Ten Tips for Successful Cell Site Lease Negotiations
1. Be Patient
Agents of tower companies, wireless carriers and lease buyout firms are under constant pressure to make something happen – not just with your site, but with all the tens or hundreds of sites that they have been assigned. They are required to record and report the number of times that they reach out to a specific landowner, as well as what happened during the call. They have perfected techniques that push the landowner into a deal. Signing bonuses, drop dead dates, and threats of site relocation are some of the techniques that are intended to spur you into agreeing to a deal. We want you to understand that if you are already party to a cell site lease, time is on your side, and that the closer the lease gets to expiration, the more leverage you have in negotiations. In other words, do not feel that if you do not sign quickly, you will lose the opportunity. The exception to this tip is that with proposed leases for new cell sites, you should be as responsive as you can be. Tower companies and wireless carriers might have an equally viable option to your land, such as your neighbor’s, so if you are interested in a new lease, consult with us right away.
2. He who speaks first loses.
In standard negotiations, the party who throws out the first offer is typically at a disadvantage. However, in cell tower negotiations, it is almost always the tower company or lease buyout company that throws out the first offer. With cell tower companies, they almost always throw out lowball offers, because they assume that they are dealing with uninformed landowners. During the past year or so, lease buyout companies have been throwing out high offers because they have found that they can’t get your attention given the number of companies all trying to contact landowners. Our recommendation is that you shouldn’t counter their offer unless they have made a remotely interesting offer to start with. If their offer isn’t worth your consideration, just reject it and tell them it isn’t interesting. A better offer is likely to come your way (and if you’re certain this is the road you want to take, we can help you find it).
3. Ask for more than you will settle for.
A good negotiator is optimistic about their position, even if it isn’t that strong. If you don’t believe you have a good position, the other party negotiating won’t either. Thus, when you do decide to speak, you should be firm and confident in your request. Since they won’t give you something you don’t ask for, make sure you start with an offer that is higher than what you expect to accept. The trick though is to understand the sweet spot. You want to ask for more than you will ever get, but not so much that they decide that it isn’t worth negotiating.
4. Ask Questions.
Many negotiation “coaches” will suggest that you need to listen more than speak. They suggest this because the expectation is that you can’t know what the other side is thinking. If you have retained our services, you will know much of what they are thinking because we provide it to you in our Assessment. However, as good as we are at what we do, we can’t know everything. If the other side is particularly reluctant, you have to be prepared to ask questions. If they suggest that the site has negative cash flow, ask them to prove it. If they tell you that due to a merger between two carriers, there is a chance that they might lose some revenue, ask them if they know whether that merger will impact your specific tower. Have they received a termination notification or not? The tower company and lease buyout agents are skilled at misdirection. They rarely lie outright, but they know how to imply something that leaves you thinking what they want you to think. A good negotiator asks questions to improve his understanding of the situation, and then comes back to his/ her consultant to discuss what the new information means.
5. Defer to a higher power.
Agents of tower companies and lease buyout companies use the “I will have to get approval from my boss” trick all the time. So should you. Don’t ever feel obligated to commit to terms until you have had a chance to disconnect from the discussion and ponder it. You can always say that you need to discuss it with the “decision makers” or your spouse or the board, even if you don’t need anyone else’s approval to make the decision.
6. Negotiate the major deal points first.
Don’t get caught up in the small stuff until the big stuff is finalized. Focus your time and attention on the major terms; once you have agreement on those, then you can address the smaller stuff. Otherwise, they will agree to the small terms while pushing back on the more important ones. And if you can’t agree on the big terms, then there is no reason to spend time on the small terms.
7. Focus on their pain, not yours.
It is surprising how many times our clients tell us that they have disclosed to the lease buyout or tower company why they need the money for the buyout. In telling this to the other side, the client is focused on why they want to do the deal, as opposed to why doing the deal at the terms the client wants is beneficial to the tower company. Fortunately, our Assessment provides you with the material you need to understand their position, including what they want and why they want it. The less you disclose about your particular desires, the better it will be for you in the long run. Just focus on your end game and don’t feel any need to explain your reasoning behind it.
8. Be willing to walk away.
If they aren’t prepared or willing to meet your offer, step back from the proverbial negotiating table. Politely explain that it is clear that you are at an impasse and that you would prefer to keep things as they are for now, and then wait until they contact you again. We have seen our clients become too vested in what they can do with a signing bonus or increased rent, and unwilling to wait to command the full value of the site. Alternatively, we have seen landowners simply become weary of the negotiations and decide they would rather take lower terms than have to continue negotiating. In either case, these landowners end up leaving money on the table. We advise our clients to enter into the negotiation with the mindset that if they don’t get what they need to do the deal, that they will walk away. We have been assisting landowner in their negotiations for 10 years now, and can say with absolute assurance that the agents always come back. If they are proposing to extend or buy your lease, it’s because they feel a real need to tie up the lease for the long-term.
9. Don’t negotiate from a position of ignorance.
If you are reading this, chances are you have already retained us and we have provided you with a thorough assessment outlining your position. If you haven’t, then we caution you to do so before you start the negotiations. The cell tower lease market is very inefficient, meaning that one side (the wireless carriers, tower companies and lease buyout companies) has access to a significantly greater amount of information than what is available to the landowner. Thus, negotiations are often inefficient because one side is ignorant regarding what they can get. This can work both ways in that the landowner might ask for something that is completely undoable, or they can ask for too little. Make sure you understand what your strengths and weaknesses are in the negotiation before starting. If you have any questions about your relative position, ask us.
10. Lastly, don’t take it personally.
Negotiation is business whether you have one lease that makes up most of your income, or you have 30,000 leases and the income off any one lease is negligible. Many of the agents for the tower companies and lease buyout companies are wonderful to work with, while some will make you angry immediately. Just remember, no matter what they offer, it isn’t personal and you shouldn’t ever feel insulted. Negotiating out of anger or frustration gets you nowhere. If we became angry every time one of the agents maligned us to one of our clients, we would be constantly angry. (It happened just yesterday.) If the conversation gets out of hand or you feel insulted, politely leave the discussion and come back to it at another time when cooler heads will prevail.