Drop in Woods’ endorsement income made Steinberg too expensive to keep
Mark Steinberg’s departure is not the beginning of the end for IMG’s golf division, but it does highlight the company’s shrinkage from the sport it helped build the last 50 years.
Mark Steinberg (right) is leaving IMG and Tiger Woods is expected to follow. The agency will shift management of its golf division to Guy Kinnings and Robbie Henchman.
Profits from IMG Golf, which have traditionally relied heavily on Woods, have steadily declined since the revelation of Woods’ extramarital affairs and ensuing scandal in 2009. That led to the end of endorsement deals with big-spending clients such as Accenture, AT&T and Gatorade.
It was the decline in Woods’ endorsement income and a general decline in golf profits that made Steinberg too expensive to keep, said sources with knowledge of the split.
Before the scandals, in 2007 at the height of Woods’ success on the course, the golf division was clearing $28 million and Woods was bringing in $7.8 million of that, the sources said. After the sex scandal, profits from the golf division dropped to $15 million in 2010, a year in which Woods brought in $1.1 million.
Fees are typically based on a 15 percent to 20 percent cut from endorsement contracts and percentages from other income, such as appearance fees, pro-ams and speaking engagements. Woods, because of his stature, could have been paying less.
Steinberg, the chief of IMG Golf and Woods’ agent for the last 12 years, would have made about $3 million this year in salary and bonuses, significantly more than the fees Woods would have generated, according to industry sources.
During the decline in profits from the golf division, IMG’s overall profits have been growing. IMG made $85 million in 2009, $110 million in 2010 and the company projects $140 million this year. With each passing year, golf’s contribution to the bottom line has decreased. Golf accounted for nearly a quarter of the company’s profits in 2009, but that figure has slipped to about 10 percent this year.
The growing college division accounts for nearly half of the profits and remains the company’s clear focus.
As one source within IMG said, “Golf will continue to be an extremely important part of our business. It’s just smaller.”
Steinberg said through text messages that it would be inappropriate to comment on his departure and that he never talks about details of his deal.
Two of the golf division’s rising stars overseas, Guy Kinnings, 47, and Robbie Henchman, 38, have been installed as the co-chiefs of the golf division, replacing Steinberg and moving the leadership out of IMG’s Cleveland office for the first time.
It also reflects IMG’s focus on increasing profits globally as it moves into the post-Tiger phase. IMG runs more than 50 tournaments around the world including the WGC event in China, it represents properties such as the Asian Tour on media deals, and its consulting clients include General Electric and RBC.
While IMG always has had a strong international component to its golf division, the business still was Woods-centric. When you thought IMG Golf, you thought Tiger Woods.
The new faces of IMG golf from an athlete representation angle will be the world’s No. 2-ranked golfer Luke Donald, a native of England, Irishman Padraig Harrington, Colombian Camilo Villegas, 18-year-old Italian sensation Matteo Manassero and 19-year-old Japanese star Ryo Ishikawa, all of whom position IMG to take advantage of the game’s global growth.
Henchman, a Hong Kong native who leads IMG’s golf business in the Asia/Pacific region, has been in charge of one of the few areas within IMG Golf that has increased profits, sources say. A self-described “IMG lifer” who has been with the company since 1995, Henchman has been integral in expanding IMG’s event business and media partnerships.
Kinnings, who represents Donald and Harrington, is based in London and oversees the company’s work in Europe, Africa and the Middle East. He recently led the efforts to sign the highly coveted Manassero, who already has won twice on the European Tour.