“We’re trying to focus on the things we’re good at and you cannot be all things to all people,” he said.
BY JOE MILICIA
THE ASSOCIATED PRESS
CLEVELAND — Losing Derek Jeter would be devastating to the New York Yankees.
For IMG though, cutting ties with the superstar shortstop is a move the sports and entertainment marketing giant says made business sense.
It’s one of many changes for the Cleveland-based company since the death of founder Mark McCormack more than three years ago and its purchase by New York buyout specialist firm Forstmann Little & Co.
IMG’s latest transition eliminated its representation of athletes involved in team sports, ending the agency’s ties to popular U.S. athletes in baseball, football and hockey. The company that helped create the sports marketing industry is shifting from athlete representation to a broader array of media, consulting and event management.
Its strategy is to focus on global divisions, such as golf and fashion, where it’s a dominant player, not only representing star clients but running events and controlling media distribution. For example, in fashion, IMG represents Giselle Bundchen, Kate Moss and Heidi Klum and owns events such as New York Fashion Week. In golf, it represents Tiger Woods and owns the World Match Play Championship.
While IMG lost some star power in its exit from team sports, George Pyne, president of IMG sports and entertainment, said the company has never been in better financial shape.
Privately owned IMG does not release financial results. Hoover’s Inc. estimates its 2004 sales at $1 billion.
“I don’t think that people know the vast resources of the company. That has probably given rise to the focus on small parts of our business,” Pyne said. “If they understood what IMG is, they’d have a better understanding of what we’re doing.”
A conference room in the penthouse of IMG’s Cleveland headquarters has a view of Lake Erie and a portrait of McCormack on a high bookshelf. On another wall is a huge canvas with dozens of pegs that reflect how IMG developed into a global entity. The pegs hold key chains from the hotels where McCormack stayed while he built his empire, from the Palace Hotel Tokyo to The Read House and Motor Inn, Chattanooga, Tenn.
IMG’s beginning is well known: a handshake agreement in 1960 between McCormack, a young Cleveland attorney, and golfer Arnold Palmer that led to International Management Group.
McCormack’s death in 2003 marked a turning point for IMG. Shortly after he died, IMG was cutting jobs and selling real estate to trim a reported $200 million debt. IMG was then sold for $750 million to Theodore J. Forstmann’s group, Forstmann Little.
Forstmann, whose firm is known for buyouts of Dr Pepper Co., Yankee Candle Co. and Gulfstream Aerospace Corp., brought a new approach to IMG as chairman and chief executive. Several top executives left as he assembled a new leadership team.
“It can be healthy and even necessary for a business to evolve,” said Phil de Picciotto, president of athletes and personalities for IMG competitor Octagon. “He’s dramatically changed the focus of the business. Not better or worse, just different.”
IMG still employs about 2,300 people in 60 offices in 30 countries, generating revenue in areas ranging from client representation, licensing and consulting to television production and golf course design.
This year, IMG parted ways with top football agent Tom Condon and baseball agent Casey Close among others. Condon and Close, who did not return phone calls seeking comment, took with them to Creative Artists Agency a list of clients that includes quarterbacks Peyton and Eli Manning, San Diego Chargers running back LaDainian Tomlinson, Chicago Cubs first baseman Derrek Lee and Jeter. IMG still represents Peyton Manning as a marketing consultant.
While the names are big, the profits weren’t in those sports.
“We chose to exit businesses that represented in total 3 or 4 percent of the company’s profit and focus on businesses that had much higher growth potential,” Pyne said.
The problem with those businesses was that while IMG can negotiate a deal for a player, it has no control of the league or media rights, like it does in golf and tennis, Pyne said.
“The gold rush era for player-agents is largely over,” Paul Swangard, director of the Warsaw Sports Marketing Center at the University of Oregon, said in an e-mail to The Associated Press. “For a diversified business like IMG, there’s better places to put their dollars for better returns.”
While IMG is known for its athlete representation, its IMG Media division, formerly known as TWI, now accounts for half of the company’s revenue and is the world’s largest independent producer and distributor of televised sports. TWI produces and distributes 10,000 hours of live sports programming a year, including the Wimbledon tennis championship and golf’s Skins Game.
Pyne said the division is in position to take advantage of distributing its vast amount of content through new media, such as cell phones and iPods. Pyne, NASCAR’s former chief operating officer, joined IMG earlier this year.
“We’re trying to focus on the things we’re good at and you cannot be all things to all people,” he said.