WPP CEO Martin Sorrell Says Company "Can't Afford" To Make Bid For IMG
Agency WPP has ruled itself out of the running for IMG, believing its rumored $2.5B price tag is too high to justify a bid. WPP CEO Martin Sorrell, speaking at Thursday’s Leaders in Football conference in London said, "We would love to own IMG.” But he added, "We can’t afford it." IMG was founded by Mark McCormack in '60. It is now up for sale by Forstmann Little following the death of Owner Ted Forstmann in '11. Sorrell said, "People are talking about 2 to 2.5 (billion dollars). They are talking about 20 bidders, 10 bidders going into the second round. That’s nose-bleed territory for us." Some observers believed WPP could be a possible bidder for IMG, as it has interest in sports through businesses such as Hill & Knowlton, and has significant advertising and media partnerships. Sorrell said he was betting on private equity company Silver Lake and entertainment company William Morris Endeavour as favorites to acquire IMG.
EXEC TURNOVER HURTS BUSINESS: Sorrell spoke out against the high turnover of senior execs, particularly CEOs and CMOs in the U.S., arguing it was to the detriment of the sports sponsorship business. Sorrell said, “The average CEO lasts for about four, four-and-a half, five years. It is too short a time. The average CMO in America lasts two. That is too short a period. Decisions get made, CMOs get replaced and whole momentum changes. The single most important factor is consistency.” While Sorrell pointed to Coca-Cola and Procter & Gamble as examples of companies that have sustained investment in sports sponsorship around big events such as the Olympics and World Cup, he said other companies were guilty of dipping in and out. Sorrell: "It is very difficult, the short term attraction of a shirt deal or stadium deal. Is that going to be long-term? The key thing is to sit down and look at what your business is trying to do and decide that this is one of the vehicles that will get you to where you want to go, and do it long-term on a consistent basis."
John Reynolds is a writer in London.