IMG, SFX exodus in the works

The athlete representation business is poised for its biggest shakeup since the late 1990s as six agents representing top athletes in numerous sports are in talks to leave sports management giants IMG and SFX Sports.

At SFX, groups led by baseball agent Pat Rooney, tennis agent Ken Meyerson and golf agent John Mascatello are in negotiations to buy back their agencies from parent company Live Nation, which is owned by Clear Channel Communications. The athletes represented by those agents include tennis player Andy Roddick, baseball players Vladimir Guerrero and Pedro Martinez, and golfers John Daly and Tom Lehman.

The departure of top agents at SFX and IMG would mean more than just agents switching agencies. Among the stars who might end up making a move along with their representatives are, from top left,John Daly, Derek Jeter, John Madden, Pedro Martinez and Andy Roddick.

IMG and SFX are two of the three major companies, along with Octagon, in the business of representing athletes in multiple sports, so the current negotiations are expected to have a major impact on athlete representation in the United States for years to come.

“I think it completely changes the landscape,” said Bill Duffy, a basketball agent whose independent agency, BDA Sports, represents dozens of NBA players, including Yao Ming and Carmelo Anthony.

Football agent Leigh Steinberg, who sold his company, Steinberg & Moorad, to Canadian conglomerate Assante in 1999, only to buy it back in 2003, said, “There is a major shift, a sea change, occurring in this industry where new alliances, new alignments are occurring in the sports representation landscape, and it’s uncertain how the new landscape will shake out.”

Daniel Rosier, chief operating officer of SFX Sports, confirmed that the company is in talks with the heads of the baseball, tennis and golf groups about those agents buying back their businesses from Live Nation.

“We are exploring that opportunity,” he said, adding that the discussions are “just at the initial stage” and that he could not provide a timetable of when the talks would be completed.

Rosier said the agents were offered the opportunity to buy their businesses because Live Nation’s core business is the music and concert promotion business, not the sports business. In an e-mail, Rosier added, “The core is live concert promotions, but that doesn’t mean sports won’t exist.”

Previously, SFX’s efforts to sell the sports group as a whole failed, according to sources familiar with the situation.

An IMG spokesperson would not comment, except to say that Condon, Close and Montag were still IMG employees.

Condon, Close and Montag would not comment. The three agents are represented in their talks with IMG and outside potential acquirers by Jeffrey Kessler, according to sources. Kessler, an attorney with New York law firm Dewey Ballantine that has represented the NFL Players Association and the National Basketball Players Association in recent labor negotiations, also declined comment.

Sources said that a decision could come in the next week on whether the three agents stay at IMG or join another company, such as CAA, Hollywood talent firm ICM or sports marketing and management company Wasserman Media Group, to name three with whom they’ve had talks. One source said that the original deadline for a decision by the three agents had been March 31, but that the deadline had been extended.

Unusual clauses in the employment contracts of Condon and Close were activated when Peter Johnson, former IMG CEO of sports and entertainment, resigned earlier this year. Johnson hired both agents, and their contracts state that if he leaves the company, then they also can leave, under extremely favorable terms, including the right to take all their clients and split fees with IMG for a short time. Montag, also in talks about leaving IMG, does not have the same clause in his contract.

Sources said the three IMG agents may act as group but could also act individually.

At SFX, meanwhile, the agents must buy back their practices from Clear Channel by paying the company a multiple — one source put it at four times — of earnings by their groups. Rosier would not comment on that.

Sources said the tennis and golf groups could band together and may already be talking to potential investors about acquiring that business.

The baseball group, meanwhile, sources said, is not talking to outside investors but is planning on becoming an independent agency.

While IMG’s late founder, Mark McCormack, built it from the ground up over four decades to be a global sports management and marketing conglomerate, SFX Sports was created to challenge IMG’s dominance through the roll-up of a number of sports agencies in a two-year series of acquisitions.

The acquirer of those agencies was SFX Entertainment, a publicly owned company whose main business was promoting concerts. But when SFX Entertainment was acquired by Clear Channel in 2000, many industry analysts believed that SFX’s sports business was an afterthought and never fit the business plan of radio station giant Clear Channel.

SFX lost its most powerful agent, Arn Tellem, earlier this year, when he sold his baseball and basketball practice to WMG, a company owned by sports businessman Casey Wasserman.

Now, if agents Rooney, Meyerson, and Mascatello complete the buyouts of their agencies, all that will be left of the once-powerful SFX Sports will be a football practice headed by veteran agent Jim Steiner and a basketball practice run by agents Rob Pelinka, David Bauman and David Falk.

Falk, whose basketball practice in the 1990s was chock-full of NBA superstars, most notably Michael Jordan, has not been actively signing young players in the last few years, but indicated recently that he may become more active in the business. Falk sold his business to SFX Entertainment in 1998 for more than $100 million.

Falk said recently that most of the sales of agent businesses to conglomerates did not work and that he thought the trend was over, but that remains to be seen. Wasserman and Tellem are said to be talking to a number of agents about buying their businesses, including serious talks with IMG agents.

Tellem would not comment on that, except to say, “Tom Condon is, in my mind, without question, the pre-eminent football agent.”

Some industry experts think WMG may emerge as the major beneficiary of the turmoil at IMG and SFX, if that company is able to snap up major agents. Another potential winner could be Octagon, the third big multisport agency, which has continued to expand its athlete representation reach through agent acquisitions over the last five years.

There is also speculation that Hollywood talent firms could make a big push into sports representation by acquiring some of the sports agents who are suddenly on the market. This is spurred in part by the fact that ICM, CAA and The William Morris Agency are said to have met with the IMG agents, although it is not clear how serious those discussions were and if they are continuing.

Hollywood talent firms have represented athletes, but mainly for entertainment and marketing work, for which agent fees range from 10 percent to as much as 20 percent. But entertainment agencies have shied away from athletes’ playing contract work, for which fees range from about 3 percent to 5 percent in the major American team sports.

That trend may be changing. Old-time Hollywood firm The Gersh Agency announced last month that it had formed a sports division and had acquired NFL player agent Steve Feldman, who has brought 30 NFL player clients with him as part of the deal (see labor column, page 13).

The new trend may also be an old trend: agents going back to being independent boutique firms.

Basketball agent Duffy said that agents from big companies such as IMG and SFX have benefited from the infrastructure of those firms, including marketing and financial resources. “Now they will have to fend for themselves as individuals,” he said, “and it is a whole new ballgame.”