NIFH06V

Case Question

World billiards has a global following among players, fans, TV audiences, and gamblers. Its televised tournaments are beamed into 140 countries, and it is hugely popular throughout the world, especially in the Far East and India where gambling is a big business. World billiards is organized through national associations which negotiate their agreements with their national TV companies around tournaments sponsored, until recently, by top cigarette brands.

Since recent legislation to ban cigarette sponsorship, the national associations face a funding crisis. International Billiards has always been associated with cigarette brands, and no obvious replacements appear to be viable. This has created an opportunity to re-organize the sport and wrest it from the national associations, who are amateurs in commercial realities, by forming a break-away international body.

World Billiards Live (WBlive.com), a recently formed internet start up dot.com, aims to re-organize world billiards completely through an internet portal which will market to the global audience and will feature live audio commentaries from new tournaments, online gambling, and games, merchandising of kit and accessories, plus live interviews with players.

The problem is one of establishing WBlive.com quickly with enough of the world’s best players – the top 20 at least – under 5-year contracts to create a series of top tournaments for TV and the internet. This means completely replacing, or sidelining, the national associations. Without all the top players, WBlive.com would provoke rivals to appear, and fragment the sport (like boxing). Golf and tennis play under the auspices of their national associations (discipline, rules, selection, etc.,) but the television rights are managed by commercial companies, as are most of the players.

Eddie Coyle Sports Management manages the business affairs of the world’s six top players (and another 15 in the top 50) and has been approached in confidence by WBlive.com to commit to the new organization. His company has been offered a $1 million signing-on fee for a five year exclusive contract for each of his players (and any others he signs), a minimum participation fee of $100 000 for each tournament any of them play in (plus any prize or place money they win), and a percentage of the TV, sponsorship and merchandising fees.

If Eddie Coyle’s players sign with WBlive.com, or if their potential involvement becomes public, they will be expelled from their national associations and will be unable to play in official world tournaments. If the majority of the world’s top twenty to thirty players sign with WBlive.com, however, this ban may not have much effect, especially if WBlive.com also signs up lower ranking players and the next generation of ‘stars.’ The TV companies want to show the world’s top players to their audiences and, therefore, they will deal with whichever organization has the top players under contract.

If the WBlive.com deal fails, this could cost all of Coyle’s players a serious loss of career earnings if they were excluded from the international game. If it succeeds, then they would earn fees many times greater than those they earn under the auspices of their moribund and inefficient national associations.

Eddie Coyle Sports Management has asked you for advice as he wants to improve WBlive.com’s offer giving, in addition to more money, greater protection to his players and more control over their future.

1. How would you assess the interests of the players?
2. What negotiable issues might Eddie Coyle Sports Management raise to protect the players’ interests?
3. What are Eddie Coyle Sports Management’s interests and what issues should he negotiate to deliver them?
4. How might you assess the power balance between WBlive.com and Eddie Coyle Sports Management?
5. How might WBlive.com neutralise threats to ban their players?

Essay 1

How would you demonstrate the theoretical benefits of bargaining?

Essay 2

How would you make the case for Principled Negotiation?

Essay 3

‘I keep myself to myself and don’t bother anybody,’ Jake said, ‘Yet I am still in trouble with Al. He says I am not a team player, but that’s not true. I follow whatever he tells me to do, to the letter, and I get the job done. There’s no satisfying his demands to do more. I don’t know what to do, and I am thinking of quitting. ‘Don’t be daft, Jake, that’s silly talk,’ advised Fred. ‘That’s OK for you to say that,’ replied Jake, ‘you’ve got a future here. I haven’t.’ ‘Look, Jake, pull yourself together and stop worrying about nothing,’ said Fred, dismissing Jake’s sour mood, without finding out more about what was troubling him. He felt Jake exaggerated his problems. If Jake couldn’t take Al’s bad tempers, he would quit, which would be a pity because he would make a reliable member of his influence group who is trying to change the organization’s policies, including its reliance on low-quality team leaders like Al. If only Al would back off …

How does wallowing help an influence game and what consequences follow if a wallowing sequence is missed?

Essay 4

Frank was angry with Fatima for proposing that her department recruit its lecturer in statistics instead of paying Frank’s department to supply statistics lecturers for her economics students. If others followed Fatima’s proposal, it would reduce his department’s earnings from service teaching in the University and cause redundancies. If he resisted Fatima, he would be seen to be more interested in his department than in the University. As he knew that he was being considered for promotion to Vice-Principal, the essential step to becoming Principal, he knew he had to be seen as a University, not just a department, man. But ending service teaching would reduce his department’s resources and negatively affect the careers of those left in it. He pondered what to do.

How might you apply your knowledge of Prisoner’s Dilemma to explain the nature of the problem faced by Frank?

Solutions to Case Questions

Case Solution

1. How would you assess the interests of the players?

A statement or definition of interests, such as ‘Interests are the motivations (fears, hopes, concerns) of a party that shows “why” one solution is preferred to another. They encompass the overriding goals of the party’.

Unlike many competitive sports, the careers of billiards players can last well into their 50s, though their high fee playing careers at the top of the profession are likely to be over by the time they are 30. Players, therefore, have an interest in becoming and remaining the world’s best players and in maximizing their incomes in the short time, they contest for the largest prize money. They also have an interest in any re-organization of the international tournaments that increase their incomes from prize money, TV fees, merchandising and sponsorships.

Because they earn fees by competing against the best players and because this is what attracts television audiences (and from TV, gamblers are also attracted, which fuels the demand for TV access to tournaments), players have an interest in co-operating with the current organizers of the international tournaments (presently the national associations). To be banned for indiscipline, etc., or for participating in matches outside the auspices of the governing bodies, or for illegal activities like deliberately throwing matches on behalf of gambling syndicates, would deprive them of their income, perhaps end their careers.

2. What negotiable issues might Eddie Coyle Sports Management raise to protect the players’ interests?

Negotiable issues are the agenda items for the negotiation. They are the subjects of the decisions both parties must agree upon if there is to be a settlement. They address the interests of the parties by delivering solutions acceptable in the circumstances.

The three main interests of the players are: to maximize career earnings in the short term; secure higher earnings per tournament; avoid trouble with the sport’s governing bodies. Eddie Coyle Sports Management must protect the players’ interests while exploring with WBlive.com its prospects for re-organizing the game to deliver higher earnings to the players. The first negotiable issue must be the securing of strict ‘privacy and confidentiality agreements’ on behalf of the players to prevent damaging leakages of their potential involvement to the national bodies (which would threaten them with expulsion).

The financial proposals from WBlive.com, while an advance on the current earnings of the players needs to be improved to address the important interests of maximizing career earnings. This places guaranteed appearance fees, prize and place money, shares of merchandising, TV rights, including appearances and interviews, and sponsorships on the agenda. Perhaps also pensions, illness and injury (particularly if they are career threatening), expenses and training academies for promising new players.

To protect the players’ interests from damaging career leakages, an insurance bond is required guaranteeing large compensation to each player in the event of their expulsion from the official game or of legal action against them from their national associations. This could be viewed as ‘earnest money’ from WBlive.com

– if they agree to a bond they are earnest; if they do not, they are not serious.

NB: comparable safeguards or negotiable issues are acceptable for earning marks.

3. What are Eddie Coyle Sports Management’s interests and what issues should he negotiate to deliver them?

Interests as defined above:

Eddie Coyle Sports Management’s interests are broadly compatible with the players. If the players are successful, then Eddie Coyle succeeds in earning his profits from providing management services. However, Eddie Coyle’s interests are both in the short-term careers of individual players and in the long term careers of managing all existing and new players. His horizons are longer than those of individual players.

A player risks his career; so does Eddie Coyle. If the players are expelled, their managing organization will be too. Each player would lose his career fees, Eddie Coyle would lose his profits from all of the players on his books and all those who would be on his books in the years to come. Eddie Coyle has much to lose (as has his staff). To protect this interest, Eddie Coyle would require complete assurances that WBlive.com was going to succeed before he committed his organization and his players to it. He would want to negotiate a large bond in place; plus close involvement in the management of WBlive.com (a large block of shares and seats on the Board), perhaps a merger of the two organizations, or a take-over of WBlive.com.

He would want a large say, preferably control, of how the break-away is prepared and then carried through. This is crucial because the inept handling of this matter could jeopardize the futures of his company and that of his players. He could achieve his goal by having himself appointed as the negotiator with the national associations, where his expertise in dealing with them over the years would be invaluable. He is also likely to want a bigger stake in WBlive.com than cash advances. Shares, and share option schemes would be likely to feature in his agenda.

4. How might you assess the power balance between WBlive.com and Eddie Coyle Sports Management?

[A general answer on the balance of power might be enough to gain a bare pass, depending on the content. An answer that refers to both Baruch and Lawyer’s dependency model or Atkinson’s measure of the power tool (Module 10) would gain marks but going into deep detail on the models at the expense of analysis would not be necessary for a case study question].

Power, like the wind, is felt rather than seen. It is the ability to get people to do what they otherwise would not. Power is a subjective concept and difficult to quantify or measure.

WBlive.com, if they are backed by substantial investment to fund the technology and to pay the signing-on costs, have considerable power but only if they can attract sufficient of the top ranking players to make their tournaments interesting for TV viewers and gamblers. Hence, their monetary power might buy them, players. For this to work, they need Eddie Coyle Sports Management because it manages the business affairs of the world’s six top players (and another 15 in the top 50). To work, the plan requires WBlive.com to sign the world’s top twenty to thirty players, and they need Eddie Coyle Sports Management six top players to give it credibility.

Because the plan would be difficult without Eddie Coyle Sports Management’s players, this gives considerable power to them. In their absence from WBlive.com, the national associations could run plausible tournaments, though this would be a diminishing asset depending on their age profiles. Four of the world’s top 10 players are outside of the Coyle organization at this moment, but they may not be enough to attract the viewing public or the gamblers.

In this situation, the power balance is fairly equal in that the parties need each other because the prospect of greatly enhanced playing and TV fees would attract players to WBlive.com and the prospect of promoting the world’s best players is what attracts WBlive.com to Eddie Coyle Sports Management.

5. How might WBlive.com neutralize threats to ban their players?

This question is about dealing with the ‘problem’ of the national associations. At present WBlive.com and Eddie Coyle Sports Management plan to break away from the auspices of national associations to unfreeze the commercial prospects for billiards from the hands of some uncommercial people. The implied threat that such a breakaway organization would have its players banned is a serious problem because it will cause talented players to hesitate in case the scheme founders.

Such a situation suggests trying another tack, such as trying to integrate the national associations into the scheme by giving them a role in running the sporting side of the game and leaving WBlive.com to run the commercial side. In effect, WBlive.com would ‘buy-off’ the national associations and neutralize them into a non-commercial role (this has happened in professional boxing where promoters generate the money, and the national associations set the rules, decide the rankings, and determine disciplinary matters, like refereeing).

Separating the roles has some merits. It creates credible contests. In contrast, where the commercial side also runs the sporting side (professional wrestling, for instance) the credibility of the contests is in severe doubt. For gambling, the credibility of the contests is the main issue; without it, serious money moves on.

There are problems for WBlive.com in revealing their plans to the national association before they go ahead and sign up the players. What WBlive.com reveals before it has signed contracts can be copied by the national associations if they can find another commercial partner. If WBlive.com or the national associations create a hostile situation once the plan is announced, it will make a partnership difficult to put together. Seizing the services of the players is necessary before seeking accommodations with the national associations, the act of doing which could jeopardize the chances of accommodation.

Solutions to Essay Questions

Essay 1

How would you demonstrate the theoretical benefits of bargaining? (20 marks)

People negotiate because they wish to change the status quo in some way. By doing so they benefit (improve their satisfaction or utility), but in situations where they cannot benefit themselves without also benefiting the other party, they must negotiate the changes to gain the other party’s consent to avoid the other party exercising a veto.

 

This can be represented by a simple diagram.

Both parties are at X, enjoying utilities P’ and Q’ respectively. They have an opportunity to raise their utilities if they can agree to a division of the potential enhanced total utility in a joint move to a position within the triangle X, A, D. If they fail to agree, they remain at X.

Party P would prefer to move from X to A, capturing all of the increase in utility, P*, leaving Q no better off (and no worse off) at Q’. Likewise, party Q would prefer to move from X to D, gaining all the increase in utility represented by Q*. But neither move is likely to be accepted because the non-gainer would veto the other’s proposal.

In anticipation of this outcome, party P may propose that they move to positions close to B giving P a utility of P# and Q a utility Q” (where P# > than Q”) and Q proposing that they move to positions close to C, giving Q a utility of Q# and P a utility P” (where Q# > than P”). Again, all such propositions are subject to the other’s veto.

Now, how close to these preferred positions they get, and the unequal divisions of the increase in utility such positions would depend on many factors, such as the bargaining powers of the parties, their negotiating skills, their perceptions of which outcomes would provoke the other party’s veto, etc. All positions between A and D improve both parties’ utility, but some improve it more than others. A position between

B and C would be a possible agreed outcome, with each gaining more utility than positions between AB and CD.

As both have improved their utility over the distribution available at X (utility P’, Q’) they have both benefited from bargaining if they can agree on a division somewhere between B and C. Agreement in these circumstances is better than a failure to agree.

Essay 2

How would you make the case for Principled Negotiation? (20 marks)

Principled Negotiation (PN) was proposed by Fisher & Ury in 1981 (Getting to yes). Their background as lawyers perhaps indicates why PN is useful as a theoretical framework for dispute resolution. It is based on resolving disputes using objective criteria without resorting to pressure. It rejects ‘positional bargaining,’ or what it calls ‘Traditional negotiation,’ represented by haggling and seeks to find more ‘rational’ ways to behave than lying, shouting, domineering and such like. Its theoretical roots lie in rational decision making (Herbert Simon).

The four prescriptions are:

a.  Separate the people from the problem.

Whenever possible separating the people from the problem is a sensible way to start negotiations. Far too often negotiators fail to reach an agreement because they focus on personalities and subjective issues not directly related to the problem they are trying to resolve. For example, in a pay dispute, the personal likes and dislikes of managers and employees, and the union officials may well impede agreement. Sometimes the people are very much the problem. But by separating the people from the problem, the negotiations can focus on the solution. To do otherwise prolongs the negotiations and risks their disruption.

b.  Focus on interests not positions.

Interests and positions are intertwined and often may not be separated. In many disputes, particularly long-running disputes, the protagonists’ main activity is to defend past positions, over which a great deal of emotion has been invested. This leads to positional posturing and a stubborn refusal to explore other potential solutions.

This prescription is a very sensible goal to hold to throughout any negotiation. This is particularly true when faced with a ‘difficult’ negotiator who indulges in red play and personal acrimony.

Also, when interests cannot be reconciled, the negotiators can ‘agree to disagree’ and focus on positions and issues to alleviate the symptoms of the dispute.

c.  Generate a range of options before deciding.

The intention is that during the debate and proposal phases some alternatives are considered. A brain storming session that enables each side to make suggestions without commitment and prior judgment is one way to break a deadlock. In the absence of involvement of the other party in joint brainstorming, the Principled Negotiator should conduct the session separately.

d.  Insist on objective criteria.

If objective criteria suggest themselves, it is sensible to apply them to the solution. Few things are objective (even validation of disarmament by inspection) and how a deal is implemented can be affected by the criteria used. However, in the case of a noise dispute, it is better to address noise levels by DBA measurements than by subjective assessments of what is ‘noisy.’

PN is a framework, and though its prescriptions may not be suitable in all May cases, if sensible flexibility is applied to the prescriptions, they are likely to be helpful.

Essay 3

How does wallowing help an influence game and what consequences follow if a wallowing sequence is missed?

The main idea behind influencing is that ‘good ideas alone are not enough’; the most meritorious course of action needs more support than it own merits for it to be enacted by others. Influencing techniques assist the adoption of meritorious ideas by others.

Influencing involves other people; close up and personal. People who know you may be more inclined to support your meritorious idea over others if they are persuaded that your idea is of higher priority than the other meritorious ideas they could vote for, go with or not oppose. This gives you two tasks as an influencer: first, link your name to the idea; second, improve its sense of priority in the mind of the influenced other players.

Wallowing is one such technique in influencing games. It involves engaging the people you wish to influence in dialogues in which their hopes, interests, issues, fears, and concerns dominate the discussion. It is not about showing how important something is to you, how much you need/deserve whatever you are proposing, or even assuming that it is self-evident why they should agree to it for themselves.

The technique is simple to understand in itself, but it is difficult to execute because (particularly for most males) it runs counter to how we have tended to behave in conversation with others. Briefly, we are often too egotistic to take the time to properly converse with people we wish to influence. In a wallowing sequence, we are more likely to be listening than talking; more interested in what they are saying to us telling them what they should be doing. Worse, we often cut-off trains of thought and topics of conversation they initiate, and on which they would elaborate, if only they were given a chance before they have had a chance to wallow in their concerns. Fred, in the scenario, is making a typical error as an influencer by cutting off Jake’s opening steps to his wallow.

During contact with a prospective influencing partner they may raise an issue or concern, or a question, of which you know the answer, or for which you have a meritorious proposal or you see an opportunity to take the conversation into an area towards which you wish it go. This is a critical moment in a wallowing sequence; miss it and the moment is lost; catch it and, like Shakespeare’s ‘tide in the affairs of men,’ you go on to win an ally.

The error would be to jump in with your meritorious proposal. You have not yet prepared the ground properly because they are not yet ready to give it their full attention or its appropriate priority. To do this, you must delay proposing your idea and, instead, concentrate on getting them to expand on their concerns by answering carefully your directed questions.

In the scenario, Jake is upset and angry about his treatment by Al. Fred wants Jake to stay, despite Al’s behavior, to persuading him to become an assistant. Hence, there is no point wishing Al would ‘back off’; the task is to persuade Jake to develop a resistance to Al’s intimidation. Telling Jake not to be ‘silly’ is no way to get him to stick around and join the team. Fred should now take Jake into a wallow sequence: ask him about Al’s behaviour; how he feels about it; what is the best way to cope with Al; seek agreement that it would be better if Al were ‘neutralised’ and the organisations polices were changed (‘what kind of person would you like to see in charge of the team?’; ‘How do you think that might be organised?’; ‘Would you be happier if Al moved elsewhere?’, and so on).

The more the prospect talks about his problems (prompted by questions and obvious sympathy and solidarity) the more the issue moves up his internal agenda and takes greater importance in his attention. At some moment his attention is fully on his problem, and its importance for him is at its highest. Recognising this ‘moment’ is of paramount importance to the influencer. It is only brought about by the skillful intervention of the influencer’s questions that gradually draw the prospect into focussing on his problem and discussing a future with the problem removed.

Having heard in full Jake’s problems, Fred chooses when to generalize with his solution (change the organization’s current team structure – or whatever). For this, he needs the active support of people like Jake. We have no information of exactly what Fred’s plans are, how many others support them, so nothing is expected from candidates in this area. The question is about getting to this point in the sequence. Moving Jake to the point where Fred can reveal something about his influence game to change the situation is far better than dampening down his complaints about Al, telling him he his being ‘silly’, worrying about ‘nothing’ and offering Jake no credible hope that his misery will end is bound to suggest that Fred is running a half-hearted influence game with little prospects of success. This is likely to hasten Jake’s departure, but even if he doesn’t quit his judgment of Fred has been damaged, perhaps permanently.

Essay 4

How might you apply your knowledge of Prisoner’s Dilemma to explain the nature of the problem faced by Frank?

The Prisoner Dilemma game analyses the situation when there is a conflict between a strategy of doing what is best for self and what is best for the group. The student is expected to apply this concept to the scenario or to a similar scenario with which he or she is familiar.

An exposition by the candidate of either the original Prisoner’s Dilemma (PD) game or any of the derivative games (Red v Blue; War and Peace; Currency; or ‘Effusi’s game from the Text) is necessary but not sufficient for a pass mark (nor is purely describing more than one of the games). Candidates must also relate PD to Frank’s situation in the scenario for a pass in the essay.

Taking Slug and Gripper for the PD, they have been arrested for a serious crime for which there is insufficient evidence of their guilt. They are offered a deal by the prosecuting authorities: if one of them confesses and the other does not, the confessor goes free, and the non-confessor gets 12 years in jail; if both confess they each get five years and if neither confesses they get one year (or some such similar tariff).

The relevance for influence is whether Frank acts exclusively in his interest (acquiesce by doing nothing about Fatima’s proposal to better his promotion prospects in the University) or he can act to protect his department’s interests (out of loyalty to his staff’s interests). This is the fundamental choice in PD games, including the game of life: do we do what is best is best for ourselves (defect because we ‘must’ or defect because we ‘want’ to) or do we do what is best for others (Nash: maximise the product of the net gains)?

From Fatima’s view point, she would see Frank’s likely reaction to her proposal as him acting predictably to defend his department’s interests. This prospect would invite an influencing contest between Fatima and Frank, with each fighting for their department’s interests. If Fatima ‘wins’, then Frank’s department will lose budget and eventually would lose personnel, especially if the precedent spreads, but Frank might be sufficiently aloof that it does not damage his career hopes; if Frank ‘wins’, then Fatima’s department would grow and Frank would lose personal promotion prospects, though his colleagues would be happier with Frank and for themselves.

The Principal might judge Frank’s reaction as a test of his suitability for promotion to Vice-Principal; does he take a departmental stance or a University-wide stance? If Frank accepts Fatima’s proposal, she may be surprised at first, until his promotion is announced, and then conclude, cynically, that Frank was ‘bought off.’ His staff would react angrily no doubt and believe Frank ‘sold them out’.