In 1960 an up-and-coming young golfer named Arnold Palmer shook hands on a deal with Cleveland attorney Mark McCormack. "Palmer came to me," McCormack remembers, "and said, 'I want you to take over all my business affairs so I can concentrate on golf.' It was like discovering gold." In two seasons Palmer's earnings soared from $60,000 to more than $500,000 a year. His name was used to hawk products ranging from golf shoes to umbrellas. And while Palmer made millions, so did McCormack, who went on to establish the International Management Group, undisputed heavyweight champ of sports marketing. IMG now has 15 offices worldwide, grosses several hundred million dollars per year and boasts some 750 clients, including Martina Navratilova and Chris Evert Lloyd, golfers Gary Player and Nancy Lopez, football star Herschel Walker and broadcaster John Madden. How could a small-time lawyer with no formal business training handle a company that got so big so quick? "Street-smart thinking," McCormack explains. For those who suspect there might be more to it, he has written a somewhat more elaborate explanation, What They Don't Teach You at Harvard Business School—Notes From a Street-Smart Executive (Bantam, $15.95). Assistant Editor Jack Friedman caught up with McCormack, who still lives in Cleveland but travels extensively, at IMG's Manhattan offices.

What exactly is it they don't teach at Harvard?

First I should say I like Harvard Business School. I've lectured there, and I'd be deeply flattered if they'd add my book to their curriculum. But the problem with any business education is that it tends to be theoretical rather than practical. And business is ultra-practical—the art of taking a slight edge here, a slight edge there.

How do you get that edge?

Street smarts. That's simply an applied people sense—the ability to make active, positive use of your instincts, insights and even gut feelings when it comes to other people. Take the first rule of golf wagering: Never bet with anyone you meet on the first tee who has a deep suntan, a one-iron in his bag and squinty eyes. That's just applied people sense.

What do you mean when you talk about "reading" people?

I've always found it vital to get a fix on a person's "real" self, because the more you can get beneath the facade, the better you can predict how he'll act. In formal business situations, people tend to have their game faces on. That's why I'm a great believer in breakfast, lunch and dinner meetings. People drop their guard. And what they do or say in the most innocent situations will often speak volumes about that real self.

Can you give an example?

I was once having lunch with a prospective client who told me he was on a diet and would only have a cup of coffee. But when the waiter came and I asked out of politeness if he wouldn't just have a salad, he said, "I'll have whatever you're having." If he could change his mind so easily, you had to wonder about how firm his "final" position was in a negotiation. I'd learned something very valuable.

Do you ever learn anything useful from body language?

Sure. One thing I've often noticed is that people will sort of "lean in" to a situation when they are ready to get serious, even unconsciously pushing everything on their desk a couple of inches forward.

What do you mean when you advise people to watch their talk-listen ratio?

Simply that everyone can talk less—and should. You automatically learn more, see more and make fewer blunders. It's also a good idea to keep pausing when you speak. People are uncomfortable with silence. They tend to fill it, sometimes with information they didn't want to disclose. Silence can also aid your thinking. For instance, in dealing with Americans, it's common for a Japanese businessman to use a translator even though he understands English perfectly well. This gives him more time to frame his response.

How can being rejected assist someone in a business negotiation?

People have a need to say no. So let them. Meaning, if you have a shopping list of things you want from them, throw in a few ringers. Collect some negative currency before you get to whatever it is you really want to sell. If you're only there to sell one thing, make a suggestion or assumption and let the other person tell you you're wrong. People have a need to feel smarter than you. A few well-placed noes create the right environment for a yes.

How do you handle phone calls?

I rarely take phone calls but I always return them. You're much less likely to snap at someone if you're initiating the call rather than being interrupted by it.

What is proper business attire?

Rarely unbuttoned shirts, gold chains or loafers without socks. People who dress like that invite disturbing generalities about their personalities. The way you dress forms an immediate and strong impression about you, so you should dress as though you mean business. That is, conservatively. Also, the more conservative your dress, the harder you'll be to "read." What you wear should say nothing about you—other than perhaps that your clothes fit.

How important is the business letter?

Of utmost importance. Correspondence creates a strong impression about you and how you run your business. Therefore, I insist that all letters be neatly typed, pleasing to the eye and contain no spelling errors or typos. Moreover, I try to personalize all my correspondence to someone I'm doing business with. This may mean bringing up a recent business deal that I know has gone his way, acknowledging his interest in a local sports team ("How about those Browns?" or "Did you get to the game on Sunday?") or asking something about his family. It is particularly impressive to personalize an initial solicitation letter. It's bound to get noticed because it will invariably raise the question, "How did he know that?" It will show, if nothing else, that you've taken the time to do some homework.

What's an effective way to impress an important client?

Do something for his kids. It will mean far more to your customer than almost anything you could do directly for him.

When should you negotiate a deal?

Extend, renew or renegotiate a contract when the other party is happiest, not when the contract is about to expire. Let's say you're a network that wants to sell advertising spots for the 1988 Olympics. The best time to cut a deal for the 1988 Olympics would be now, after the huge success of the '84 Games—not a few months from now when people will be questioning whether the 1988 Games will have the same impact.

Have you learned anything from your athlete clients that a nonathlete might find useful in business?

Yes, it's this: that in the true champion's mind, he's never ahead—he's always battling from behind, working harder and looking for the edge. I remember watching Arnold Palmer and Gary Player in an exhibition match in Japan. On the ninth green Arnold lined up a 10-foot putt for a birdie and sank it. Gary turned to me and said, "He's been doing that all day. I can't buy a putt, and once he gets it on the green it's in the hole." I found this remark a bit curious because, in reality, Arnold's birdie had brought them dead even. As Arnold walked toward me on his way to the 10th tee, I could see that he was upset too. "Well, what do you know," he said. "I finally made a putt." Then, motioning ahead to Gary, he added, "...and that little son-of-a-bitch hasn't missed one yet."