SBJ/February 20 - 26, 2006/Other News

Sources: IMG sets Indian Wells deadline

America’s second-largest tennis tournament, the Pacific Life Open, could be on its last legs in this country if an investor syndicate led by Tennis Magazine principals does not complete a roughly $55 million deal to buy the event by the end of this week, sources said.

The event may bounce to China or Qatar.
Tennis Magazine founder George Mackin has for almost a year been trying to arrange a group of investors to buy out IMG’s 50 percent interest, as well as the bondholders who are owed $39 million from the construction of the tennis complex in Indian Wells, Calif. This year’s tournament begins in two weeks.

Frustrated with the long, winding process, sources say IMG last week gave the syndicate a 10-day window to get the deal done. Otherwise, IMG has an offer from Shanghai, China, as well as strong interest from Doha, Qatar, which hosts an ATP event the week before the Pacific Life.

“Many deadlines have come and seem to have passed,” said Etienne de Villiers, the ATP chairman. De Villiers said the ATP would consider a move of the event.

Sony Ericsson WTA Tour Chief Executive Larry Scott declined to comment on the potential tournament move, describing the subject as hypothetical.

Scott added that Ray Moore and Charlie Passarell, who own the other half of the event through their company PM Sports, have been saying for weeks that they expected to get a deal done.

Moore and Passarell, who created the stop in the 1970s, have been feverishly working to keep it in the United States. They even helped arrange a contribution from the U.S. Tennis Association, which also would like to see the event remain in this country.

“The USTA is actively participating with a consortium of investors to do everything within reason to keep the tournament in the U.S.,” said USTA spokesman Chris Widmaier. “With respect to a Doha offer, we can’t imagine the ATP and WTA Tour consenting to moving their highest-attended tournament from the world’s largest media market to Qatar.”

Gavin Forbes, IMG’s head of men’s tennis, who is leading his firm’s negotiations, declined to comment. Mackin of Tennis Magazine said it was premature to discuss the situation.

The stormy sale is the latest chapter in a good story gone bad. When the ATP sold marketing rights to Swiss agency ISL Worldwide for $120 million a year in the late 1990s, PM Sports and IMG used its share as collateral to build a major tennis complex.

ISL’s 2002 bankruptcy hit the project severely, more than any of the other men’s tennis events, which are largely played in government-financed buildings. The debt on the project results in a $4 million annual interest payment.

The two-week men’s and women’s tournament has been a hit with fans. Last year it drew 280,653 spectators, pushing it past Miami’s Nasdaq-100 Open, long the country’s second-biggest tennis event behind the U.S. Open. Beyond the Grand Slams, the Pacific Life is now the largest tournament.

“The tournament has been very successful. The problem has been the financing,” Moore said. “To alleviate that we have to sell off some assets, and luckily we had some foresight in 1999 to buy the surrounding land.”

The Tennis Magazine syndicate has been trying to get the city of Indian Wells, where the tourney resides, to agree to buy some of that land and lease it to the tournament.

Who’s who in Pacific Life sale

IMG
Owns half the event and wants to cash out. Has been patiently waiting for effort to keep event in the U.S., but patience may be frayed.

PM Sports
Owns the other half, founded the event and wants to keep it in the U.S.

Tennis Magazine/USTA
Leading syndicate with PM to buy out IMG and bondholders, but effort has been arduous and the clock is ticking.

Doha, Qatar
Already boasting a men’s and women’s tour stop, the oil-rich Persian Gulf city wants to boost its international allure with a major tennis tournament; has expressed serious interest, but no offer yet.

Shanghai, China
Wanted to buy the event last year and could still get it; has new $200 million tennis complex where ATP’s season-ending championship is staged.

WTA/ATP
Would have to approve any sanction transfer and move of tournament outside the U.S.

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