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Agents see red over Ovitz’s green scene

Take-home pay raises eyebrows

No one expected the legacy of the sushi-loving, Sun Tzu-quoting Mike Ovitz to be revealed in the tiny backwater state of Delaware, but it has been.

And here it is: Agencies will likely never again be so entrepreneurial, nor so tolerant of an owner’s astonishing appetites.

Testimony from the shareholder lawsuit filed against Disney over Ovitz’s extra-ordinary severance provoked a truly novel defense from the ex-superagent’s legal team. It boiled down to this: You folks only think Ovitz ripped off Disney because you have no idea how thoroughly he enriched himself while at Creative Artists Agency.

“It sounds to me like Mike was running two separate businesses,” says one top agent, who insisted on anonymity. “One to line his own pockets, and another that was just the general agency business. If I’d tried that, I’d have been thrown out of a window.”

Despite what he told his employees, Ovitz was unwilling to share such massive personal windfalls with his partners. In addition to his salary, he kept the lion’s share of a $40 million fee from advising Matsushita, and pocketed fees from a consulting arrangement with Credit Lyonnais as it restructured MGM/UA, all instances which highlight how much the artist representation business has been changed since, and perhaps by, Ovitz’s tenure.

Michael Eisner used to reprimand the manipulative Ovitz by warning, “Don’t agent me.” Many international congloms now appear to feel the same way. The Germans, French and most of the Japanese have been burned and appear to have lost either the interest or the wherewithal to own a piece of Hollywood.

Outside CAA (which still doesn’t use contracts) most new agency partners these days find lengthy blocks of legalese in their contracts that bar them from any sort of advising of corporate clients for personal fees, a la Ovitz.

For example, when, in 2002, CAA found it risked losing client George Clooney over a finder’s fee Clooney’s agent had discussed taking for brokering the sale of an palatial Italian estate, CAA and the agent quickly parted company. Clooney stayed put.

The intense competition among the Big Five agencies today puts a premium on retaining good agents by making them partners. That, in turn, puts a premium on getting along and sharing somewhat more equitably with one’s many partners. (Ovitz never did that well with CAA founders Ron Meyer and Bill Haber, who it is said, had to share a 45% ownership in CAA while Ovitz controlled 55% by himself.)

Today, displays of gross excess can be a turn-off to clients who might wonder, “Why does my agent live in a better house than I do?”

Agency bigwigs like ICM’s Jeff Berg and Endeavor’s Ari Emanuel seem to favor elegant but reasonably-sized family homes, not perversely supersized Xanadus of the kind Ovitz is currently at work constructing.

By contrast, Ovitz is squabbling with neighbors near his Benedict Canyon home, which is being built with characteristically Ovitzian restraint. The 24,000-square-foot family residence, a 2,222 square-foot guest house and 2,430 square-foot “tennis pavilion,” the private driveway and retaining wall will require more than 1,100 truckloads of cement and 1,350 dumptruck loads of dirt. Rebuilding Baghdad might require less.

In recent testimony evocative of the urban legend that says Al Gore claimed to have invented the Internet, the former Disney president even told the Delaware Chancery court, “I pioneered the idea of giving goodwill gifts to people to mark occasions.”

Ironically, that might actually be Ovitz’s gift to the agency business — showing agents the need to share the wealth, rather than the appearance of sharing the wealth.

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