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Sources said that William Morris Endeavor co-CEOs Patrick Whitesell and Ari Emanuel are expected to visit IMG College HQs in Winston-Salem, N.C., today to see the operation and meet further with IMG College President Ben Sutton. The most immediate question facing WME in the aftermath of its $2.4B acquisition of IMG is whether certain company leadership -- Sutton and IMG Sports & Entertainment President George Pyne -- will stay with the company. In a memo to staff yesterday, Sutton wrote that both of them have been asked to stay, but neither have made a commitment yet. It is uncertain which direction they will go. Some industry experts believe Sutton and Pyne are a package deal because they have worked so well together in building IMG College from $25M in net income to $70M over the past three years. While the college business is new to WME, they have expressed a desire to stay the course. Sutton in an e-mail to staff wrote, "They foresee opportunities to further develop the college business." In the meantime, Sutton directed his team of more than 1,000 employees at IMG College to conduct business as usual.
William Morris Endeavor co-CEOs Ari Emanuel and Patrick Whitesell were "spotted making the rounds Wednesday at IMG Models -- as well as at IMG-owned division Art + Commerce, which reps fashion fotogs Steven Meisel and Patrick Demarchelier, among others," according to the N.Y. POST's Page Six (N.Y. POST, 12/19). Meanwhile, VARIETY's Cynthia Littleton wrote WME with the IMG deal "suddenly gets a whole lot bigger -- larger in size and international scope than its foremost rival" in CAA. WME's goal over the long term is "likely that IMG's earnings bolster the combined enterprise, and IMG's depth in marketing services, corporate connections and international savvy will lead to all manner of innovative opportunities for WME clients as well as IMG's." There "may well be challenges ahead in terms of melding cultures." WME is "known for its formidable team spirit that stretches across departments and disciplines," while IMG is "said to be run as series of fiefdoms, in part because its business operations are disparate and far-flung." The impact of WME-IMG on Hollywood "will be much discussed." Littleton: "Will CAA make a move to counter WME's growth spurt? Will UTA, ICM Partners or Paradigm feel the urge to expand in other areas? Will more private equity money flow into the talent representation biz?" (VARIETY.com, 12/18).
STRONG & GROWING? In N.Y., Ken Belson reports sources close to WME "believe that IMG's sports offerings fit into the agency's broad focus on entertainment." Sports are "widely seen as having more room to grow than the film and music industries, where Hollywood agents have traditionally reigned." College sports, one of IMG's "largest pursuits, could generate business for some of William Morris's other businesses." That calculation "does not include the untapped opportunities for sports overseas." WME may decide to "sell parts of IMG to help pay for the acquisition, or because they do not fit into the new company's broader profile." It also might "build up the athlete representation business that IMG has been shedding." Belson: "No matter which way it goes, there are unlikely to be any shortcuts, no matter how popular sports is" (N.Y. TIMES, 12/19). Also in N.Y., Abrams & de la Merced write the deal "reflects a shift in how Wall Street has paired up with Hollywood, especially the traditionally clubby world of agencies." While previous generations of financiers "have viewed the talent business as a vanity project, newer deals show that investors are set on remaking the industry, expanding its size and scope." Sources said that CVC Capital and Carlyle Group "each ultimately bid" less than $2B for IMG. IMG for now "will be run separately" from WME, though it will "eventually be merged in some fashion" (N.Y. TIMES, 12/19). The HOLLYWOOD REPORTER's Paul Bond cited sources as saying that bids of less than $1.8B "came in" from CVC, Chernin Entertainment and a "consortium of ICM Partners and the Carlyle Group" (HOLLYWOODREPORTER.com, 12/18).
ARI IS GOLD? ESPN.com's Darren Rovell wrote, "The ever-competitive Emanuel had two significant moments in sports in which he exerted his power, although neither worked out particularly well." It was Emanuel's "idea to turn LeBron James' free agency choice in 2010 into the 'The Decision,'" and the "second big move made by Emanuel and his WME team was winning Tim Tebow's marketing rights in March 2012 even though Tebow's contract agents were his competitors at CAA." Tebow "eventually fired WME and hired CAA for his off-the-field work." While the IMG acquisition "might be Emanuel's biggest power play yet, many insiders wonder how it makes much sense considering WME isn't adept in businesses that make IMG the most money." IMG is the "largest independent producer of sports programming in the world," and its "biggest growth engine is its college business" (ESPN.com, 12/18).
After the IMG sale to William Morris Endeavor was announced, a number of sports execs talked to Editor-at-Large Terry Lefton about what it means. The following are excerpts, and see our On The Ground blog for more.
* Octagon President & CEO Rick Dudley: "The departure of key people is a concern and certainly something we¹re going to keep an eye on. Whether it is people or clients or business they might decide to shed, we are going to be looking at those as opportunities."
* Former IMG exec Rob Prazmark, currently a principal at 21 Marketing: "With a stroke of a pen, WME just became a global sports giant, something that puts them way ahead of CAA in the battle of Hollywood supremacy. It will take decades for anyone to catch WME now."
* Trager Group Chair Mike Trager: "I am surprised at the final closing purchase price, if it is accurate. Based on the $170 million in EBIDA, that is a heck of a multiple and WME must believe that there are significant savings to be gained by the acquisition. I am also interested to see what role Mark Shapiro will play in all of this. It seems to me that the success of CAA in sports might have been a motivating factor in the aggressive bid by WME."
* Premier Partnerships President Randy Bernstein: "It will be fun to see the sports and entertainment shootout between IMG and CAA. Both companies will be pitching for bragging rights for athletes, entertainers, properties and rights holders. Let the games begin."
* Marketing consultancy Focalsport Principal Mark Noonan: "It all comes down to the fit of the cultures and personalities. Synergies that look logical on paper require people with egos to compromise and execute. Remember SFX? I believe there will be some strategic culling of assets, but the bulk will remain intact. End of one storied icon, beginning of another."
* Inner Circle Sports Partner Steve Horowitz: "The years of investment IMG has in the international market and power in the far reaches of the world will be the hidden gem here. Adding entertainment to the offerings around the world will be very powerful."
* Scout Sports & Entertainment Managing Partner Michael Neuman: "This creates instant credibility in sports for WME and a two-horse race with CAA as the leading entity to harness the power of sports and entertainment for their clients."
* USA Today Sports Media Group Senior VP/Leagues & Properties Merrill Squires: "It will be interesting to see what assets remain in tact, including people. I think there is immediate impact in the industry and could be great potential for prospective buyers to look at spin off assets that have further industry impact."
* Paragon Marketing Group Exec VP & Partner Tony Schiller: "To the extent that employment agreements allow, I think we will see numerous former IMG exec's launching their own businesses, as well as migrating to smaller shops."
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Compiled by Terry Lefton.