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IMG

IMG

1360 East 9th Street, Suite 100
Cleveland, Ohio 44114
U.S.A.
Telephone: (216) 522-1200
Fax: (216) 522-1145
Web site: http://www.imgworld.com

Wholly Owned Subsidiary of Forstmann Little & Co.
Founded:
1960 as International Management Group
Employees: 2,100
Sales: $1 billion (2004)
NAIC: 711320 Promoters of Performance Arts, Sports, and Similar Events without Facilities

IMG, once known as International Management Group, is the world's leading sports and lifestyle management and marketing company, representing more than 1,000 clients. The firm is best known for the roster of sports stars it represents, including Vince Carter, Jeff Gordon, Jaromir Jagr, Derek Jeter, Peyton Manning, Maria Sharapova, Michael Schumacher, Annika Sorenstam, Venus Williams, and Tiger Woods. IMG also represents coaches such as Denny Green and Steve Mariucci; sportscasters like Bob Costas and John Madden; and models (sometime actresses), including Tyra Banks, Elizabeth Hurley, Kate Moss, and Liv Tyler. Moreover, IMG represents the interests of such organizations as the Grammys, The Nobel Foundation, the Royal and Ancient Golf Club of St. Andrews, the USGA, the U.S. Olympic Committee, Wembley National Stadium, and Wimbledon. IMG divides its business into two segments: IMG Sports and Entertainment, and IMG Media. The cornerstone of the latter is subsidiary TWI, which serves as IMG's television, radio and new media arm. It is the world's largest independent producer and distributor of sports programming, covering more than 240 sports in 200 countries. IMG also acts as a literary agent and is involved in golf course design. IMG has been a pioneer in many ways, credited with the introduction of the corporate tent at major sports events and the commonplace practice of paying athletes appearance fees that are sometimes greater than first place prize money. In addition to its Cleveland, Ohio, headquarters, IMG maintains 70 offices in 30 countries.

ORIGINS

IMG was founded by Mark Hume McCormack, who was born in Chicago in 1930, the son of a farm journal publisher. At the age of six he suffered a skull fracture in an automobile accident, preventing him from pursing contact sports. Instead he found an outlet for his competitive drive by taking up golf, taught to him by his father. McCormack was an accomplished enough golfer to win the Chicago prep title and play number one at the College of William and Mary, as well as qualify for the British and U.S. amateur championships and the U.S. Open. It was during his collegiate days in a match with Wake Forest that McCormack played against Arnold Palmer. It would be the start of a friendship that would prove pivotal in both of their careers. After graduating from William & Mary in 1951, McCormack earned a degree from Yale Law school, and then following a stint in the Army as a law instructor he took a position with the Cleveland-based law firm of Arter, Hadden, Wykoff and Van Duzer.

Although McCormack decided against making competitive golf his career, he did not lose his love for the game. In addition to his duties at Arter & Hadden, he began to book exhibition matches for professional golfers. Some of them soon began asking him to review their endorsement contracts, including Palmer who was emerging as a star on the professional tour. McCormack told London's Observer in a 1999 interview, "I started out giving tax advice to golfers, filling in forms, sending off returnsfreeing their time up so they could play more golf." In 1960 he experienced something of an epiphany, which he described to Daily News Record in 1985: "It occurred to me that if a company had a recognizable name which could be put on a new product, that product could have instant recognition. Usually, you have to spend hundreds of thousands of dollars to educate the public to new products, but if you have a famous name associated with it, it gives you a head start." Fortunately for McCormack he had a friend with a famous name, his college golfing nemesis Arnold Palmer. McCormack convinced Palmer to become his first client, the deal formalized with nothing more than a handshake, and International Management Group was born.

In the year before signing with McCormack, Palmer had earned $60,000. Two years later that amount would increase to $500,000, but this would just be a down payment on the hundreds of millions of dollars Palmer would earn even after he ceased to be a competitive golfer. From the start, McCormack proved savvy about how to leverage a personality's franchise. "We never let our licenses advertise Palmer's wins, although they wanted to," McCormack told Daily News Record. "We knew that one day he wouldn't be winning any more, and we didn't want him to lose his impact." Palmer's success with McCormack caught the attention of other top golfers. Later in 1960 Gary Player signed on as a client, and then in 1961 amateur star Jack Nicklaus approached McCormack during a tournament and asked to have a word after the completion of the round. This meeting led to further talks and in December 1961 Nicklaus turned professional, with McCormack acting as his representative, and launched his stellar pro tour career in 1962.

The "Big Three"Palmer, Player, and Nicklausdominated golf for the next decade, and with McCormack landing endorsement deals for them, they soon earned more money off the course than on. Moreover, their increased stature raised golf's profile with the general public and made professional golf popular, especially on television, and it became an even more lucrative occupation.

COMPANY PERSPECTIVES

IMG is the world's largest, most diverse and only truly global company dedicated to the marketing and management of sport, leisure and lifestyle.

INTERNATIONAL EXPANSION: 196099

McCormack's ambitions, however extended far beyond the Big Three and golf. A visionary, he was already thinking in global terms. Early on he signed endorsement deals in Japan and England, and although the amount of business did not justify it, he began opening international offices. In 1964 IMG opened an office in Asia, followed two years later by a London office. In 1967 the firm signed Tony Jacklin, England's best golfer, which established a strategy of signing a country's top athlete and then leveraging that connection to win bigger future prizes. In the case of England, the Jacklin connection led to IMG a few years later signing the Royal and Ancient Golf Club of St. Andrews as a long-term client. This game plan was applied to sports other than golf as well. In 1968 IMG signed French skier Jean-Claude Killy after winning three gold medals in the Winter Olympics. Although his competitive skiing came to an end, Killy enjoyed a highly successful career as an IMG client. Some 20 years later it was Killy who convinced the Albertville Olympic Committee to use IMG to handle its marketing for the 1992 Winter Games. In 1968 IMG signed Australian tennis star Rod Laver, a move that not only provided the firm with a foothold in a new sport but also led to IMG representing the Australian Open, Wimbledon, and the U.S. Openthree of tennis's four Grand Slam events. IMG also advanced on other fronts during the 1960s. In 1964 it staged its first golf event, the World Matchplay Championship, and two years later opened a Los Angeles office and founded TWI, which would produce a number of made-for-television golfing and sporting events. In 1967 IMG Literary and IMG Broadcasting were founded, the latter the result of signing top sportscaster Chris Schenkel. A year later IMG Football was launched, its first client Minnesota Viking's quarterback Fran Tarkington. In 1969 IMG signed its first baseball player, Brooks Robinson; its first motor-sports client, Jackie Stewart, launching IM Motorsports; and its first model, Jean Shrimpton.

In 1970 IMG lost a major client in Nicklaus, who according to Sport Illustrated, was reportedly frustrated at playing "second fiddle" to Palmer at IMG. "To have held on to Nicklaus, I couldn't have expanded the company," McCormack explained to the magazine. "I'd have had to personally watch over him. Instead, I was creating IMG. I'd have won the battle and lost the war." Instead McCormack continued to pursue his plan of global conquest in the sports representation field. In 1970 IMG signed its first basketball player, John Havlicek. A year later it added Brazilian soccer superstar Pele as a client. Also in 1971 an Australian office was opened and IMG Consulting was established. In the early 1970s IMG became involved in client-designed golf courses, with an Arnold Palmer-designed course opening in Japan in 1973. IMG's revenues reached $25 million in 1975, but McCormack was far from content. In the second half of the decade IMG opened an office in Canada in 1977 and Brazil in 1979. The firm also signed its first woman golfer, Nancy Lopez, which led to a heavy involvement in women's golf. IMG made additional strides in its tennis business, signing both Chris Evert and Martina Navratilova as clients, and in 1979 the firm staged its first event in China, a tennis exhibition match between Jimmy Conners and Bjorn Borg. Far afield from sports, IMG established its relationship with the Nobel Foundation in 1978.

The early 1980s saw IMG bring televised National Football League games to Great Britain and a number of other entertainment firsts. In 1983 it staged the first Skins Game, a made-for-television golf format that would become an annual event. Also in 1983 IMG first became involved with the Olympics. It was IMG that led to the games being spread over three weekends for the benefit of television ratings, starting with the Winter Games in Calgary in 1988. IMG produced its first ice show in 1986, the "Scott Hamilton America Tour," which led to the perennially popular "Stars on Ice" tour. IMG continued to build its tennis profile during the 1980s, acquiring Nick Bollettieri Tennis Academy in 1987, which provided it access to rising talent and set the stage for the creation of a Men's Tennis division in 1988, when Andre Agassi, James Courier, and Pete Sampras were signed. IMG also bolstered its roster of baseball clients, which only numbered ten, by acquiring Reich, Landman and Berry in 1987. Within three years IMG would be representing 75 baseball players. In addition, IMG built up its basketball and football divisions in the late 1980s and became involved in cricket, representing the interests of West Indies Cricket Board. On the nonsports front, the firm founded IMG Artists in 1983 (with violinist Itzhak Perlman becoming the centerpiece), acquired Laraine Ashton in 1987 to start IMG Models, and in 1989 began representing Oxford University for licensing.

IMG continued to grow in the United States while also expanding its international reach and growth beyond sports. The firm bought its first CART car race in 1991, and became involved with the Rugby World Cup in 1992. In that same year IMG signed a 12-year deal with USA Volleyball to take advantage of the sport's Olympic popularity but according to Brandweek, "IMG's efforts to build the same fizzled when volleyball's marketing rights became entangled in a dispute with the Atlanta Olympic marketing group."

KEY DATES

1960:
Mark McCormack launches company by signing Arnold Palmer.
1966:
TWI is founded.
1971:
Royal & Ancient Golf Club of St. Andrews becomes a client.
1978:
A relationship with Nobel Foundation established.
1983:
IMG Artists is launched.
1986:
"Stars on Ice" begins.
1996:
Tiger Woods signs as client.
2003:
McCormack dies.
2004:
Forstmann Little & Co. acquires IMG.

In 1994 IMG formed a soccer division, and then in 1996 it began to represent stadiums and arenas. It was also in the 1990s that IMG became a sports team owner, acquiring a club in the Chinese Basketball Association in 1995 and purchasing a first division French soccer team, Racing Club de Strasbourg, in 1997. The firm considered golf, McCormack's first love, to be a market that was essentially "fully valued," however. McCormack told Brandweek in March 1996 that golf was "peaking a little bit. I don't see it growing at the same levels. The worst thing to get into in golf today is the sponsorship of a PGA [Tour event]. It costs so much and you only get a week out of it." But that would all change later in 1996 when Tiger Woods turned professional and took the game to even greater heights. Woods had been a golfing prodigy since childhood and IMG began courting his family when Woods was just 13, currying favor by hiring his father as a junior golf scout, bringing much appreciated income to the household. That would end when Woods enrolled at Stanford University to make sure there was no violation with the National Collegiate Athletic Association (NCAA). It was no surprise that when Woods decided to become a professional after his sophomore year in college that he would sign with IMG. Other notable developments in the 1990s included the signing of the Rock and Roll Hall of Fame as a client in 1993; the establishment of the TWI Interactive division in 1996; the addition of the Kennedy Space Center as a client in 1997; and the creation of a private equity fund to invest in the sports industry, formed with Chase Capital Partners in 1998.

NEW CENTURY, NEW OWNERSHIP

The terrorist attacks on the United States on September 11, 2001, along with a depressed economy, hurt IMG's business, as many companies cut back on sponsorships. Over the course of the next 18 months IMG eliminated some 400 positions, roughly 17 percent of its staff. The firm also spun off Elevation Motorsports, a subsidiary that owned the Grand Prix of Cleveland, and unloaded Racing Club de Strasbourg. After experiencing a difficult 2002, IMG hoped to rebound in 2003, but in January the 72-year-old McCormack suffered a heart attack during dermatology surgery. He would linger in a coma for four months before dying on May 16, 2003. McCormack was replaced by long-time lieutenants Bob Kain and Alastair Johnston, who took over as co-chief executive officers. Their tenure would be short-lived, however. There was talk of McCormack's family selling a portion of the company to fund expansion, or even taking IMG public. Shortly after McCormack's death, however Theodore (Ted) Forstmann of private equity firm Forstmann Little & Co. began courting the family. Forstmann was long-time friends with McCormack (they served together on the board of directors of Gulfstream Aerospace Corporation) and his second wife, and the two men had discussed becoming partners. In October 2004 he succeeded in convincing the family he was the man to carry on what McCormack had begun and Forstmann Little completed a purchase of IMG for a reported $700 million to $750 million.

Forstmann became a hands-on manager, taking over as IMG's CEO. He then tried to balance his pledge of preserving McCormack's legacy with the application of sound business practices. Kain and Johnston were eased aside and in 2005 George Pyne, former chief operating officer of NASCAR, was installed as president. According to Forbes, Forstmann also got rid of some of the "exjocks and sports-fan lawyers" that held prominent positions and "stocked the IMG board with titans of business." Overall, he cut IMG's work force by 10 percent to 2,100. However, Forstmann was becoming involved in a far different world than the buying and selling of companies which had garnered him a personal fortune of more than $700 million and made him famous during the leveraged buyout heyday of the 1980s. "Forstmann has entered the service business," wrote Forbes in 2005, "where competitors plot to steal managers and their clients, and keeping pampered personalities in check is critical. To keep his managers content, Forstmann has done something that even the beloved McCormack never did. He has given or sold equity in the firm to some 80 IMG executives. So if he does flip this baby, cutting costs and selling IMG at a profit, they, too, will get rich."

PRINCIPAL COMPETITORS

Advantage International LLC; Live Nation, Inc.; William Morris Agency, Inc.

FURTHER READING

Brady, Diane, "IMG: Show me The Bottom Line," Business Week, July 12, 2004, p. 82.

Doward, Jamie, "It's a Fair Way of Making Money," Observer (London), June 13, 1999, p. 5.

Keeton, Ann, "McCormack Scores Big," Daily News Record, November 11, 1985, p. 25.

Mortland, Shannon, "IMG Charts Leaner Future," Crain's Cleveland Business, June 2, 2003, p. 1.

Pulley, Brett, "The Barbarian at the First Tee," Forbes, July 4, 2005, p. 122.

Schmuckler, Eric, "Still the One," Brandweek, March 11, 1996, p. 28.

Spander, Art, "New Man at the Helm of IMG," Daily Telegraph (London), October 5, 2004.

Strange, Curtis, "The Most Powerful Man in Sports," Sports Illustrated, May 21, 1990, p. 98.

Sweeney, James F., " The Care and Feeding of Tiger," Cleveland Plain dealer, March 30, 1997, p. 10.

Vinella, Susan, and Corwin A. Thomas, "The Grandmaster of the Sports Deal," Cleveland Plain Dealer, April 22, 2001, p. 1A.

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