There seems to be a common theme among those in the sports law industry who provided comment to Sports Litigation Alert about Silver Lake Partners and William Morris Endeavor Entertainment, LLC’s acquisition of IMG Worldwide earlier this month.
“Based on my 20 plus years of observation of such non-sensical industry mergers (see SFX) and the history of entertainers getting into the agent business (see P Diddy), this will not end well for the brand of IMG,” said one source. “All you need to consider is this entire thing is being driven by ego (Emanuel) + investment capitalists.
“As I told one of my colleagues today, sports is entertainment, but entertainment is not sports.”
Another source told the Alert that Jay-Z’s representation of Robinson Cano as a prime example of the nativity of what happens when those in the entertainment industry get the sports industry. “Good luck marketing a Hispanic player in Seattle,” he said.
The Company Line
Of course, there were others, who were only too happy to put a positive spin on the development.
“Today marks the successful culmination of the bold global strategy devised by Ted Forstmann for IMG over many years,” said Mark MacDougall, a partner of the law firm Akin Gump Strauss Hauer & Feld, LLP, speaking on behalf of Forstmann Little, the private equity firm led by the late Ted Forstmann that acquired IMG in 2004. “We are confident that this fine company will continue to flourish and grow under the leadership of Silver Lake and WME.”
Winston Hutchins, the remaining General Partner of Forstmann Little, added: “We would also like to express our appreciation to our limited partners, who have shown great patience and support of IMG and its management through the years, helping lead to this successful outcome.”
Heitner Sees Huge Impact
Darren Heitner, founder of the influential Sports Agent Blog and a partner at Wolfe Law Miami, P.A. in Miami, didn’t pull any punches in his assessment of the deal.
He wrote that the acquisition “will have a rippling effect across the entire sports business landscape, … shifting the balance of power among major players in the business of sports.
“It has now become clear that instead of creating a sports division from scratch, the executives at WME (including Ari Emanuel) instead chose to purchase the assets of one of the industry’s most valuable names in IMG Worldwide. Interestingly, CAA (Creative Artists Agency), who will become one of, if not the main rival of WME’s new sports division, was a part of the bidding process to acquire IMG Worldwide, but dropped out of the auction in the recent past. Now it will compete to not only keep its clients, but also its main personnel from jumping ship to a new entity that is likely to make waves in the world of sports.
“While the purchase of IMG Worldwide by WME swiftly shifts the balance of power in the business of sports to a new entrant, it should be recognized that WME has experience of its own in the representation of athletes. William Morris Agency has managed Alex Rodriguez’s and Michelle Wie’s marketing affairs, Ari Emanuel had a role in the formation of the not-so-successful ‘The Decision’ broadcast hosted by LeBron James, and William Morris once called sports industry veteran (and Magic Johnson devotee) Lon Rosen its leader of a robust sports marketing division. When Rosen left William Morris, it appeared that it (and what would eventually become WME) was no longer interested in pursuing sports marketing. That all changes today.
“Since 2009, companies like CAA have been steadily growing (largely through acquisitions of smaller companies and the hiring of prominent sports industry employees) while keeping a close eye on William Morris Endeavor. It just did not feel right; how could a company so well positioned to take a chunk of business away from others in the world of sports simply failed to take advantage of the opportunity? Years have passed by and now the biggest possible splash has been made. The purchase of IMG Worldwide by WME will have a rippling effect across the industry. While at one time CAA and the rest of the sports business world was fortunate that WME failed to create a sports division, those days are long gone. There won’t be any ‘hugging it out’ among the new competitors in this drastically changing world of sports.”
