IMG will lay off about 100 employees, or 3% of its worldwide staff, in the coming weeks.
The decision comes more than six months after the sports agency powerhouse was acquired by WME. The cuts are expected to land across the board at IMG divisions. The WME side of the company, which is now majority-owned by private equity firm Silver Lake, will not experience layoffs.
Layoffs and other changes had been expected at IMG in the wake of its merger earlier this year with Hollywood uber-agency WME. WME-IMG co-CEOs Ari Emanuel and Patrick Whitesell spent months learning the details of IMG’s operations, which are spread around the world and range from sponsorship and marketing agreements to media rights auctions to promotion of events including New York’s Fashion Week.
IMG and WME have maintained largely separate operations since coming together early this year. In the layoffs to come, it’s clear that those in business, administrative and financial jobs that are redundant with posts filled by existing WME executives will be vulnerable.
The $2.2 billion pricetag that Silver Lake and its partners paid to bring IMG and WME together spurred speculation about massive cuts to come at both operations and chatter that the debt service would hobble both agencies.
Over the past few months, the exec team led by Emanuel and Whitesell has fanned out across IMG’s divisions in search of restructuring and management changes designed to make it less balkanized and a more cohesive operation. Emanuel spent months this spring and summer in London getting a handle on the company’s international hub.
IMG by many accounts had grown bloated and inefficient during the previous decade under the ownership of investment giant Forstmann Little. The death of principal Ted Forstmann in late 2011 triggered the IMG sale process that came to a head late last year. CAA and ICM Partners were also in the hunt for the percentery that remains a uniquely global entity in sports marketing, promotions and rights dealmaking.
Cost savings were quickly realized when a number of IMG vets left in the wake of the merger, and after the co-CEOs took steps such as streamlining the management of media rights and event management divisions, which previously had little communication.
Meanwhile, efforts to foster collaboration among IMG and WME talent and projects have been encouraged but not forced, according to insiders. Now that the restructuring of IMG is well under way, Emanuel and Whitesell indicate there may be more noticeable changes for both sides of the WME-IMG ledger, or what they describe as “changes in the business that will help ensure we’re all set up to succeed” in a memo confirming the IMG layoffs.
Here’s the complete memo from WME-IMG co-CEOs Ari Emanuel and Patrick Whitesell:
In the seven months since WME acquired IMG, we’ve been focused on helping this company live up to its potential as the global leader in sports, media and fashion. We’ve worked alongside all of you to consolidate businesses, create new roles, and collaborate across departments in ways that will fundamentally change not just WME | IMG but ultimately our industry. We’ve seen firsthand how hard you’ve all been working to bring these two companies together, and we’re grateful.
As you’ve heard us say, we are incredibly well-positioned for the future. We’ve had a strong start financially, the business is performing well around the world, and our ability to connect, develop, and promote artists, athletes, media and brands is unmatched at a time when our industry has never been stronger.
But to take full advantage of the opportunity that lies ahead, we have to make some tough choices about how we allocate our resources at IMG. In the coming month, we’ll be updating you on some changes in the business that will help ensure we’re all set up to succeed.
As a first step in this process, we will be downsizing three percent of our workforce across IMG in the coming weeks.
These decisions aren’t easy, but they are necessary for us to best position IMG for future growth and success. These changes will allow us to more effectively invest in our future through acquisitions; to re-allocate our resources to high-growth businesses; and ensure we realize our full potential across WME | IMG.
Thank you all in advance for your help through this transition. Changes like these are always difficult, and we appreciate your hard work and dedication.