The negotiation lasted almost 20 years. The buyer had a clear goal: ownership. But in 1968, when the negotiation started, he admitted he didn’t have “two nickels” in his pocket.
In 1987, he had more, but not nearly enough. The cost? $44.5 million. The sale item? The Phoenix Suns. The purchaser? Jerry Colangelo.
So what did he do, and how did he negotiate to buy the Suns and join one of the most elite group of businessmen in the world, professional sports franchise owners?
To understand and learn from this negotiation, we must first recognize that the negotiation didn’t simply occur in 1987, when Colangelo rounded up the Suns’ purchase price.
No, the negotiation started in 1968, when 27-year-old Colangelo was hired as general manager of the Suns. Even then, he wanted to own the team. So he asked the owners for the right to buy if they ever decided to sell. They agreed.
• Lesson 1: Focus on a clear goal and don’t be afraid to ask for things even if they don’t appear likely at the time.
Colangelo’s next step took almost 20 years to accomplish, consisted of thousands of telephone calls, business meetings, social outings and almost every conceivable form of communication with literally hundreds of people.
In many ways, this next step reflects one of Colangelo’s major strengths as a negotiator. He built strong, trusting relationships with the Phoenix community – business and otherwise – based upon respect, honesty, fairness, mutuality and a willingness to work hard to achieve his objectives. He built the same relationship with the Suns’ owners.
Negotiating, according to Colangelo, is “relational in a very large way.”
He thus paid close attention to his reputation and relationships, and when it mattered most, in 1987, it paid off. His Phoenix business community colleagues invested almost $20 million toward his effort to buy the Suns. And the Suns’ owners sold the team for what he considered a fair price.
• Lesson 2: Strong, trusting relationships have a distinct and significant value in most negotiations.
A reputation for honesty, fairness, respect and hard work will make a bottom line difference.
Despite this effort though, the face-to-face negotiations almost fell apart in 1987 when America West Airlines and Circle K investors walked at the last minute. Colangelo’s own lawyer then told him it was a “hell of a try.” But Colangelo refused to give up.
Instead, he came up with a creative way to satisfy both sides’ interests. He told Donald Pitt, one of the Suns’ owners, that to consummate the deal Pitt would need to enter the deal as a limited partner and carry some debt.
Colangelo and his partners then would get the team. Pitt and his partners then would get an enormous profit. They had, after all, purchased the team for $2 million almost 20 years before. Pitt agreed.
• Lesson 3: Open your mind to find creative ways to satisfy the interests of both sides and stick to it if you think there’s a chance for success – even if it appears hopeless to others.
Finally, Colangelo never could have bought the Suns or successfully negotiated many deals without practicing a critical negotiation strategy common to all the most effective negotiators.
• Lesson 4: Be prepared.
Do your homework. Find out all you can about the substantive aspects on the table before you begin the formal face-to-face negotiations.
Colangelo moved to Phoenix in 1968 with little in his pocket and a blank slate in the community. In more than 30 years, he has engaged in countless negotiations.
Sure, he has weaknesses and faults. Everybody does. But he’s been able to negotiate his way to the top. One goal still eludes him, though, and he can’t negotiate his way there. A baseball World Series for Colangelo’s Arizona Diamondbacks or an NBA Championship ring for his Phoenix Suns.
Ironically, he must rely on those with whom he’s negotiated to get it for him. He’s hoping they bring him a win-win.
Published September 24, 1999 The Business Journal