Contract Negotiations Case Study
From peace negotiations between countries to professional sports contract negotiations, these meetings of parties occur daily in every society and result in both positive and negative outcomes. Negotiations occur on both high and low levels and are necessary to reach agreements for limited resources, work together to create something otherwise impossible, or resolve problems between parties (Lewicki, Saunders, & Barry, 2006). In the National Basketball Association, the stakes are high during contract negotiations and can make or break a team resulting in major changes to the relationship between the organization and a professional athlete.
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This agreement exceeded the cap allowed to each team for player salaries and was kept quiet by Miami Heat owners and managers violating the NBA’s requirement to notify new player salary agreements as they occur. Once discovered, Howard’s deal with Miami Heat was dissolved by NBA attorneys concluding the contract null and void with the inability to fit Howard’s base pay under the approved salary cap. Howard was once again deemed a free agent by the NBA and the Washington Bullets were approved by the organization to enter into contract with Howard with no limit to salary caps becoming Howard’s best backup plan and making NBA history (Lewicki, Saunders, & Barry, 2006).
Benefits of Contract Negotiations
Intangible Benefits. Intangible factors directly or indirectly influence parties involved in a negotiation process as fundamental psychological motivators. These factors include recognizable yet not easily quantifiable forms such as time, experience, or leverage. Ignoring intangible factors is impossible as they can have a tremendous influence on the negotiation process and outcome. These benefits are often engrained in personal values and emotions. Intangibles can pose a major problem during a negotiation when the parties involved fail to understand how he or she may affect the decision making process if tangibles dominate the negotiation (Lewicki, Barry, & Saunders, 2006).
Intangible benefits exist throughout the negotiation process in the case of Juwan Howard’s contract deal. The Washington Bullets owner, Abe Pollin, made a promise to fans that the managers and owners will do anything to keep Howard in Washington because of the love for Howard as a player. These emotions come into effect during the negotiation process as Howard felt strong as a player for the Bullets and did not want to lose that experience. Unable to shrug off his feelings for the Washington club, the Bullets were provided with another opportunity to win him over after the initial rejection (Lewicki, Saunders, & Barry, 2006).
Tangible benefits. The tangible benefits in the Juwan Howard case are the salary and perks of the seven-year contract. The first offer made by the Bullets for $78.4 million was made well below his projected value with little enthusiasm. Once other teams showed their offers for Howard, Washington increased their offer to $84 million. Bullets executives stated the offer was what the team could afford to pay Howard, nothing more. He was forced to make a decision to accept the offer with less tangible benefits and more intangible benefits or to consider trading teams. Ego satisfaction is often as important as achieving tangible benefits and Howard did not feel either (Lewicki, Saunders, & Barry, 2006).
Howard’s decision to entertain offers from other teams welcomed the tangible offers of a higher salary of $100.8 million, hotel suites, limos, bonuses, and an allowance to run a youth basketball camp from the Miami...