Winning at all Costs: Soviet Style | Styles of Negotiating - 6 Steps ( Part 1 )
Extreme Initial Positions
Whenever purchasing an expensive ( Big-Ticket ) Item, they will make a paltry first offer. Usually this is done in Secret, behind closed doors, to prevent additional buyers from bidding. The Tactic is used to make the seller believe that there is no available option other than dealing with them.
For Example, when did we learn about the Soviet Purchase of Canadian or American Wheat? Usually after the tonnage had been loaded on special tankers for overseas shipment. In some places these transactions were referred to as The Great Grain Robbery.
Here's another instance of how the Soviets operate as buyers: Almost 30 years ago they were interested in securing a large parcel of land on the North Shore of Long Island. They Intended to build a recreational center for their embassy personnel.
At that time, acreage the size they wanted in this area was selling between $360,000 and $500,000. The property they decide on was appraised as $420,000.
Did the cagey Russians offer to pay $420,000, or even $360,000? Not on your life. Since they're past masters at "Lowballing", they made an initial offer of $125,000- a laughable figure. But no one laughed.
How did the Soviets get away with this? They did what they always do when purchasing: Negotiating in secret, they eliminated possible competition.
In this case they paid a small amount for an exclusive 1 year option to buy with the provision that matter be kept secret. The owners of the property knew that the $125,000 figure was ludicrous.
However, they were unable to get other offers because of the secrecy restriction. After 3 months of token haggling and frustration, they muttered in effect, "We know this is ridiculous, but maybe we were a little high." So they dropped the asking price from $420,000 to $360,000. Psychologically, the Soviets had set them up like pawns on a chess board.
When the Soviets are sellers of anything substantial, they do just the opposite. they make excessive demands, then filing the doors wide open to encourage competitive bidding. By playing various bidders against each other and egging them on to outdo each other, they escalate the final agreed-upon selling upon price to stratospheric levels.
A graphic illustration of this method can be seen in the sale of the rights to televise the 1980 Olympics from Moscow ( before the United States boycotted the Olympics and made the matter academic.)
The cost of these rights has risen considerably from what CBS paid for the 1960 Olympics in Rome to ABC's winning bid from the Montreal games in 1976. The approximate selling prices follow:
- 1960 one-half million dollars
- 1964 three million dollars
- 1968 five million dollars
- 1972 thirteen million dollars
- 1976 twenty-two million dollars
The Soviets, with typical guile, smashed this predictable succession pattern. During the summer games in Montreal, the top brass of all 3 networks were invited to a lavish party on board the Alexander Pushkin, which was moored in the St. Lawrence River.
Each network was contacted separately and given the Soviet demand: They wanted $210 million- in cash! Their asking price did not exactly follow a geometric progression.
Generating cut-throat in-fighting, they did what I mentioned earlier: They encouraged competitive bidding, Inviting representatives of ABC, NBC, and CBS to the Soviet Capital, they essentially reduced them to 3 gladiators hacking at each other in a Roman Arena.
Roone Arledge, then head of ABC Sports, bitterly commented, "They want us to be like 3 scorpions fighting in a bottle. When it's over, 2 will be dead and the winner will be exhausted."
I witnessed part of this struggle between the minions of Moscow and the moguls of Manhattan. I was in the Soviet Union at the time, embroiled in negotiations of different nature. I attended one of the cocktail parties thrown to keep the gladiators' spirits up. Never have I sipped better vodka, nibbled tastier caviar, or seen more strained and determined faces.
As they entered the stretch, here was the bidding: NBC, $70 million; CBS $71 million; and ABC had come up to $73 million. It was generally assumed at the time, that the experience of ABC in broadcasting 8 of 10 prior Olympics would give up them the edge. However, CBS hired the services of Lothar Bock, a professional go-between from Munich, Germany.
With the help of Bock a meeting was arranged between the Soviet negotiators and William S. Paley, the chairman of CBS, in November 1976. On this occasion a deal was struck, with CBS agreeing to raise its bid one more time and offering even more concessions.
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