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Magnum working on departure from sports properties
Published October 22, 2001
Financially troubled Magnum Sports & Entertainment Inc. will soon divest its sports holdings, composed of the practice of NFL agent Joel Segal and the House of Boxing Web site, said Magnum CEO Bob Gutkowski.
Headquarters: New York City
Chairman: Charles Koppelman
President/CEO: Bob Gutkowski
Web site: wwentertainment.com
Nasdaq listing: MAGZ
Stock price as of Oct. 17: $0.14
52-week high (date): $2.31 (Nov. 6)
52-week low (date): $0.07 (Sept. 18)
Source: Magnum, Yahoo! Finance
Gutkowski said he is close to completing an agreement in which Segal "will be on his own," but he would not elaborate. Segal, who represents about 40 NFL players, including Tyrone Wheatley, Darren Sharper, Antonio Freeman and 2001 first-round draft picks Gerard Warren and Rod Gardner, wouldn't comment.
Magnum's fiscal woes have been evident since the summer. Pre-eminent boxing writer Michael Katz, who left the New York Daily News to work for Magnum's Web site, said he has not been paid his salary since mid-August.
The company has acknowledged in Securities and Exchange Commission filings that it owes money to both Katz and boxing writer Thomas Hauser.
Gutkowski said he is in sale discussions for House of Boxing with British company Secondsout.com and others. "If it is not sold, it will be closed down," said Gutkowski, who gave no timeline for possibly closing the site. "We are working out an exit agreement for the two people [Katz and Hauser] involved in House of Boxing."
But Katz said, "There is no exit agreement. ... If he pays me, then we'll have an agreement. He owes me two months salary, and not only salary but medical insurance he is supposed to be paying."
Magnum announced in June that it had secured a $15 million senior debt facility to finance a deal to buy New York modeling agency Ford Models, and Gutkowski said that facility is still in place. That money, however, cannot be used to pay Katz and Hauser or to keep House of Boxing afloat, Gutkowski said.
"That is for an acquisition of Ford and not to keep House of Boxing alive," he said.
Magnum, in a filing with the SEC in August, stated that the company "may be unable to continue as a going concern." Magnum, which lost $7 million for the first six months this year, was notified by the Nasdaq this summer that its shares would be delisted by Oct. 30 unless it satisfied the minimum bid price of $1 a share.
Although Magnum has not risen above $1 for months and closed at 14 cents a share last Wednesday, the threat of delisting has been lifted. Nasdaq recently announced it was suspending its minimum-bid requirements for all companies on the exchange until 2002 amid the market turmoil since the Sept. 11 terrorist attacks.
Gutkowski said the attacks also delayed Magnum's acquisition of Ford Models. He said a deal is now close to being completed.
"We are working on finishing the equity piece and the debt piece to close the acquisition of Ford," he said.
Ford officials did not return a phone call by press time.
Gutkowski, best known in the sports world as the former head of Madison Square Garden, said the company may be making announcements related to new sports ventures after the deal to purchase Ford closes, but he would not elaborate.