Ted Forstmann Talks About IMG's Financial Success, Global Push

Forstmann Says IMG's Earnings Are Four Times Higher Than When He Bought Company In '04

IMG Chair & CEO Ted Forstmann in an interview for BBC World’s “Hardtalk” program said IMG’s earnings are “much higher -- four times higher -- than when" he purchased the company in '04. Forstmann paid $750M to acquire IMG, and he said, “I think it has terrific prospect. I did pay a lot relative to what the company was doing when I bought it. But I paid not a lot at all relative to what the company is doing now.” The BBC’s Stephen Sackur asked Forstmann if he sees sports “purely as a product, a commodity, something to make money from,” and Forstmann said, “No. I love sports. That’s not why I bought the company. … I saw the possibility to do what we do: to make this company much bigger and much more successful and much more profitable.” Forstmann noted he was given an exclusive window to buy the Dodgers from Walter O’Malley after they had moved to L.A., and said, “I went out and looked at the numbers, and they were one of the most successful baseball teams, but you can’t make it work. As a financial buyer with other people’s money … it doesn’t pencil out. It doesn’t work. The only thing that can make it work is if the franchise value goes up and a guy is willing to pay more 10 years later.” When asked if spending on sports is “under pressure” because of the economic recession, Forstmann said, “I don’t know a business that hasn’t been adversely affected. Sports, sponsorships and advertising are all things that have been affected. … There’s been a worldwide devaluation of assets, whether it’s a Picasso or a house in Los Angeles or London or wherever, and franchise values of professional sports teams are not the same today that they were two or three years ago. But I think, like a lot of asset values, they got very overvalued. We’ve gotten back to more normal pricing on things, and there’s going to have to be an adjustment.”

SPANNING THE GLOBE: IMG last year signed a 20-year joint-venture agreement with CCTV to create and produce sports events in China, and Forstmann said he is “very comfortable” with the arrangement. He said that IMG is not having to make compromises to its operations in China, as some other companies expanding into the country have had to. He explained, “Even entertainment has some political overtones to it. Sports really doesn’t. And I think that’s how and why we got this joint venture done, which is the only one they’ve ever done. … This is the most innocent thing in the world.” Meanwhile, Sackur noted IMG was “heavily involved” in cricket’s Indian Premier League, and Forstmann said, “India as a country for sports is absolutely fascinating, because other than cricket it’s kind of a blank slate. Yet they have a billion people, they have a lot of athletes, they have a lot of athletic prowess. One of the first things we’re going to do is an Olympic academy there … to try to create some Olympic athletes for India.”

END OF THE ROAD: Forstmann indicated that IMG was his last major job, and said, "Anybody that spends their whole life trying to make money, I don’t understand that. … Money has never made a big difference to me at all.” He added, “What I want to do with the rest of my life is that I want to do stuff for children, which is kind of what I’ve done with half of my life” (“Hardtalk,” BBC.co.uk, 9/24).