One of the fun parts of negotiating leases is collecting the war stories. The negotiations often produce revealing and humorous moments.
Coming from Boston, the biggest sporting events are Red Sox / Yankees baseball games, a Super Bowl which includes the Patriots or a Stanley Cup championship game including the Bruins. Those tickets are gold – and if the tickets are on the Green Monster in Fenway or in the club boxes with food and drink at the Super Bowl – they are even more valuable. In a recent negotiation by conference call, the lessor representative started the call – during the chit chat – by asking the company’s lease manager how he had enjoyed the Red Sox / Yankees game the prior year and whether he remembered the game or all the food considering how much all of them had had to drink. The lessor then intimated that tickets to other events (perhaps the upcoming Super Bowl) were being divided up in the office. This was a classic move — and while the events were especially significant the general approach is all too common. What the rep was conveying in terms of establishing a potential quid pro quo was obvious. But the comment had an unintended consequence. As a result of that comment the company representative was more than usually vigilant in pursuing and protecting his company’s interest. Whether that was in reaction to the ham handed comment by the leasing company representative or not we will never know …
Because lease rates are largely commoditized leasing sales representatives largely depend on relationship building to win or maintain business. In one recent client situation the lease administrator traveled the country to play golf at various tournaments with his leasing sales person. While there is nothing wrong with a round of golf or a series of tournaments – in this particular case the lease administrator’s portfolio had cost over $10 million more than expected.
Conclusion: Most firms allow for various levels of vendor entertainment as a part of business but this should be well monitored. Having a third party involved in these negotiations can help to reinforce adherence to policies. It seems like an obvious thing but if the lease administrator is traveling to golf events with leasing sales people all over the country – and has the trophies and memorabilia to prove it – it is probably worth doing an analysis of the all-in cost of leasing.
