What do monopolistic suppliers have in common with top-level footballers?

What do monopolistic suppliers have in common with top-level footballers

Alfred Morris Blog, Procurement

The issue with monopolistic suppliers and top-level footballers is the perception that under changing circumstances they have the power to dictate terms. Many of us will have seen our clubs held to ransom by one of its superstars and a few of us seen a similar situation at our organisations by that one tricky supplier. In this context, how can Procurement balance the power of the relationship? In this blog, I have turned to the football transfer market to draw comparisons and provide a few hints and tips.

Breach of contracts by Dmitri Payet & Diego Costa

Many of the globe’s top footballing leagues have all too commonly encountered situations where their prized assets have refused to play for their club and potentially breach their contract – often for more money, the pull of a more prestigious club or for personal reasons. These include West Ham’s Dmitri Payet who refused to play for West Ham due to personal reasons and Chelsea’s Diego Costa who had allegedly refused to play for the club due to a sizeable financial offer from China. Each club has taken very different negotiating positions resulting in West Ham’s Payet breaching his contract but getting his move to Marseille and conversely Chelsea’s Costa fulfilling his contractual obligations for the short term at least.

Lionel Messi`s wage demands

With suggestions that Chinese clubs are being prepared to offer Lionel Messi a salary of over £1m per week, Barcelona’s Director Oscar Grau had set out the club’s negotiation position and made a public statement that they will refuse to give in to Messi’s wage demands when renewing the contract of their best player. Taking such a firm and public approach has led to fans, current players and interested parties demonstrate their own public support for Lionel Messi. The response has weakened Barcelona’s position with the club`s President now taking the role of lead negotiator and seemingly backtracking on their initial statement.

The case of Atletico Madrid

Atletico Madrid sold Fernando Torres in 2007 and since that time the club has gone through a raft of replacement strikers including Sergio Aguero, Radamel Falcao and Diego Costa. Antoine Griezmann, their latest striker who was nominated for The World Player of the Year will no doubt be sold next and you can guarantee Atletico will have a plan .

Negotiation strategy

Negotiating with monopoly suppliers and the world’s best footballers will always be difficult, but there are a few things you can do to increase your chances of success:

  • Timing is important. Monopolistic suppliers and star footballers with limited time left on contracts will have greater power. Conversely, a supplier having a tough quarter or a star footballer going through a performance blip or injury may present an opportunity to get a good deal.
  • Have a clear plan and objectives and understand the levers available to you.
  • Ensure that your supplier or superstar footballer understands the value you can bring to them. Do they know how costly it is not to do the deal and what alternatives do they have?
  • The monopolistic supplier may be able to deliver services to other parts of your business; these less monopolistic services could be a bargaining chip to reduce costs. Why not have discussions with the difficult agent about more than one of his footballers to get a better deal overall?
  • Ensure that your monopolistic supplier sees the relationship as a strategic partnership.
  • Building continuous improvement and 1st refusal on new technology into the contract could give you a competitive edge. Include a performance clause into your footballer’s contract so the player is incentivised to achieve your shared goals.
  • Challenge the assumption of whether this is truly a monopolistic supplier or if there are alternatives available in the short to medium term. Do not be afraid to take the Atletico Madrid approach and develop credible alternatives!