This is a column by John Culbertson, owner of Cardinal Real Estate Partners LLC in Charlotte. He’s a veteran real estate adviser and investor.
How do you negotiate with someone who has 17.7 billion dollars? Is it even possible to negotiate with someone that seems to hold all the cards?
While you’ve probably never found yourself in the same position as the City of Rock Hill and its stakeholders, you’ve likely found yourself scrambling at some point in time, desperately trying to bounce back after a failed negotiation.
It may seem like all is lost for Rock Hill, but we believe they’ve still got a shot at a deal.
“Most of us are disappointed.” – Gov. Henry McMaster, SC
The back story
For those unfamiliar with the situation, here’s the gist of it:
For the last couple of years, it’s been widely anticipated that a new Carolina Panthers’ headquarters and practice facility would open in Rock Hill, South Carolina, in 2023. The Panthers would practice, hold training camps, and manage business operations at the new facility, which the team’s owner David Tepper has invested $170M in developing.
The City was on the hook to use its “reasonable best efforts” to issue $225 million in bonds by February 26, 2021, to cover public infrastructure costs related to the project. South Carolina lawmakers also passed a bill in 2019 that would provide the Panthers with more than $100 million in tax incentives after the team’s headquarters was built. For 15 years, the team’s players, coaches, and other personnel would have been immune from paying state income taxes.
Last month, however, construction was stopped due to disagreements between the city and the company. If Tepper doesn’t develop in the state, the tax advantages will also expire.
While it’s a tricky situation, opponents of the deal have questioned whether the state should even be helping the NFL’s richest owner (which is a fair point considering David Tepper is a hedge fund manager worth around $16.7 billion).
Three tips for Rock Hill
With the above in mind, we think it’s a real art to know how to cool down after heated negotiations. So, here are our three tips for the City of Rock Hill:
First, establish what you want. It’s surprising to us how often we see people enter into negotiations without really knowing what they want. We encourage our clients to define two or three things they want clearly.
So, City leaders of Rock Hill, grab a mint julep and do this visualization exercise: close your eyes, and pretend it’s a year from now, and it’s another beautiful spring day in Rock Hill, the cherry trees are blooming, and kids are playing safely in the streets. Now, ask yourself these questions.
- What will have to happen related to this deal with David Tepper to make us feel good about our progress with the negotiations?
- List three advantages, disadvantages, and vulnerabilities for the City in this negotiation.
- From working with this Scallywag up to this point, what have we learned about effectively working with the other side?
- How can we position our proposal with concrete data by providing objective benchmarks, criteria, and precedents to support our preferred solution?
- It’s all about the BATNA (Best Alternative To a Negotiated Agreement). It’s essential we keep our objectivity and work to improve our fallback options. Will BestBuy lease the space? Wait! We know… Halloween Superstore!!
Second, practice investigative negotiation. Challenge your assumptions and gather critical information regarding Tepper’s perspective. Most think of this as the art of negotiation, but it’s more a science. It’s where the real work begins.
So, ask yourself:
- What do you think Tepper wants?
- What is the hierarchy in his organization? Who do you approach first?
- What do you think is Tepper’s BATNA? What options does he have, and how can you uncover those? Can you reasonably compare your preferred option to his plan B?
Finally, get your message across. Effective negotiations come to fruition when parties create value, for themselves and for the other side, by trading resources, preferences, risk tolerances, and deadlines. So, it’s really all about effective communication.
- Ask yourself how all of the commotion in the media might affect talks.
- What parties not yet involved might also value an agreement?
- To learn from the events so far, ask yourself what went well? What would you do differently next time? What steps would you take to ensure this does not happen again?
- Finally, keep in mind that your approach must be principled and straightforward. Have objective and concrete information at your fingertips, seek common ground, and do not be afraid to be passionate and emotional. And, whatever you do, find a great story you can tell supporting your position.
You folks in South Carolina are some of the best storytellers on the planet. You can do this!
As a side note to Tepper, I have a tip: To succeed in a negotiation, you may want to help the other side save face.
Reach John Culbertson at jculbertson@cardinal-partners.