Why business is like ... football transfers

Last summer, before the football season started, Tottenham Hotspur was engaged in a game of brinkmanship with Manchester United over the sale of Dimitar Berbatov. Spurs had accepted the fact that its most valuable asset wanted to make his dream move to football's biggest club, but it was determined to get every penny it could for handing him over.

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Last Updated: 31 Aug 2010

Man United offered £20m. The London club held out for £30m. A game of high-profile chicken ensued, only to be concluded in the moments before the transfer window slammed shut, when United caved in, laying out £30.75m for the prized striker.

Spurs had its victory, but also a problem: it had lost a talismanic player and been so focused on the deal that it had failed to secure good replacements. Hopes of a top-four finish quickly dissolved as the club fell into turmoil, recording its worst start to a season since 1912. Out went the manager, and the leadership structure had to be overhauled.

There's a lesson in Spurs' Pyrrhic transfer victory: not every result is worth the price paid by the victor. Look at RBS: it may have won the battle for ABN Amro, but it's hardly cheering now. The rule also holds true for litigation. In a recession, supplier contracts are more likely to be broken, clients more likely to try to wriggle out of their obligations. And potential litigants are more inclined to fight for what they feel is owed to them, making litigation more common. It's always tempting to play the Spurs role - chasing people for everything they can.

But at such times it's fatal to be distracted from the work that really matters: building a stronger business. Better to cut your losses, if that enables you to keep your eye on the ball. You don't want to find yourself at the bottom of the table.

Jennifer Harris is director of JRBH Strategy & Management, www.jrbh.co.uk

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