In sophisticated negotiations, the parties will typically find the standards that favor their side and use their most favorable standards to independently justify the “fairness” of their positions. The parties will then negotiate over which standard represents the most fair and applicable justification.
Such is the case in the current NBA collective bargaining negotiation. Billy Hunter, the NBA players’ union director, commenting on the owners’ claim to have lost $370 million last year said, “There might not be any losses at all. It depends on what accounting procedure is used.” He then said, “If you decide you don’t count interest and depreciation, you already lop off 250 of the 370 million dollars.” The union’s preferred standard here is “real losses,” which don’t include interest and depreciation.
In response, NBA deputy commissioner Adam Silver said, “Part of the problem with the existing system is it’s based largely on revenue, not net revenue. Although our actual revenue numbers were better than what we projected, it came at a large cost.” The NBA’s preferred standard here is net revenue.
Hunter further stated the players have little confidence in the owners’ projections and will offer their own interpretations of the league’s finances at the next bargaining meeting.
What lesson can we learn from this? Research the applicable standards before your negotiation. Then come prepared to use the most favorable ones and discredit the most unfavorable ones. Finally, negotiate over the most appropriate objective criteria.