H'w'd agencies, private equity firms eye auction that could hit $2 bil
Private equity firm Forstmann Little & Co. is preparing to put its powerhouse sports agency IMG Worldwide up for sale next year. Observers say the sports event management and marketing giant could fetch as much as $2 billion.
Goldman Sachs has been informally helping Forstmann prep IMG for a sale, according to knowledgeable sources.
It’s unclear whether the investment bank has officially signed on to shop IMG, but the firm has deep ties to Forstmann Little. Goldman Sachs declined to comment.
Despite the growing chatter in showbiz and investment circles about IMG’s sale prospects, spokesman Jim Gallagher said the company is not for sale.
“All we’re doing is improving our business every day and moving ahead on our international joint ventures, running our business to their greatest profitability,” he said.
IMG is seen as a marquee asset with unique infrastructure in the sports event world. Forstmann Little, which acquired IMG in 2004, quietly shopped the asset earlier this year for about $3 billion, says one insider with knowledge of the talks. Company is said to be on track for earnings of about $200 million in 2013, according to industry observers.
While IMG reps a slew of notable athletes, it’s understood that the company generates most of its money from its other businesses.
IMG’s global operations include robust sports marketing, event management, licensing, fashion, representation and production businesses. It handles retailing and licensing for the All England Lawn Tennis Club, which organizes the Wimbledon tennis tournaments, and produces high-end golf, soccer, rugby and cricket events around the world, among its other sports activities. Its IMG College wing works with the NCAA and others on the lucrative of biz of marketing, ticketing, licensing and brand management for more than 200 college sports properties in the U.S.
But industry insiders say IMG’s various businesses have become more balkanized in recent years. Observers say that a potential IMG buyer may move to streamline those operations or possibly break up the company.
IMG’s competitors in the sports biz include CAA and the Wasserman Media Group. CAA, with its growing sports ambitions, is seen by industry observers as a likely bidder for the asset. Some believe that CAA’s private equity investor TPG could eye IMG as a potential acquisition to pair with the agency. CAA spent big bucks several years ago to hire a handful of top IMG talent reps as the agency expanded its sports biz over the past decade. However, others note that CAA has rarely pursued acquisitions, let alone a purchase the size of IMG.
Tech investment firm Silver Lake, which purchased a 31% stake in WME last May, is also considered a logical contender.
There has been speculation among bizzers that TPG or Silver Lake could pursue an acquisition of IMG as part of a strategy to eventually spur a public offering for their agency investments. A pair-up with IMG could help CAA or WME diversify with the kind of scale that investors would find attractive in a public company. Sources close to the situation caution that talk of an IMG combo and IPO prospects remains highly speculative for both CAA and WME.
Observers have suggested that private equity firm Guggenheim Partners and India’s Reliance could also be in the mix. Guggenheim led the $2 billion deal to acquire the Los Angeles Dodgers earlier this year. And Reliance, with its foothold in the Indian marketplace, already operates a joint venture with IMG. In 2010, the two inked a 15-year deal with the All India Football Federation to restructure, promote and popularize soccer in a transaction that gave IMG all the commercial rights to soccer in the cricket-crazed nation.
IMG’s future has been the subject of speculation for nearly 10 years, since the death of agency founder Mark McCormack in 2003. McCormack famously launched IMG in 1960 through a handshake deal with golf legend Arnold Palmer and is credited with numerous innovations in the sports biz, along with helping to popularize golf as a sport.
Forstmann Little bought IMG in 2004 in a cash deal valued at more than $700 million. The death of Forstmann Little topper Ted Forstmann in November 2011 accelerated speculation that the agency would mount an IPO or a sale, partly as a means for a number of IMG veterans to cash out their stakes in the company.