Was this Monopoly money?

I leaned over the table to Jimmy. I had an idea.

“Why don’t you see if the artist will do another and have the auctioneer

ask the #2 bidder if he’ll pay the seventy-six grand for the painting?”

Jimmy speaks with the artist, who makes a little OK sign. Then Jimmy

motions to the auctioneer and whispers in his ear. The auctioneer goes back

to the center of the ring.

“Sir, we don’t want anyone to leave this room disappointed. Our

distinguished artist says he thinks we can meet your need, for the agreed-

upon price of $76,000. It may turn out even better the second time

around. What do you say?”

What could he say? He was willing to pay $76,000 thirty seconds earlier.

No way he could change his mind.

Done deal.

Remember: Who says some experience can’t be sold twice, especially if

it’s for a good cause?


It’s not how much it’s worth; it’s how much people think it’s worth — you have to create the demand

The dinner netted a whopping $500,000. As I was leaving, I felt a big

paw on my arm. It was Ali. “You devil,” he said. “You’re worse than Frazier.

Did you ever do any fighting?”

Now I realize that many of you have seen this strategy work before at

auctions you may have attended. However, this was 12 years ago, and it

certainly hadn’t been part of any auction in which I had been involved.

The moral: Sometimes you’re allowed to throw a punch a teeny bit

below the belt if the negotiation is for a good cause.

And remember, too: It’s not how much it’s worth; it’s how much people

think it’s worth. You have to create the demand.

Let’s talk for a minute about negotiating policy and strategy within your

own business. That’s something each of us has to do, nearly every day, but

most businesses stack up short on that measure.

There’s an unforgettable story that Howard Schultz, chairman, CEO,

and guiding light of Starbucks, tells about the historical evolution of this

remarkable business.

A pivotal figure in the history of Starbucks was a guy by the name

of Howard Behar. For many years, Behar was president of the chain. He

was a critical figure in Starbucks’ operating expansion beyond the Pacific

Northwest.

Behar, who retired from active management in 2007, was totally

customer driven.


You need to examine your values in light of your customers’ preferences

Howard Schultz writes of Behar: “When Howard [Behar] joined Star-

bucks in 1989, … he immediately began frequenting our stores and talking

to baristas and customers.”

By listening carefully, he heard things to which we had closed our ears,

and he forced us to examine our values in light of our customer preferences.

One message he heard loud and clear: “Many customers wanted us to offer

nonfat (or skim) milk.”

“Our goal,” Schultz notes, “then, as always, was to bring the authentic

Italian espresso bar experience to the United States… ‘We will never offer

nonfat milk. It’s not who we are.’ … When a caffè latte is made with nonfat

milk, most Italians wouldn’t recognize it.” Even Howard Schultz steadfastly

opposed Howard Behar, the skim-milk champion.

“[T]he issue of nonfat milk led to one of the biggest debates in Star-

bucks’ history.” Imagine this heated exchange in the hallway of Starbucks’

Seattle headquarters:

Here’s a purist member of the executive team rejecting non-fat milk and

standing “nose-to-nose” with Howard Behar, maintaining: “That’s not in

keeping with the quality of our coffee. That is bastardizing it. It’s getting to

the point that we’ll do anything the customers want us to.”

To which an impassioned Howard Behar blurted out: “Are you nuts? Of

course we’ll do what they want us to!”

And they did. But it was a royal donnybrook getting there. “Today,

almost half of the lattes and cappuccinos [Starbucks sells] are made with


You can never afford to win the argument with a customer

nonfat milk.” And no one sees the wisdom of the change more than

Howard Schultz.

In so many strategic arguments, you’ll see one member of management

locked with another in mortal combat.

They’re negotiating with each other about what course of action is better

for the business. Or, at least that’s what’s said. Almost always, the argument

is about which of them has the better idea.

The real issue is not the idea that either of them had. The real person

the business is negotiating with is the customer. And you can never afford

to win the argument with a customer. Put differently: You may win the argu-

ment, but you’ll lose the game.

I want to close today with some recollections about global commerce.

There is hardly a business in this country that you can safely say is domestic

any longer. Increasingly the world we live in — and negotiate in — is global…

and the specific influences of Asia — and China in particular — are inescap-

able. In short, if you don’t think global, you’re dead.

You all read the same statistics I do:

l In 2013 — just two years from now — China will overtake the U.S.

in world scientific leadership.

l American architectural firms — including the modestly-sized ones —

are doing gangbuster business in China. For example, Heller Manus,

out of San Francisco, is doing two-thirds of its business in China.


There is hardly a business in this country that you can safely say is domestic any longer

l In April, Bloomberg reported that BMW and Mercedes sold more

than 100,000 luxury vehicles in China: “an increase of 76 percent

from a year earlier … nine times the pace of the wider industry.”

l There are 413 billionaires in the U.S. Just a year ago, the number

in China was pegged at 115. But the tally in China has soared and

recent estimates I have seen suggest the real Chinese billionaire total

is also much closer to 400.

l Add that up with another set of numbers. In the States, there are

7,000 yachts that are 60-feet long or longer. In China, there are

only a hundred today. But, watch those dock berths. (The domestic

Chinese yacht-building industry is working at breakneck, day-and-

night speed to catch up.)

Who can argue with numbers like these? And the ball started rolling less

than forty years ago.

Richard Nixon shocked the world when he became the first U.S.

president to visit Communist China in February 1972. (This was such

an historical thunderbolt that Nixon’s visit with Mao Zedong has since

become the subject of a grand opera.)

I headed one of the first business delegations ever to go to China. This was

right after Nixon’s historic trip. The Minneapolis Chamber of Commerce

organized the expedition, and I was president at the time. It included all

the big players in our business community: Medtronic, Honeywell, General

Mills, Pillsbury, Dayton’s, and 3M — the entire Minnesota A-Team.


You need to know the mastery level of your fellow negotiators in order to properly prepare yourself

The leader? Well, I may have been, but I knew exactly nothing about

China. None of us did. First step?

At the time, I was in my late thirties and had assembled one helluva

Rolodex. I tapped into my YPO network and learned the name of a Boston

businessman by the name of Julian Sobin.

Julian, who died in 2001, was one of the great nuts-and-bolts business

experts about the Far East. Until his death, he was Honorary Counsel

General of Nepal in Boston. Julian’s father built a chemical company, and

Julian himself was a Senior VP for the world’s largest fertilizer manufac-

turing company.

Julian had made more than 50 trips to China before Nixon’s historic

visit. He also negotiated some 2,500 contracts with the Chinese.

So I flew to Boston and used him as my consultant. Among the vast

wisdom he shared about the Chinese were these six pointers:

1. They are the toughest negotiators on earth.

2. Their mastery of illusion, bordering on deception, is unparalleled.

3. Pay special attention to the Chinese when they seem disinterested.

That is often a signal that their interest is at its most acute.

4. They tell the truth, but only half the truth … and you will hear it as

you have never heard it before.


Understand the competitive advantages the other negotiators have over you

5. On trip expenses, expect that you will be nickel-and-dimed to death.

So build some generous air into your expense plan.

6. “And, Harvey,” Julian warned, “don’t hold any meetings indoors

with your group. The walls are bugged floor to ceiling.”

Remember, Julian wasn’t making racial slurs about the Chinese people.

He was describing what it would be like doing business with Communist

Chinese technocrats.

We Americans were still the decadent capitalist enemy that dour

Marxists were intent on trampling into the ground.

So we arrived in Beijing. The guest quarters were stunning. As the

leader, my villa was nothing short of imperial. It included a reception room

that could host 500 guests for cocktails.

Our group traveled from location to location. Everything was regal

and opulent. But after 5 days, we found ourselves being extorted with

every bill compared with the promised charges. This wasn’t just nickel-

and-diming … but substantive, systemic overcharging on the scale of the

Forbidden Palace. I let them know, in no-nonsense terms, that I was one

unhappy camper. They blew me off.

So we were stuck. We were negotiating with the marketplace. But the

Chinese government totally controlled the market. So, during a garden

conversation in Shanghai, we decided we were going to strike back.


In any negotiation, your counterparts may be listening to you most carefully, when they aren’t even supposed to be listening at all

This is the only time we didn’t follow Julian Sobin’s advice. But we did

put to use something he told us. We had a mock meeting in the living room

of my villa at 8 in the evening after dinner.

We — in quotes — “debated” whether we would break off the visit and

go home. Several of the group delivered pre-arranged speeches, both pro

and con. By a pre-arranged vote of 15 to 6, we decided we would go home.

Before breakfast the next morning, a contrite Chinese official knocked

on my door. He advised me that they would honor all of their previous

expense commitments.

Of course, nothing — not a word — was ever uttered about the secret

vote taken in the bugged living room.

The lesson: In any negotiation, your counterparts may be listening to

you most carefully … when they aren’t even supposed to be listening at all!

This story has a sequel. I think it took place in Guangzhou — now a

huge mega-city on the Pearl River.

We had brought these beautiful blue-vellum introductory brochures

with us for use during the trip. They contained photos, bios, and company

descriptions, and even were translated into Mandarin — absolutely state-

of-the-art info packages.

At our first meeting I said to the Chinese Trade Minister, Here are the

bios of our delegation, and I’d like to pass them out.


Study disinterest withcare — the more strenuously it’s stressed, the more often it conceals hidden passion

“No, no,” he said, “we’ll distribute them at the right time,” and threw

them in the corner of the room. The right time never came. The Chinese

made a great show of being terribly disinterested in the brochures.

When the meeting was over, I purposely left behind my briefcase under

the conference table. After our group left, I came back five minutes later to

retrieve my briefcase.

Sure enough, they were poring through the brochures … clucking and

gesturing with intense interest. Great smiles erupted on their faces, as I

walked in unexpectedly. It was as though I had caught them thumbing

through the latest issue of Playboy.

The lesson: Study disinterest with care … The more strenuously it’s

stressed, the more often it conceals hidden passion.

Speaking of passion, there is one last negotiation tip I want to leave with

you. It’s about the mastery of semantics.

When I married my wife, Carol Ann, 50 years ago, our most important

negotiation was to nail down the ground rules for our marriage.

Then we hit on it. I would make all the major decisions, and she would

make all the minor decisions!

Many of my friends have asked me: “Harvey, how on earth could that

ever work out?”

My answer: “Very simple … There have never been any major decisions.”


Sometimes negotiating is all about the mastery of semantics

Now in the remaining time I’ll turn it over to Alex Mandossian who

will cue up a couple of our Roundtable members who will share their

negotiation stories.

ROUNDTABLE MEMBER NEGOTIATION STORIES

BonnieBruderer: Hello, Roundtable. This is Bonnie Bruderer, your

Roundtable concierge. Alex is actually delayed in travel,

so I’m going to jump in here for him.

What we’re going to do next is we’re going to hear a couple

negotiating stories from some of our members. So first we will

hear from Christine Jones.

Roundtable Member Christine Jones

Christine: Well, Harvey, thank you for putting together these incredible

guests for this session. As a sometimes Chicago Bulls fan and

Chicago resident, I am a big fan of David Falk. So it was a real

pleasure to hear from him, particularly because Michael Jordan

is my all time favorite sports celebrity of any sport.

So instead of telling you a lawyer story, I’m going to tell you

a sports story. I’m sure Brandon Steiner can top this, but

nevertheless, here we go.


Be sure that you get your agreements in writing

The biggest mistake I probably ever made in negotiating —

and as a lawyer, I’m sure I have had many — was I took the

other lawyer’s word for it when he promised me he was going

to do something. I didn’t get it in writing. That seems like a

very fundamental basic mistake, but it was in litigation.

The case was supposed to be dismissed. He didn’t dismiss it.

Instead he defaulted my client. I’m still in the case four years

later. So that was the biggest mistake.

The sports story comes as one of the biggest victories, and

that came in 2005 when we advertised in our first Super Bowl.

We had negotiated back and forth with FOX for several weeks

to try to get a Super Bowl ad approved. If you’ve seen our

GoDaddy ads, you know, sometimes they can be somewhat

controversial. Finally, we got a version of our very first Super

Bowl ad that FOX approved, and it was just a few days before

the Super Bowl was supposed to air.

At the last minute FOX came to us and said, “We have some

remnant space in the two-minute warning. Would you like

to buy it?”

We’d never done a Super Bowl before, we didn’t know what a

big deal that was, and so we said, “Sure. Why not?” We want

to run a different ad. So we sent another ad, which, as the

standards and practices go around Super Bowl ads, could not

get approved.


Never take someone’s word during a negotiation

So FOX said, “Tell you what, GoDaddy, why don’t you guys

just show the same ad twice.” Well, we were really disap-

pointed because we thought it might make us look kind of

immaturish if we showed the same ad twice, but nevertheless

we decided to go ahead and do it at their request.

So the first ad came on. It was with our famous GoDaddy girl,

Candice Michelle, and she was there in a tank top with our

name emblazoned across her chest, and the ad showed, and

we were all very excited, sitting here in the office watching it.

We high fived and celebrated and cheered.

Then the two-minute warning came, and the second ad never

showed. We kind of looked at each other and said, “Well, you

know, we’ve never done this before. Maybe that wasn’t really

where our ad was supposed to play. Maybe it’s the pod that

comes after the two-minute warning.”

So we sat and waited, and the next set of ads came on. And

our ad didn’t show. We kind of looked at each other and

thought, Well, where the heck is our ad? So we started getting

on the phone to the head of FOX Sports and to the NFL and

to all the people who we had worked with before, and this is

an incredibly long story, but to shorten it, we found out that

they had canceled our second ad because there were some

people who were offended by it.


When the other side fails to fulfill an obligation that you have in writing, be sure to get a good faith concession

Well, I happened to have a contract for the second airing of

that ad. So I called up the lawyer from FOX, and I said, “Mr.

FOX Lawyer, what are you going to do to make me whole on

the ad that you didn’t show?”

It was a negotiation that resulted in a settlement, which is

confidential, but I can tell you by the time we finished, our

ad had shown in the next six months 861 times for free, it

turned out to be one of, if not the most, inexpensive Super

Bowl advertising in the history of mankind. And by the end

of the negotiation, because there was a solid contract with

terms that were definable, everybody knew the expectations.

In the end the guy from FOX basically said, “Christine, just

tell me what you want, and I’ll give it to you.”

Well, we made good, they gave us some free air time, so on and

so forth. And at the end of the day he came back and said, “I

just cannot give you anything else. There’s just nothing else

for me to give up. My client won’t go any further.”

And I said, “Okay. Well, I need to bring something back

to the founder to show him that you have some good faith.”

And he said, “Well, I just don’t know what else I can give

you.” And I said, “Tell you what, Mr. FOX Lawyer, how about

if you get me a signed game ball that was actually used in the

game and signed by either an official or a coach or a quarter-

back or some significant person in the game.” And he said,

“That much I can do.”


Even when you have lost something in a negotiation, you can find a compromise that allows you to win

And two days later, two signed game balls that had been

used in the Super Bowl showed up at my office, and one

of them sits in the founder’s office to this day. That was

kind of a way of compromise that got us over the hump, got

both sides to the yes, was an easy give for them, but a real

significant victory for us, because it was a demonstration of

concession and good faith.

So I would say in the spirit of David Falk and sports stories,

that was one of the greatest and most fun negotiating stories

I’ve ever had the privilege of being a part of.

Bonnie: Wonderful. Thank you, Christine, for that great story. Next,

we’ll move on to Steven Schussler.

Roundtable Member Steven Schussler

Steven: I very much enjoyed David on selling your track record. I

very much enjoyed Harvey and send in the clones, and obvi-

ously Governor Pawlenty, so it’s been a great session. Thank

you very much.

By the way, for those Roundtable members that didn’t know,

Harvey’s wife just had surgery and I understand, from speaking

with Greg Bailey, that she’s doing fantastic. So our love goes

out to Carol Ann.


It is important to not only learn but also apply the strategies you are learning in these Roundtable sessions

The following story I’m going to share with you, Bonnie and

the rest of the members, really optimizes Harvey Mackay’s

StarTribune article “A to Z, Take to Heart Those 26 Lessons

on the Art of Negotiating.” And I think in this particular

instance I’ve used all 26 of Harvey’s lessons.

I’m trying to find a deal for Yak & Yeti. It’s a Pan Asian

restaurant that I now have at Disney’s Animal Kingdom.

I’m also trying to find a deal for TRex, a prehistoric family

adventure, which is a dinosaur restaurant at downtown

Disney. I’m basically telling you two negotiating stories.

The most important part of building my deal was to find

locations that would accept Yak & Yeti and TRex, which I

considered two of my best creations, but it meant negotiating

for prime space on two unproven, not-yet-opened, not-yet-

financed restaurants and retail stores.

Now, most people would think that I was absolutely out of

my mind in presenting these to Disney, but I had a great track

record with Rainforest Cafe, having opened up 45 in seven

years in three continents.

Disney had a young lady with a new set of eyes that took a

new position and was in charge of operating participants. She

brought her whole team to visit with us in Minneapolis to see

what new things we were doing in our laboratories and what

we have created.


If you are negotating the sale of something, it is important that the other party sees what you have created

Now, I previously developed a relationship with this young

lady and realized that we were on good terms. I knew it was

very, very important for her to see what we created.

They loved TRex and decided they wanted it. But as they

were leaving, they saw us taking things off of a truck and they

asked us what it was, and we explained that it was Yak &

Yeti, a Pan Asian restaurant, that we were just in the midst

of creating. They asked us if we would not mind to leave the

room while they talked amongst themselves.

They talked amongst themselves for 15 minutes and then

called us back in the room. They said to us, “Listen, you know,

we really like TRex, and we’ve already kind of made a deal

with you for TRex. But now that we’ve seen Yak & Yeti, we

have a space for this Pan Asian restaurant, and we’ve decided

the way to negotiate with you was not to negotiate, just to

tell you straight out that unless you give us Yak & Yeti, we’re

not interested in TRex.” So let me see, Disney, the world’s

leader in entertainment is telling me that they want two of my

creations instead of one, and if I didn’t give them both, they

didn’t want either. Well, that’s a great problem to have.

Usually, with Disney, in these kind of negotiations, they were

ten-year leases with five-year options. So what we did is we

entered into a negotiation with them, since there was no

negotiation versus having two concepts. We decided that was


When someone wants more from you than you were originally planning on giving, you have a greater chance of negotiating better terms

a no-brainer, but in order to get financing, we decided that we

would press for 20-year leases — something that Disney has

never entered into. I decided if it was going to cost me the

amount of money we were looking at for building these huge

creations, that it was important that we would be able to get

a future in order to pay back the money that we borrowed to

build these and also have a profit going into the future.

So we successfully negotiated two 20-year leases, which Disney

had never entered into before, and it gave us a basis to be able

to raise the amount of money we were looking to raise.

Then we had to go find the money. TRex cost me approxi-

mately $30 million to build, and it was an unproven concept.

Yak & Yeti was $17 million. Well, we put our numbers

together, and I decided since we had a fantastic relationship

already with Landry’s Restaurants and since we successfully

sold them in 2000 to Landry’s for an astronomical amount of

money, that I would go back to that well, because those are

people who profited from our experience and from the success

we’ve enjoyed in creating that already. They would probably

be the most likely suitors for Yak & Yeti and TRex.

When I told them about our deal and I told them the beau-

tiful real estate that we had at Disney, they asked me how

much money we wanted, and I told them that I would like

$150 million. The guy that I spoke to on the phone actually


Know from whom you’re asking money and what you’ve realized with them in the past

drove off the road in a bed of flowers, and he said, “Are you

mentally deficient? How could you charge us that much for

two unopened, unproven restaurant concepts?” At the end of

the day, we realized that he did not want us to compete with

him because he was so successful with Rainforest Cafe.

We wound up making the deal with him for the money that we

asked for, because we did our research and we found out what

he was about, what they were interested in, and it wound up

being one of the most successful negotiating tools of knowing

who you’re asking money for and knowing what you’ve real-

ized with them in the past and being able to go back to them.

So we used all the principles in Harvey’s stories, especially the

one in the StarTribune, “From A to Z,” to take advantage of

that, and we were very, very successful, Bonnie.

Bonnie: Excellent. Thank you for that great story, Steven. Now we’ll

move on to Brandon Steiner.

Roundtable Member Brandon Steiner

Brandon: First of all, let me just say, it’s a pleasure to have David Falk,

who I’m on the Sports Advisory Board of Sports Manage-

ment. David was extremely generous, and we just actually

named the school after him. He was involved with building


If you can get into a situation where you can bring somebody to neutralize things, it will always be a positive

the Sports Management School, the first actual school, up at

Syracuse. I share an advisory board with David, along with

a whole bunch of other initiators up at Syracuse. So it’s a

lot of fun, and he is the real deal. I love the way collectibles

saved a deal; whenever a collectible can save a deal with

GoDaddy, that’s pretty cool too.

This morning, I’ll just tell you a quick story. I just thought

I would give one of my favorite stories, which was with the

Yankees. I created the Yankees Steiner. Now, originally when

I was creating Yankees Steiner, at the first meeting, I met with

Brian Cashman, Lon Trost, and Randy Levine, the hierar-

chies of the Yankees, and they called me in for a meeting.

And I really thought they were going to call me in, take away

my tickets, and they were just killing me every which way,

telling players, you know, maybe they shouldn’t be dealing

with me and everything else. There was a bunch of things

that led up to that point where we were getting pretty close

to a lot of the players, doing a lot of things, and the Yankees

were pretty nervous about it.

So I was on my way into the meeting that day — and prior to

that meeting, I always think of, you know, when you have an

important meeting, if you can get in a situation where you can

bring somebody to kind of neutralize things, it will always be

a positive. So I called up Jeter’s agent, who is a good friend of


When you’re meeting with someone, think about who those people know and who would be powerful to be at your side

mine, and asked him if he would come and help me just kind

of mediate, just kind of sit in the meeting with me and show

a little strength. So he came in and kind of neutralized the

meeting a little bit. So I think it’s always a help when you’re

meeting with some people to think about who those people

know and who would be powerful to be at your side, whether

to make a call ahead of time and say, “By the way, Brandon’s

a good guy; Steiner’s a good company,” or where they actually

join you for the meeting could be a big help.

I think after the meeting, when I went into the meeting

and I saw Randy and Lon, and I wasn’t really sure where

this was going, and certainly when Randy had gotten up,

he had told me about the nervousness that the Yankees

have as far as collectibles and game used items and jerseys

and things at the stadium.

I said to Randy, “My number one ace in the hole is that I’ve

just been purchased by Omnicom.” And I said, “Randy, I

can’t do underhanded things. I can’t pay players cash. I

can’t do anything that would be illegitimate. So some of

the things you have going on maybe in your head just can’t

possibly be true.”

So I think one of the things we talked a lot about in these

negotiating sessions is listening. I really wanted to see what

else was bothering the Yankees, what was on their mind,


It’s important to know some of your Plan Bs you have when you go into a negotiation

and the two things were they thought their fans were prob-

ably getting unauthentic stuff, and they thought they had a

security problem. They couldn’t find a company that they

could trust that maybe could help them handle some of

those problems.

So I went to them and said that I was part of a public company.

That was the first thing that got their attention; they kind

of liked that. And the second thing was, since I was part of

Omnicom, they had just started a network called YESNetwork.

So in listening to them, I said, “Maybe it’s possible I could set

up a meeting with some of the people from Omnicom to meet

with some of the people from YESNetwork.”

They were struggling a little bit at the beginning to get adver-

tising dollars into the pool and some support, and Omnicom

is one of the biggest advertising conglomerates that I was a

part of. So right away I offered to maybe get the CFO of

Omnicom on the phone. I didn’t have his personal number,

but I did have a little relationship, being that his kid was a

first baseman and then John was a big Yankees fan. So I had

that well dug well before I possibly needed him. So when

I said “Let’s call John right now,” that got their attention.

They understood that I was in the fold and in the mix.

I think it’s important to know some of the Plan Bs you

have when you go into a negotiation, and my Plan B was


There are some points in your negotiations that you must stand firm on

the Omnicom card. I figured maybe there was somebody at

Omnicom that could help the Yankees. Little did I know

that there was actually a need to connect a BBDO, DDB

possibly with YESNetwork; they were trying to get some

advertising dollars in.

And the other thing was the security. Since I was connected

with a public company, it was easy for them to understand

that I was legit and authentic. I think when you talk about

starting a company called Yankees Steiner, never in the

company’s history did the Yankees ever have another sponsor

or partner, partner up in name. So I knew it would be a big

deal. Steiner was a good company. It was on the rise, but I

knew having the credibility of the Yankees would be huge.

So when I negotiated Yankees Steiner, I took on the position

that, yeah, the Yankees were the biggest brand in all of sports

and I respected it. No question. I probably would have given

my right arm just to get that deal. But I stood firm, knowing

that I had the best company in my category; I was the best in

category. Steiner was the best authentic collectible company.

We have the best baseball collectible company, and I was

wired in with many of their players.

So when they were trying to talk me into calling the company

Yankee Collectibles and all of these other things, I stood firm.

I think their interest in trying to get together with Steiner


It can be advantageous when you get to spend more time with somebody when negotiating

was even more interesting to them than anything else, so they

conceded on the Yankees Steiner end of things.

Just on one little footnote, I think it’s really important, the

more time you could spend with somebody — that meeting

led to a series of probably as many as 30 or 40 meetings with

the Yankees — and I think the more you can meet and the

more you can stretch things out, I always thought that was to

my advantage. So I took as many meetings as I could with

Randy, Lon, Brian Cashman, the more they understood about

my company and what I was doing, the more ultimately, after

we did this deal, I figured that they could help me.

I think that ended up holding true, because my business can

get kind of complicated with all the different people I talk to

at a team, when you talk about game used products, we do

a lot of marketing stuff with their season tickets, with their

sponsors, activation. I’m touching every bit. I’m touching

TV, in stadium marketing.

There isn’t a part of the Yankees that I don’t touch from

helping the Steinbrenners get Christmas gifts for some of

their key sponsors and partners all the way down to the fans.

So I think the more that they understood, and I took those

two years when I negotiated Yankees Steiner, it was a pretty

sizable deal, but I knew that such a powerful company like

them, I wanted to make sure that I got myself around to four


A key component during negotiations can be getting a lot of the players involved

or five of the key people that run the Yankees and have them

know as much as they possibly could about Steiner. Every time

I could get a meeting with them to figure out how to nego-

tiate a part of the deal, I would take the two-hour meeting,

knowing that it would come back in spades.

Out of all the partnerships I have, after putting all of that

time in, that’s definitely helped quite a bit.

Bonnie: Excellent.

Brandon: That part of it was a key component, making sure that I

stretched out the negotiation and got a lot of the key Yankee

players involved.

As it turns out, you know, we talk about digging your well,

when George made the decision to actually do this was the

first time ever a team had partnered up with a collectible

company, and basically let me into the vault to sell all of

their collectibles.

There was stuff down in the basement that was 30, 40, 50

years old: World Series jerseys; stuff from Rizzuto, Mickey

Mantle, all that sort of thing; trunks that were used by Gehrig,

DiMaggio. I mean, 50, 60 years old. It was crazy.


Make sure you give respect to others in your business because you never know who you’re going to run into

But when it came down to it, one of the limited partners, who

was a collector, big collector, Barry Halper, one of the biggest

in the business, sat down with George and said, “George,

you’re going to actually go with Steiner. You know, I’ve

known him for a long time, but you think he can do this?”

And he said, “George, I don’t know if you should do this deal,

but if you’re doing a deal like this, there’s only one way to go,

and it’s Brandon Steiner.” And that’s the guy that I always

gave the respect to, always had a great relationship with, even

though our paths didn’t always cross, because he was more of

a collector than a business person about it. You just never

know who you’re going to run into.

As it turned out, over dinner with George, he had the make-

or-break to what was one of my bigger deals.

Bonnie: Excellent. Thank you, Brandon, for that great story. Next is

Royce Imhoff.

Roundtable Member Royce Imhoff

Royce: Okay. I can tell you one thing, I’m certainly not going to

negotiate with Christine, Brandon, or Steven — that’s for

sure. And I don’t know that my negotiating skills are better


Great negotiators tend to be great leaders and good listeners

than anyone else’s, but I have had the privilege over the years

of seeing some great negotiators in action.

I think there’s three common denominators that people that

have really mastered the art of negotiation have.

First, great negotiators tend to be great leaders. I don’t know

if there’s a correlation by the way between leadership and

negotiation, but my experience has been that great negotia-

tors are also great leaders.

Secondly, you know, they tend to be good listeners. Yeah,

they’re good communicators, good orators, they’re persua-

sive, but they tend to know the cards before they’re actually

played. And I attribute that to asking the right questions and

being good listeners.

And, thirdly, and probably a page out of Harvey Mackay’s

handbook, and that is great negotiators tend to have the

uncanny ability to have incredible networking skills and build

fabulous support teams.

Let me give you an example.

Back in 2003, when Saddam Hussein fell from power in Iraq,

our chairman at that time at AIG was Hank Greenberg. One

of Greenberg’s big goals was to become the first major insur-

ance company to go into Iraq and write life insurance and

property casualty coverages.


Great negotiators tend to have the uncanny ability to have incredible networking skills and build fabulous support teams

So he set out on this goal, and the first thing that he did is

he put and assembled just an incredible team. He had Henry

Kissinger. He had former Secretary of Defense Bill Cohen.

He had a three star general from West Point, who was helping

him negotiate militarily and politically. I mean, he put the

best of the best in place as his advisory team.

Next, you know he figured out that if he could give Iraq some-

thing that they needed and couldn’t get elsewhere, he had a

distinct competitive advantage. He knew they needed help

rebuilding their infrastructure. So he went out to some of the

very biggest, best insurers that AIG had a working relation-

ship with and had written coverage with for years. There

were road construction companies, there were bridge builders,

there were water treatment processing plants.

What he was able to do is he convinced these CEOs of these

various companies, that he had a relationship with for years,

to buy into his strategy, and he believed that he could drive

that in business and contracts that they would not otherwise

have gotten. At the same time his ultimate goal was obvi-

ously to provide the country and government of Iraq much

needed services that they desperately had to have.

The other critical component of his plan was he also

convinced these CEOs that they couldn’t go back and ask

their people to do something that they were not willing to


Put the very best team of advisors in place that you can find

do themselves, so he persuaded them all to go over to Iraq

with him. He led an envoy of CEOs over to Iraq. They flew

into Kuwait. And then under the cover of darkness with

military escorts, they had Patriot missiles going off, clearing

the air space, they flew into Iraq.

Anecdotally, the next day, as they were out touring the coun-

tryside, the first Humvee that was in — there were three or

four of them, hit a land mine and flipped over. Greenberg,

being the great planner that he was, of course had a team

waiting in Kuwait that went in, air evac’d those guys out, and

fortunately nobody died in that incident.

But just think about the negotiating skills that he had to

convince those guys in the first place to go over there and

take part in that deal.

To me the takeaways of that negotiation are, first, he put the

very best team of advisors in place that he could find. I mean,

I would never go into a negotiation with Christine Jones and

not have an attorney, the very best legal counsel that I could

find. Greenberg also understood, better than anyone, what

the government and the country of Iraq really needed, and

then he was able to deliver that and execute flawlessly.

I mean, if you think about it, the genius in that negotiation

and in that plan was the fact that he was able to create a win-

win. He was able to go out to people he had relationships


To be a top negotiator, you must understand better than anyone what is really needed, and then be able to deliver and execute it flawlessly

with, clients that AIG had written for years, and convince

them that he was going to deliver business and contracts that

they needed, and think of what he delivered for the country

of Iraq. I mean, those much-needed social services and infra-

structure that they had to have.

Once he was able to connect all of those dots, the insurance

was a lay-up. There were no price negotiations.

He basically eliminated all the other competitors that were

in there vying for the insurance, and honestly, he was able to

do that by focusing on what was important and meaningful to

them, even though ultimately he wanted to be able to provide

the insurance. So I think without question, that’s probably

the best and personally gratifying negotiation that I was ever

a part of or saw go down.

Bonnie: Well, excellent, Royce. Thank you. I’m glad you were able

to share that great story. On that note, I will turn it back to

you, Harvey, for your wrap-up.

Harvey: Bonnie, thank you for pinch-hitting.


There is no substitute for using our own members as our resources

WRAP UP

Before I close, special thanks for your key insights and kudos to …

l Christine Jones

l Royce Imhoff

l Steve Schussler and

l Brandon Steiner

There is no substitute for using our own members as our resources … and

we will continue to do so throughout the year.

Thanks again.

you need to - amazon s3 · you want the deal and understand exactly why you want it let’s begin...

Documents