SBD/April 14, 2014/Finance

WME Outlines Plans To Cut $151M In Costs Out Of IMG After Acquisition Deal Closes

INSIDE IMG: THE FINANCIALS

Revenue By Division

Year College Media & Entertainment Sports Total
2011 $331 $410 $618 $1,380
2012 $349 $446 $571 $1,389
2013 $487 $448 $626 $1,567

Note: Compound annual growth rates, 2011-2013: IMG College (9%), IMG Media (16%), IMG Sports & Entertainment (1%), total (7%)


2013 Revenue By Business Unit

IMG College
Multimedia: $435
Licensing: $32
Business ventures: $20
Total: $487
 
IMG Media
Rights acquisition and distribution: $273
Sports production: $160
Other media ventures: $14
Total: $448
 
IMG Sports & Entertainment
Events and federations: $153
Fashion: $112
Golf: $97
Tennis: $90
Performance: $83
Consulting: $36
Licensing: $35
Clients: $20
Total: $626

Note: In millions; revenue from other divisions not separated out.
Source: IMG lending documents, as acquired by SportsBusiness Journal

WME has "outlined a plan to cut" $151M in costs out of IMG "after it completes its expected acquisition of the company in the coming weeks," according to Tripp Mickle of SPORTSBUSINESS JOURNAL. The projected cuts are $51M more than Moody’s Investor Service "projected WME would cut from IMG." Cutting costs is "critical to WME's efforts to make the IMG acquisition work." The total was "outlined in financial reports shared with lenders in late February." The documents "offer a rare, inside look at the financials of each company and break down individual business units while mapping out WME’s plan to leverage" its $2.375B acquisition. The company "hopes by doing so it can increase margins at IMG on earnings before interest, taxes, debt and amortization" from 12.4% to 22%. The reports said that the cuts "will come in waves." WME expects to cut $14M in the first six months by "reducing aircraft, corporate and consulting expenses," and $55M in the following three months by "restructuring the organization and cutting costs from its events, client and production businesses." By the end of the first year, it "expects to eliminate" another $53M in costs through "indirect spending cuts, finance cuts, human resources cuts and college contracts." It then "plans to cut" the additional $29M by the end of 18 months. The documents show that WME also plans to cut $5M in costs by "reducing overhead at its own agency." The documents show that the combined company "will have a value" of $3.5B, with Silver Lake Partners owning 50%, WME 47%, and 3% for the Abu Dhabi-based sovereign wealth fund Mubadala Development Co. (SPORTSBUSINESS JOURNAL, 4/14 issue).
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Related Topics:

William Morris Endeavor, IMG, Finance

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