On October 27th, All-Star basketball player James Harden was traded from the Oklahoma City Thunder to the Houston Rockets. Harden was one of the core players who led the Thunder to the NBA finals last year. The trade came about after Harden rejected a four-year, $54 million offer from the Thunder, $6 million less than the maximum they could offer. Instead, after the trade, Harden accepted a five-year, $80 million “maximum” contract offered by the Rockets.
Two deadlines played a key role in the negotiation. First, the parties faced a firm, external deadline of October 31st for contract extensions set by the league. Second, the Thunder gave Harden one hour to accept or reject their final offer.
The Rockets had pressed the Thunder to give Harden an offer on October 26th, but the Thunder waited until the 27th (effectively the last day to do a deal so that everything could be finalized by the 31st) and gave Harden only 60 minutes to accept or reject it, wagering the pressure might induce Harden to sign but willing to take the risk that he wouldn’t.
Harden was disappointed by this and it likely influenced his decision to turn the offer down. He later said, “After everything we established – everything we had done – you give me an hour? … It hurt me. It hurt.” Of course, the extra money he’ll get from the Rockets will help console him.
As negotiators, this should remind us of the importance of understanding when and how to use deadlines, how to effectively operate within them, and the psychological tendencies underlying them.