Talent agency William Morris Endeavor Entertainment and investment partner Silver Lake announced Wednesday that they have reached a deal to purchase storied agency and marketing firm IMG Worldwide. The move gives WME a dramatically increased presence in the lucrative sports marketplace.
Terms of the deal were not disclosed, but several reports have placed the final price tag in the range of $2.2 billion.
"IMG has incredible strategic value to WME. The brand's global reach, outstanding management team and leadership across sports, fashion and media are a strong complement to our business," said WME CoCEOs Patrick Whitesell and Ari Emanuel. "We are honored to build on the legacy of founder Mark McCormack and recent owner Ted Forstmann. Supported by Silver Lake's continued partnership, WME and IMG together will deliver a broad range of opportunities and resources to the companies and talent we collectively represent."
IMG's client list includes stars such as football's Peyton Manning. Hollywood agencies have recognized for several years that downward pressure on talent salaries means diversification can be a prudent strategy. As an adjacent area, sports offers great opportunity for show business specialists, especially in an era where TV rights costs are spiraling, new networks are blossoming and live broadcasts continue to set records for both ratings and ad revenue.
"With WME you have an organization that is very skilled in marketing talent across a range of platforms," said analyst Lee Berke of LHB Sports, Entertainment & Media. "It seems like they have the skill-set that's really going to match up to the range of opportunity that IMG presents."
As an adjacent area, sports offers great opportunity for show business specialists, especially in an era where TV rights costs are spiraling, new networks are blossoming and live broadcasts continue to set records for both ratings and ad revenue.
"Player salaries for most of the sports are roughly 50 percent of revenues," said Andrew Zimbalist, Robert A. Woods Professor of Economics at Smith College. "As television revenues explode, player salaries go with them."
The typical sports agent gets not only a cut of the salary, but also "a larger share of endorsement income," Zimablist added. "Representing people in the film industry becomes riskier and less rewarding, and representing people in the sports industry is going in the opposite direction."
But Zimbalist argues that we're currently experiencing a "sports-media bubble." Uncertainty, he said, has led to huge sums of money paid for long term TV rights and investments in regional sports networks. "At the end of the tunnel, you've got a geometrically expanding number of video options. That means more competition, and more competition means fewer eyeballs."
Fewer eyeballs would inevitably lead to a decline in revenues.
IMG has branched out in the other direction, producing sports and entertainment programming such as The NFL Cheerleader Playoffs, American Gladiators and The Skins Game. It was founded by Mark McCormack, a former attorney and pioneer in sports marketing with endorsements dating back to the late 1950s, who personally signed the likes of Arnold Palmer, Tiger Woods and Derek Jeter. McCormack died earlier this year at the age of 72.
The smarter way to stay on top of broadcasting and cable industry. Sign up below.
Thank you for signing up to Broadcasting & Cable. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.