The game is afoot

Agencies make their play for star athletes

After years of false starts, Hollywood agencies are finally suiting up for the sports game. The question is: Will the percenteries’ new divisions have what it takes to play in the big leagues?

Creative Artists Agency last week hired football dealmakers Tom Condon and Ken Kremer from IMG, with more major moves expected soon. William Morris and the Gersh Agency also have dedicated sports operations.

Sports is a sexy business, and its allure to Hollywood agencies is understandable. On the surface, there doesn’t seem to be much difference in making a deal for Tom Cruise than for Kobe Bryant.

Though agents earn commissions of just 3% to 5% on playing deals, endorsement deals can bring commissions as high as 10%. Those numbers can be dizzying.

Tiger Woods, the top-ranked athlete on Sports Illustrated’s 2005 earnings list, raked in $80 million in endorsements last year. Football QB Peyton Manning landed $10.5 million, basketball’s Kevin Garnett $7 million and baseball’s Derek Jeter $6 million. Tennis star Serena Williams earned just $2.3 million in salary and winnings on the courts, but chocked up $20 million in endorsements.

WMA has already made eight-figure endorsement deals with Sony Corp., Nike and Omega for golfer Michelle Wie

Gersh’s entry into the sports arena came a few weeks ago, when it acquired management firm Steve Feldman & Associates; it starts its division with 30 football clients. Condon and Kreme bring a client list to CAA that includes Peyton and Eli Manning, LaDainian Tomlinson, Marvin Harrison and Tony Gonzalez.

While CAA earlier signed ex-USC quarterback Matt Leinart for merchandising deals only, both CAA and Gersh will handle all contract negotiations for the rest of their athletes.

CAA might make a further splash, courting IMG’s baseball specialist Casey Close and his list, which includes baseball’s Jeter.

WMA has been in the sports game longest, concentrating on merchandising and endorsement deals for a cherry-picked list of athletes that includes Wie, Williams, Garnett, Phil Jackson and boxing champ “Pretty Boy” Floyd Mayweather

But not everyone is persuaded Hollywood has the grit to stay in the game. Even some prominent Hollywood agents question whether the upside potential is worth the cost and manpower. 

“Whether it was Mike Ovitz and AMG, ICM or the time when rappers like Master P got into sports dealmaking, we’ve watched these ships pull into port and then leave,” says Gil Pagovich, veep of Maxximum Marketing, which reps football’s Tiki and Ronde Barber. “I’ve yet to see a deal one of these agencies made we don’t make, and the simple fact is not every athlete is a fit for Hollywood.” 

Also skeptical is Casey Wasserman, grandson of Lew Wasserman and chairman-CEO of Wasserman Media Group, which handles such athletes as Jason Giambi, Tracy McGrady and Hideki Matsui.

“For us, sports is a business, not a hobby,” he says. “It’s not based on acquiring a list of clients, or boasting about a handful of clients you represent, without disclosing what you commission or what you generate.” 

The sports biz, Wasserman cautions, is more complicated than catching a Tiger Woods by the tail and hanging on for the ride. 

“Sports is the most dispersed business there is,” he says. “Every city has a high school, college and pro team, and this requires the manpower to be wherever the business is.”

Competition to broker contracts and ancillary deals for brand-worthy athletes is so ferocious that some agencies win clients by guaranteeing projected revenues, particularly in sports not regulated by unions. But an athlete’s value can drop precipitously through injury or scandal. 

Despite those hurdles, the meld between sports and showbiz seems inevitable to vet agent Leigh Steinberg, who’ll make Leinart’s football deal while CAA handles ancillary deals.

“The marriage between sports and entertainment has been brewing for years because it simply makes good business sense,” says Steinberg, who like Wasserman once discussed an alliance with CAA. 

Says USC Sports Business Institute exec director David Carter: “Traditional sports agencies just don’t have the marketing acumen and contacts to put together sophisticated deals that Hollywood agencies make all the time. These agencies excel at packaging, and athletes who are represented there feel it catapults them beyond being a star athlete into a pop icon.”

CAA and Gersh will most likely try to build their sports departments quickly. WMA, where the sports business is steered by president Dave Wirtschafter and former pro tennis player Jill Smoller, will stay on a slow-growth course.

Hollywood’s best chance to make a mark, says USC’s Carter, will come if it can make brand names of Leinart and Wie, signings that rocked the sports business.

“Matt is the most popular athlete in Southern California, and Michelle has the world at her feet, as opposed to just the nation,” Carter says. “If these agencies establish them as major brand names, then the sports agents who dismiss Hollywood might be whistling past the graveyard.”

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