Birth of IMG College a decade ago revamped sleepy collegiate business
When marketing powerhouse IMG bought Collegiate Licensing Co. 10 years ago this month, the college marketplace was stunned. Until then, collegiate marketing was a slowly evolving segment full of companies that were either family owned or individually owned. Battle, Host, Lear, Sutton — those were the names that defined multimedia rights and licensing at the time.
Fast forward 10 years and the names have changed, the faces have changed and, boy, the money has definitely changed. IMG’s acquisition of CLC in May 2007 triggered a consolidation that spurred unprecedented growth, pumping double and triple the amount of money into rights fees for the biggest college brands. IMG spent a total of $300 million to roll up CLC and Host Communications in 2007 and ISP Sports in 2010 to form the guts of IMG College.
Some of the smaller shops that pioneered collegiate marketing were swallowed up as new mega-players like WME-IMG, CAA, Fox Sports, Outfront Media and private-equity firms with deep pockets of cash came along. Not even the most bullish observers of the college space 10 years ago could have guessed that Learfield would be bought and sold three times, most recently last year for a staggering $1.3 billion.
Collegiate marketing and media is no longer the undervalued, unsophisticated business it used to be. The space is all grown up, and much of that growth can be traced to the events of 2007. Would all of those moves still have happened if IMG had not begun the rollup? That’s a matter of debate among the principals in the collegiate marketplace. What’s fact is that it did happen.
IMG College transformed the parent company, growing to nearly $500 million in revenue — roughly a third of IMG’s total revenue — by the time a very different-looking IMG sold to WME in 2013.
What follows are the stories from the people who had a front-row seat for IMG’s acquisition of CLC, and subsequent game-changing moves that altered the profile of IMG, the college space, and the people and companies within it.
How it started
■ GEORGE PYNE: I was tasked in 2006 with identifying growth opportunities for IMG. I looked at different things in motorsports, I looked at handball, I looked at sailing. I mean, I looked at all kinds of things all over the world. IMG was heavily in golf and tennis, so we were looking for growth opportunities in other areas.
■ DOUG PERLMAN: George had the ability to see value, to see broad themes that create opportunities. George had a sense that college was really undervalued and he saw an opportunity there. He did that at IMG and he’s doing that now at Bruin.
■ PYNE: I had a guy, Sam Zussman, who was sort of a chief of staff, and he was researching college sports. When the demographics came in, I was blown away. It was something like 173 million fans, 80 million female fans, 30 million fans who earned $100,000 or more, No. 1 in 18-24. Corporations would die for this. That began the process of trying to unearth opportunities in college. … One of the first things I did was fly with Barry Frank to Greensboro (N.C.) to see (ACC Commissioner) John Swofford. We wanted to convince him to let us represent a few categories in the ACC championship game. I was trying to find any way we could to get into college sports. I talked to Ben Sutton at ISP, I talked to Greg Brown at Learfield, and then also, I was always enamored with CLC. I knew the licensing business cold from my days at NASCAR. So we started talking to Pat and Bill (Battle at CLC), and they had a desire to be part of a larger organization and roll up various elements in college.
■ BEN SUTTON: George and I went to Maloney & Porcelli for lunch in New York. We’d never really met, but we had a mutual friend in Winston-Salem (N.C.), Cliff Pennell, who had run sports marketing for Winston in NASCAR. Cliff put us together for lunch. I even remember the details. Chuck Gerber was sitting in the booth behind us. I always wondered if he heard every word we said. … Anyway, George had put forth this idea to (IMG Chairman Ted Forstmann) that college sports could be a place where IMG could transform its heritage business. Ted and George knew they had to re-invent IMG.
■ GREG BROWN: George called and asked if I’d take a meeting with Ted. I said, basically, I’m happy to meet, but it’s not something we’d do. So we did not meet. They were going to send a plane and we were going to meet at Pebble Beach, and I declined. We just didn’t think it was a fit. They’re more Wall Street, and we’ve always been the Middle America guys.
■ PAT BATTLE: We felt that college was very much on par with the professional leagues in popularity, but the college market was very fragmented, while the leagues were unified. We knew the more colleges could work together and create a unified front, the better off we’d be in the marketplace. It took us 27 years to build that school-by-school in licensing alone. … I knew George from NASCAR, but our paths had not crossed in a business way.
Talks get underway
■ PAT BATTLE: In December 2006, George called and said he’d love to come see us in Atlanta (at CLC headquarters), and that some interesting things were going on at IMG. So he came down to Atlanta, we met and spent a couple of hours talking about CLC and the college market.
■ BILL BATTLE: We had been approached a few times, but never by anybody that I thought was real serious. Pat came to me and said he’d had a conversation with George Pyne. He felt like they were serious and that we should listen.
The late Ted Forstmann (left) hired George Pyne in 2006 with designs on finding growth opportunities for IMG.
■ DEREK EILER: In our weekly CLC meetings, going back to the mid-2000s, I remember Pat saying, with two or three moves, you could create something really powerful in college. Lo and behold, one day Pat says that we’ve got this guy coming to town to talk to us and it was George. So Pat, George and myself went to The Georgian Club … the whole meeting took me by surprise. All I had ever known was being part of a family-owned business. In fact, when I was coming out of college, I had applied for an internship at IMG and been rejected. It was a real full-circle experience for me.
■ PAT BATTLE: That first meeting led to a dinner in January 2007 with George and Ted, I think, at the 21 Club. Ted really liked the 21 Club (in New York). Ted talked about how surprised he was to find that more than half of IMG’s business was outside the U.S., and he was committed to strengthen the domestic business. College was a place IMG was not involved and that the company could add some tremendous resources. I agreed.
■ LAWTON LOGAN: Tom (Stultz) and I ran into George and Pat at the Final Four between the two semifinal games, and it was super-clear that there was something going on. Tom and I were on our phones trying to figure it out. We knew who George was and it was just too coincidental that they happened to be there together.
■ TOM STULTZ: The business 10 years ago was a bunch of entrepreneurs who thought they’d be doing this the rest of their lives, but it kept getting more and more expensive to play. The ability to get an infusion of cash and maybe a competitive advantage was attractive.
IMG acquires CLC
■ PAT BATTLE: A few days after we closed on May 1, I went to New York for IMG’s quarterly meeting with the business leaders from the 13 verticals in the company. Ted talked about the CLC acquisition they had just made and there was some skepticism within IMG as to why they’re getting into college. They’re golf and tennis and events. They didn’t see the fit. So, Ted called me to the front of the room and I talked about college. When I finished, Ian Todd, who ran the global business, stood up and very passionately said that what Ted has done will transform IMG. I was really grateful to Ian for that. I think it set the tone within IMG that this was a smart move for what college could become. Ian was a huge champion for college, and he was probably an unlikely source for that kind of statement having grown up in England, but he had also spent six years at Nike, so he did have an understanding.
■ STULTZ: The marketplace was shocked.
■ PYNE: There are always people resistant to new ideas and college was a new idea, so that was a battle. There were questions about how much you paid and whether it’s the right move. But that’s part of leadership. College at IMG represented a new idea and change, but CLC and the Battles gave us credibility. Without CLC, we wouldn’t have been as successful.
|Bill Battle (second from left) and his son Pat (second from right) mark CLC’s 25th anniversary in 2006 with NACDA’s Bob Vecchione (left) and ESPN’s Rob Temple.
■ BRUCE SIEGAL: CLC, with its culture, was like a family and I think it’s safe to say there was excitement, but also anxiety because we‘re moving from a family company where you could walk down the hall and ask the founder of the company a question. Now we were going into a company with a lot of unknowns. And we didn’t know how comfortable the schools would be. This industry was built on relationships and a comfort level.
■ BROWN: I was surprised, to be honest. On the surface, it didn’t strike me as an obvious fit. Licensing is not the most connected business to the athletic department. Particularly in that day, many licensing decisions were controlled on central campus.
■ LOGAN: Because there was private equity (Forstmann Little) behind IMG, we figured it could be the start of a rollup. Pat is extremely smart, he’s got terrific relationships, and you never wanted to be competing against him. He was the perfect guy to connect the dots on how to grow college.
■ EILER: As we were getting close to the transaction, Bill said we need to sit face-to-face with our top 10 schools. He said, “Derek, why don’t you take Michigan, Penn State, Notre Dame and North Carolina.” I jumped online to see how I could get to these little college towns in a matter of 36 hours. I told Pat we just can’t do it. So, Pat calls Ted and Ted gave us the IMG jet.
■ DELOSS DODDS: Bill got on an airplane and flew to Austin so he could tell me face-to-face that he was selling. That was the only reason for him to come, to tell us that. I was an admirer of his before, but that was over the top and very meaningful.
Turning to Host
■ PAT BATTLE: In that January 2007 dinner, we started to think beyond this transaction. We talked about the companies in the multimedia rights space and, like CLC, there were maybe three that started as — mom-and-pop shops is too strong — but they were started by individuals or families and built from the ground up. If we could acquire one or two of those, it could be pretty powerful. We were focused on Host, even though they didn’t have the most market share, but they had Texas, Tennessee, Kentucky and the SEC, which were four of our biggest clients as well.
■ EILER: Once Pat got in there and had Ted’s ear, it became about further consolidation. Pat was the architect of the bigger vision.
■ STULTZ: When George and Pat approached us, we already had an offer for Host at $103 million. Ted and George laid out a number of $100 million. I presented the offers to the Triple Crown board (Host owners) and they got a little greedy. They figured that if we had two unsolicited offers for that much, what could we get if we got an investment banker. In the meantime, one of the board members had his wife get extremely ill, which set things back four or five months into the summer of 2007 when the debt started drying up. And that’s how we wound up at a much lower valuation ($74 million).
■ PAT BATTLE: The financial resources came into play pretty quickly on the Host business. Within the first 18 months, we got Michigan, Ohio State, Oregon, Florida and some others. We quickly began adding to the Host platform.
■ LOGAN: We had a super growth spurt, renewing properties, adding properties. The combined power of Host and CLC was on display. We had a lot of tailwind and brands like UPS and Lowe’s were starting to acknowledge the opportunities. We also were working on the Longhorn Network, and through Pat’s relationships, we had four or five lines of business with the NCAA.
■ DAVID LEVY: Pat’s relationships in college were very strong and, in fact, he had a very close relationship with Greg Shaheen, who was running the negotiations for the NCAA’s March Madness in 2010. But Greg really didn’t know anything about Turner Sports or myself. So, Pat talked us up and told Greg that, before you do anything on March Madness, at least spend some time with Turner. Greg comes to Atlanta, we show him our operations and from there we partnered with CBS. Pat’s the reason Turner has March Madness today. Had he not made the introduction, we probably don’t get the business.
IMG acquires ISP
■ SUTTON: I had been talking to (Learfield Chairman Clyde Lear) and Greg and we constructed pretty specific parameters for what it would take to get ISP and Learfield together. But at the Final Four in 2010, they changed their minds. That’s when I started having more conversations in earnest with Teddy and George because I knew that we had to do something in order to grow our business. That was disappointing because I absolutely thought ISP and Learfield would wind up together, but Teddy’s interest was reassuring.
■ PYNE: We were very far down the road with ISP until the Thursday before Memorial Day weekend. At that time in 2010, the financial markets had seized up. So we needed to go raise more money, like $350 million, not just for ISP, but for other things. Ted comes in my office that day and says we’re not going to buy ISP. The terms from the banks were the equivalent of loan sharks and we’re not going to do it. In only the way Ted could say it, he told me to get over it. He was tough. There wasn’t any “Thanks for trying.” It was devastating. … That night, I emailed Ted and said, “I respect your opinion, but if you pass on this, it’s going to be like passing on EPL rights or the NFL for 30 years, and you will regret not doing it.” It took some courage. So, the next day, I’m driving the family to Cape Cod for Memorial weekend, and all of a sudden I get a call from Ted. He says, “Where are you?” I said, “I’m driving my family to Cape Cod.” He said, “The company’s at an inflection point. You need to be in the office. We’re going to buy ISP.” Sure enough, the deal was back on and we closed it 30 days later.
■ CLYDE LEAR: We worked really hard for two years to merge (ISP and Learfield). Our companies were very similar, but we just couldn’t put the two businesses together. We never did do the deal, which was kind of sad. I was pretty sure it was going to happen.
■ STULTZ: Everybody assumed consolidation made sense and that there would be more. We felt like ISP’s properties lined up better than Learfield’s, although we would have been interested in Learfield.
■ WALSH: Looking back, it reaffirmed our long-held belief about fragmentation. College was a hand-to-hand, relationship business. What we’ve seen is that the whole industry has struggled to adapt in some ways. It’s tough to roll up. But it put the college market on the map with lots and lots of capital.
■ PYNE: A lot of people followed IMG into college and the rights exploded in a big way. I’m not saying it happened because of us, but I do think we were somewhat of a catalyst in showing the value in college sports. Turner came in (to buy NCAA rights), Fox came in. Since that time, values have really gone up.
■ PERLMAN: The stakes have been raised, the value has been recognized and the schools and the conferences have become more sophisticated in terms of mining the value of their properties. That world looks very, very different.
Ben Sutton’s ISP Sports comprised the third component of IMG College in 2010.
■ PAT BATTLE: What Silver Lake and WME-IMG have done with their commitment to college has been great. I give a lot of credit to Greg Brown for what he’s built at Learfield. And the biggest beneficiaries have been the schools. The growth over the last decade has been significant. It’s brought extensive resources that just didn’t exist before.
Once IMG closed its acquisition of ISP in July 2010, the company moved into a new phase. Pat Battle departed, Sutton was installed as IMG College president, and the enterprise surged along. By 2013 when WME acquired IMG, the college division was doing $487 million in revenue and $66 million in earnings before interest, taxes, depreciation and amortization. Simply put, no division within IMG could match what college was doing, and the growth was instrumental in IMG fetching $2.4 billion from WME.
The business has encountered headwinds in recent years amid changes in leadership and the loss of properties, but college remains a core driver of revenue within the overall company.
Other college businesses have thrived as well. Learfield was bought three times, with the most recent acquisition by Atairos Group drawing $1.3 billion. Eiler and Walsh left and ultimately started their own licensing shop, Fermata Partners, which sold to CAA Sports. Van Wagner Sports & Entertainment and Fox Sports jumped into multimedia rights, Outfront Media took on CBS’s college properties, and JMI Sports hired Stultz to lead its entry into college sports.
A whole new round of competition emerged from these new players, propelling rights fees even higher.
“Did it succeed?” Pat Battle said. “Ten years ago, the vision was to make the collegiate market more relevant and to expose more people to the attributes of college. I think you’d have to say it’s a very resounding yes.”