Lessons from the Lockout: What IT Buyers Can Learn from the NFL Labor Stalemate

Though it’s almost five months until the next NFL season is scheduled to kick off, most professional football fans I know don’t expect to see any games at all this year. Many remain shocked the owners and the NFL Players Association (NFLPA) cannot reach a deal to split up a large – and rapidly growing – pile of revenue. I have watched the bargaining process with a great deal of interest, mainly because I am a veteran of many intense contract negotiations, but also because I am a New England Patriots fan.

Obviously, negotiating a labor agreement with a union of 1,000+ professional athletes is different than seeking an optimal contract for IT services or a major technology solution. But, interestingly, many of the challenges the NFL owners and players are encountering are also common in negotiations between CIOs and IT service and solution providers.

Lack of Trust

Given the NFL is one of the most successful professional sports leagues in the world and has experienced huge growth in recent years, there is remarkably little trust between the two parties. Each party doubts the other’s numbers and statements. The owners refuse to open up their books, while the NFLPA makes many grandiose claims about fairness. The posturing and lack of transparency both undercut trust.

Hall of Fame coach Vince Lombardi once said,” Winning isn’t everything; it’s the only thing.” In this case, that’s not true. The only thing here is to ensure the business keeps operating since there is every reason to believe it will be hugely profitable, whatever the details of the final contract. That promising outlook should be a foundation for trust.

In negotiating IT contracts, we see similar mistrust entirely too often, even when forward-looking IT organizations and innovative software and services companies have longstanding and successful relationships. Hugely profitable corporations claim poverty as they set their budgets, while IT service and solution providers throw ridiculously complex deal constructs, packaging, pricing and licensing models at their prospective customers when asked what something costs. So, despite the shared goals (e.g., smooth IT operations, successful implementation projects, compelling business outcomes) and ample opportunities to share rewards, the two parties frequently end up viewing each other as adversaries – broader business goals, end-users and fans be damned.

Overlooking the Forest for the Trees

Speaking of broader business goals, both sides in the NFL dispute are taking too narrow a view. They are fighting it out over specific details without realizing the bigger-picture goal of ensuring there is an NFL season this year. U.S. District Judge Susan Richard Nelson, who is ruling on the legality of the lockout, said it best, when encouraging the two sides to return to continue with negotiations: “It seems to me both sides are at risk, and now is a good time to come back to the table.” She also noted that her ruling will surely make one side unhappy, so finding a mutually agreeable now is better for the long term.
The owners apparently expect that the enormous growth rate in the valuations of their franchises must continue unabated, despite overall economic hardship in the U.S. Meanwhile, players seem to believe a larger share of the ever-increasing revenue is their birthright. The question must be asked: how much are growth projections worth if all revenue is lost in the immediate term? Put another way, the present and future must be balanced in setting up optimal contracts and working agreements. While some observers suggest that the owners are trying to make up for the last deal (which they considered to be unfavorable to their interests), the past, by and large, must be forgotten. If contract renewals or renegotiations are viewed as opportunities to settle scores, trouble is sure to follow.
A similar issue is worth addressing in IT software and services relationships; the benefits of existing relationships must be carefully balanced against the hard work and expense of establishing a new one. That question applies to both the buyers and sellers of IT services.

Muddled Objectives

In its public statements, the NFLPA is emphasizing the healthcare angle, claiming that the owners don’t care about the safety and welfare of the players, most of whom have very short career spans. And a few players suffer horrifying injuries. It is possible they are overplaying their hand, seeking general leverage without clarifying exactly what they want in terms of long-term healthcare packages. Meanwhile, the owners are insisting that their stadiums need major upgrades (which can’t be publicly subsidized anymore). Therefore, the players must chip in from their share of the huge revenue pie, or concede to adding two more games to the regular season schedule. I suspect both parties want more money, which means there is plenty of room for compromise, provided everyone clarifies what is most important to them.

This pattern repeats in IT services and solution negotiations, with one party emphasizing higher performance or innovation in one area or “stack,” when it really wants to focus on adjusting cost parameters somewhere else. Again, transparency and open communication are critical, not just for signing a deal that offers win-win possibilities, but also for establishing the foundation for successful, long-term relationships.

Partnership may be an overused word today. But if anybody stands to benefit from a partnership, it’s the NFL owners and the NFLPA. Meanwhile for IT organizations, in a highly outsourced, increasingly mobile and data-driven world, business success requires strong IT partnerships. Companies and IT organizations simply can’t meet their goals without a baseline level of trust and strong vendor commitment. And vendors have no chance to meet their goals unless they recognize the importance of enabling client success. These are all thoughts CIOs should keep in mind as they enter into contract and relationship discussions this year, and when they find themselves with some spare time on Sunday afternoons this fall.