The Power of BATNAs: Manchester United’s summer transfer window
Note: Periodically, we analyze current events through the lens of negotiations as a case study to support negotiation topics. This is the first in an ongoing series.
As a lifelong soccer/football fan, I have always had an affinity for Manchester United. My love for the club pre-dates the commercial juggernaut that the club has become – the most valued club in the world (according to Forbes), listed on the New York Stock Exchange, and where players are allegedly encouraged to keep their match-worn jerseys (vs. engaging in the post-game jersey swap ritual) for auction later. It was a “simpler time” when Manchester United was led by Sir Alex Ferguson and had a steady stream of players come through their academy or purchased players that were still unfinished products (Cristiano Ronaldo!). Today, though, the club has come to rely on the transfer market to purchase stars in their prime to maintain global appeal and maintain commercial power. United’s recent negotiation and purchase of star Striker, Romelu Lukaku, demonstrated how the club successfully leveraged a key negotiation principle – BATNA (Best Alternative To a Negotiated Agreement) to strengthen its position.
Given the increasing reliance on the transfer market to bolster the club’s talent (vs. a prior emphasis onin-house talent development), coupled with its increasing commercial might, United has progressively found it difficult to conduct transfer negotiations without paying a market premium. With the constant information in the media around United’s transfer targets coupled with its financial strength, the clubs of targeted players can quote exorbitant prices knowing that United can (and will…) pay up. Furthermore, the negotiations are largely transactional, involving two key dimensions with two key interests at play: (1) the transfer fee with the club and (2) the player’s wages with their agent. This often turns the negotiation into more of a protracted stare down, rather than a dialogue, all while playing out publicly in the tabloids – a hard scenario even for an experienced negotiator.
Despite this tough dynamic, reports praise Manchester United’s Executive Vice Chairman, (Ed Woodward) and Manager (José Mourinho) for employing a shrewd negotiation maneuver to land a world-class striker (Romelu Lukaku) from rival club, Everton. After engaging in a highly publicized and lengthy transfer negotiation with Real Madrid to purchase their striker Álvaro Morata for nearly a month (in which Real Madrid quoted astronomical fees for a player of Morata’s quality and their true motive suspected to be extending Morata’s contract as a PR “win”, rather than sell), United discretely developed its BATNA by engaging with Everton for Lukaku. In strengthening its BATNA, United created for themselves a unilateral win-win scenario: the ability to leave Real Madrid empty-handed at the table and, if the deal did go through, improves its squad. Such a move is key for clubs such as United and Real Madrid, where negotiations for top stars occur regularly so there is a built-in repeatability to the negotiations. For a club of United’s size and stature developing a strong and viable BATNAs, whenever they engage to buy or sell a player, also helps tamp down exorbitant transfer fees by providing credible and proven alternatives. This reputation precedes them and by never locking into a single club or player, United’s future negotiation with other clubs affords them perceived negotiations leverage.
In a world where news leaks and spreads at the speed of the Internet United’s ploy could have easily backfired; however, the club’s ability to engage decisively with Everton for Lukaku shows the value of increasing one’s negotiation leverage by developing sound BATNAs.