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A version of this story first appeared in the July 25 issue of The Hollywood Reporter magazine.“>
Two months after assuming control of sports and fashion powerhouse IMG in a $2.4 billion deal, WME is navigating its first hurdles.
Within 16 days, the new WME-IMG endured a few losses. On June?23, the University of Kentucky ended a 40-year relationship with the agency and signed a $210 million deal with boutique firm JMI Sports, co-founded by former San Diego Padres owner John Moores. Then, on July?1, Syracuse University notified sponsors that it had terminated its agreement with IMG that ran through 2020-21. One week later, WME CFO Peter Kline exited after just six months on the job. (On the bright side, IMG client Novak Djokovic won Wimbledon — an IMG event — during that tumultuous frame.)
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A WME source says Kline’s departure has more to do with personal issues (the New York transplant missed his home in Seattle) than the pressures of mandated cost-cutting at the combined agency. Kline will remain with WME as a consultant, helping to fill the vacated post. Meanwhile, WME has a trio of candidates in its sights and expects to make a decision on a replacement within a month.
Losing Syracuse would be a blow to the hugely lucrative IMG College — a division that accounted for close to $70 million in earnings in 2013. But there’s still a chance that the basketball powerhouse will stay. And Kentucky is only part of a well-diversified portfolio (IMG College handles licensing for more than 200 schools and bowls). But the colossal nature of the new super-agency is one reason Kentucky bolted.
“Kentucky was attracted to the prospect of being a star client and not one of 75 or 90 schools in a portfolio,” JMI CEO Erik Judson tells The Hollywood Reporter. “They will be one of a handful of schools that we can service with the utmost focus.”
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Kentucky athletics director Mitch Barnhart echoed that point during a June 23 press conference in Lexington. “They say we’re their flagship and we’re their folks, and I like that a lot,” he said.
But a WME spokesman counters that Kentucky’s decision had more to do with money. IMG offered $186 million, $24 million less than JMI. “We had an incredible run with Kentucky, and we’re very proud of the work we did with them,” says the rep. “That being said, we seek partnerships that are mutually beneficial, and it was not financially responsible to pursue this deal just to win the bid.”
For its part, JMI says its bid included naming rights and other entitlements that IMG did not include in its bid, and JMI believes these rights will more than exceed the $24 million gap.
Co-CEO Patrick Whitesell has taken the lead on the sprawling sports enterprise, working furiously to introduce himself to college leaders and tout the benefits of the merged agency (co-CEO Ari Emanuel has been more involved with IMG’s fashion enterprises but works on sports as well). Whitesell, who has been making the rounds this summer with athletic directors from Chapel Hill to Ann Arbor, can notch one key victory in recent weeks. Sources say IMG is close to signing a multiyear extension with the University of Michigan.
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Michigan would mark just the latest — though most notable — in a string of recent signings. IMG renewed exclusive trademark licensing agreements with Boston University, Eastern Carolina University, Grambling State University, University of Pittsburgh, Vanderbilt University and University of Virginia. Outside of the college fold, it also landed deals with Formula One’s U.S. Grand Prix and the NFL’s Buffalo Bills and Tennessee Titans.
“For so long, IMG has dominated the rights field and has been very aggressive in signing deals everywhere,” says sports agent Leigh Steinberg, who is not involved with IMG. “Many of these major deals they did several years ago. The challenge now is the rights business has become exponentially more valuable and competitors will come in as those contracts expire and fight for that same market.”
Still, even Judson can find little fault in WME-IMG’s game plan.
“IMG has a tremendous portfolio of clients, and they will certainly continue to grow their business,” he says. “However, multimedia rights do change hands occasionally, and we believe there is an opportunity for another competitor in this [college] space. Competition is good.”
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