TED FORSTMANN, a pioneer of the leveraged-buyout industry who turned around companies like Gulfstream Aerospace and Dr Pepper before acquiring and transforming the business of one of sports’ premier agencies, IMG, died yesterday at the age of 71. The cause was brain cancer, an IMG spokesperson said. Forstmann became a figure in the sports world in '04 when he bought IMG for $750M and began reshaping its business by shedding its famous professional sports agent operation and replacing it with a robust college sports business. His focus on earnings spurred an abrupt cultural change at the company, led to the departure of an array of longtime executives and triggered public criticism that IMG had become less innovative. But he combated any turmoil and criticism by insisting that he’d turned IMG into a moneymaking enterprise with more than $110M in profits in '10. His biggest bet, a $300M investment in college sports between '07-10, was an immediate benefit to the company’s bottom line. According to people who have seen the company’s books, the college business will be half of the company’s earnings this year, when EBITDA is set to hit $160M. Those numbers could not be independently verified. IMG Sports & Entertainment President GEORGE PYNE said, “Ted’s a builder. He wanted to build and grow and change paradigms, and the investment in college sports speaks to all of that” (Tripp Mickle, SportsBusiness Journal). IMG President & COO MICHAEL DOLAN in a letter to employees wrote, “Tenacious, ambitious and an inspiring visionary, Ted was a self-made businessman and a brilliant dealmaker.” The letter continued, “Ted’s passion and commitment to every task he undertook helped turn IMG into a global powerhouse in the sports, fashion and media businesses. Under Ted’s leadership, the company experienced unprecedented growth, both domestically and internationally. We solidified our position as the leader in collegiate marketing, licensing and media rights; we forged meaningful long-term growth prospects through our joint ventures in the emerging markets of India, Brazil and China. ... In no short order, Ted transformed IMG from a sports talent agency into a rapidly growing business at the epicenter of sports, fashion and media. He was a man of unmatched drive and a visionary in every sense of the word.” Dolan concluded, “In the spirit of Ted’s legacy, let us remain steadfastly focused on continuing to make him proud” (IMG).
PRIVATE EQUITY PIONEER: In N.Y., Andrew Ross Sorkin writes Forstmann was among the “very first executives to use debt to acquire companies, fix them and then sell them for millions -- and sometimes billions -- of dollars in profits.” Beginning in the late '70s, he “pooled money from wealthy investors and large pension funds to back his acquisitions, while taking 20 percent of the profits, creating a business model that today is known as the private equity industry.” Forstmann over the next three decades “bought, sold and turned around dozens of companies.” Over the past seven years, he had "worked steadily on his last big investment: IMG.” The company “encompassed everything he loved: deal-making and sports” (N.Y. TIMES, 11/21). Dolan said that Forstmann was a “complex, brilliant person who was the quintessential entrepreneur.” He added that Forstmann “would remember numbers for years and had the ability to spot a company's potential, no matter whether it marketed athletes or made aircraft or soft drinks.” Dolan: "He had no problem jumping into an opportunity. That's what makes an entrepreneur, someone who sees something that other people don't see and says 'I'm going to go after this'" (AP, 11/20). The WALL STREET JOURNAL’s Zuckerman & Futterman note Forstmann was “a longtime bachelor and built a fortune amid the buyout wave of the 1980s and 1990s, even as he railed against the so-called junk bonds used in many deals of that period.” With his “love of the spotlight, his outspoken opinions and shock of thick, white hair, he graced magazine covers and issued broadsides at his competitors.” After being diagnosed with cancer earlier this year and receiving medical treatments, Forstmann “continued to come into the office regularly, expressing interest in expanding IMG so he would have more to give away” (WALL STREET JOURNAL, 11/21). Forbes magazine in March estimated Forstmann’s net worth “to be $1.6 billion.” He had “promised to give the majority of his wealth to charitable causes, including the Children’s Scholarship Fund” (L.A. TIMES, 11/21). A Memorial Mass will be held at St. Patrick’s Cathedral in N.Y. on Nov. 29 at 10am ET (THE DAILY).
