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The Balance of Power Trap

Apostolos Korlos

The European Basketball Championship came to an end on the 18th of September. The tournament was characterised by the high quality of players and teams alike.

For a Greek like me, the experience of this important (at least for many European countries) sports event, was a bitter one. After a humiliating defeat by the German squad, the Greek national team stayed out of the medal zone, despite the high expectations of its fans.

A key figure contributing to Greece’s demise in this fatal game, was Germany’s Point Guard Dennis Schröder. His 26 points, 8 assist passes and overall performance were decisive and to a significant degree, determined the game’s result.

As a professional athlete in the world’s top basketball championship, the NBA, Schröder has a very telling story. In November 2020, he was signed by the LA Lakers. After a few games where he boasted impressive performance, his team offered him a 4-year contract giving him 85 million dollars. Convinced that his value as a player was much higher, he turned the offer down and counter-proposed a contract giving him 200 million dollars for the same period. The Lakers would not consider this. As a result, and following a Covid infection, Schröder missed most that season.

By summer of 2021 the Lakers make it clear that Schröder was not part of their plan for the coming season(s). The player was in a (desperate?) search of a new team interested in signing him up. He was now looking for a contract at the 85m USD level, just like the one he had turned down a few months before. Finally, in August 2021 he secured a 1-year contract with the Boston Celtics, offering him 6m USD.

A number of less than impressive performances and a shoulder injury, prompted the Celtics to send him to the Houston Rockets as part of an exchange deal. So come summer 2022, just before the European Basketball Championship, Schröder was practically a free agent, looking for a team. 

Schröder made a mistake often seen in negotiations. That is the over (or under) estimation of one’s position in the market at a given point in time. People fail to assess where the Power Balance lies and, as a result, fail to set realistic objectives. Schröder was convinced that his value was a multifold of what the market dictated. Ignoring the market, not considering risks (in the case of an athlete these take the form of injuries, or even Covid etc), being greedy, relying on false information or rumors are only some of the reasons explaining poor decisions and unrealistic objective setting.

Schröder ignored the market he was operating in. During a painful, Covid induced lock down, NBA teams faced empty arenas and reduced sources of income. Naturally they cut their budgets and this inevitably took a toll on player contracts. His counter proposal to his team of 200m USD was utterly unrealistic by any account.

So what can we learn from Dennis Schröder’s mistakes?

  1. Before entering an important negotiation, study the market and have a clear picture as possible about what is realistic.
  2. Spend time during preparation to assess the Balance of Power. This will lead to an effective strategy.
  3. When receiving a proposal, don’t respond with an unrealistic counter proposal. Doors may be shut, and it will not be easy to reopen them. Instead, try to consider the terms under which their proposal could be acceptable to you. Try to avoid a deadlock.

Latest update: Despite his phenomenal performance in the European Basketball Championship a few weeks ago, Dennis Schröder failed to attract the attention of a new NBA team. He has returned to the LA Lakers with a new contract offering him 2.4m USD (!) per year. Who said that negotiating mistakes do not have a very high cost? 

Apostolos Korlos
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