Sports marketing legend Mark McCormack, who died last month, famously built IMG into a global sports and entertainment giant on the basis of a single handshake.
That the handshake was with then unknown golfer Arnold Palmer was crucial, of course, but the key to player management remains the same today as it was 40 years ago: having the right agent find the right athlete at the right time.
McCormack, a renowned charmer, and future golfing champion Palmer were a match made in heaven. But now IMG is showing signs of becoming a victim of its own success. Observers say the company’s size has led to a growing isolation from the athletes that once fuelled its fortunes, certainly in the case of personality-driven sports such as football, where a player’s agent can be as close as a parent.
Further internal pressures are starting to show following McCormack’s death, which has left IMG without a single clear leader. The privately owned company is now jointly managed by Bob Kain, president and chief operating officer of IMG Americas, and Alastair Johnson, president and chief operating officer of IMG Asia.
But with McCormack’s family still holding key positions of power – and talk of takeover attempts and asset sales washing around the industry on the back of a rumoured debt of some $200m (&£120m) – the future structure of IMG looks far from certain.
In fact, industry sources suggest that the recently reported folding of IMG’s football division into its television distribution arm, TransWorld International, could reflect the beginnings of an internal power struggle (MW last week).
One insider says: “IMG has chosen to fold football into its TV arm, which is hardly surprising given its strength in the area. But it also shows the power TWI has within IMG. The TV people know they are the cash cow, and want leading positions in the company. What the events and consultancy people will make of this will be interesting.”
But there are also more prosaic reasons for the recent corporate restructure. Few were surprised when IMG Europe president Eric Drossart admitted the company was investigating the withdrawal of business from the field of player management, which is an industry where individual agents continue to prosper at the expense of the corporate giants.
As Matthew Patten, chief executive of entertainment group SP Active, says: “In football, chemistry can be as important as commercial clout. IMG is a very commercial company, whereas player management is a very personal business.”
An estimated 15 per cent of employees were made redundant in the football division, including key figures such as managing director Philip Grother and senior executive Philip Hauber. While the company still manages European sportsmen and -women, Drossart says the company is likely to sell parts of the business to focus on its core interest of TV rights.
He adds: “There has been no resolution on the player-management business. We do still own it, but it is a very personal business to those made redundant.”
Drossart says that television is the centre of IMG’s football business – with only 15 per cent of the division’s revenue derived from other sources – which makes TWI the natural home for the company’s football division. Eight members of staff were moved from IMG Football into TWI as part of the shift.
IMG responded to the news broken by Marketing Week with a statement that it is still aggressively involved across the football industry, although a spokesman admitted that there has been a reorganisation. He would not comment further on the move out of player management.
Industry sources say the sports group could come to regret not fully exploiting player-management opportunities. An insider says: “There are three necessary areas for a global sports company: sporting events; sports TV rights; and managing athletes.”
As the recent uproar over a certain ex-Manchester United midfielder has proven, managing football stars is still a very valuable proposition. The restructuring of the football player transfer market, which gave agents more power to broker massive deals, has led to huge sums of money being funnelled into transfers and massive fees for the agencies involved.
This has been good news for IMG rival SFX Sports Group, which has made a fortune this month on the back of the transfer and sponsorship packages of its superstar client David Beckham.
The majority of the England football squad is handled by SFX, while IMG can boast only one – non-playing – member of the squad, the England manager Sven-Goran Eriksson. McCormack was reported to have personally flown to Sweden to convince Eriksson to sign, underlining how important his approach of face-to-face client management is in football.
But, according to Proactive Sports Management chief operating officer Neil Rodford, this is a rare example of the sort of personal involvement that is key to player management. He says that a large company, such as IMG, can be too distanced from its clients, who can choose from nearly 250 agents in the UK.
IMG tried to overcome the fragmented market by bringing a portfolio of agents under its corporate wing. But this policy, says Octagon senior vice-president and head of football Phil Carling, backfired when the agents proved too maverick to conform with the IMG model.
Carling says: “IMG found that it is difficult to manage the people who manage the players. These people don’t slot easily into a corporate system.”
Carling says IMG’s strategy was also to acquire European agents with large portfolios of central European players, rather than to focus on a single country or a select group of stars. He says that this may have appeared to be a good plan in the heady days of inflated football wages in the Nineties, but has proven less successful now that the football boom appears at an end.
Carling compares the huge portfolio of German and Scandinavian players acquired by IMG to the successful domestic policy of SFX Sports, which was founded on the strong UK-based portfolios of legendary agents Jon Holmes and Tony Stephens.
Holmes agrees that a business as personal as football will never naturally fit with a corporate approach. He says: “Individual agents do not want corporate restrictions, they need freedom to work, while the remuneration packages are never enough within a corporation.”
CSS Stellar football client manager Ian Flanagan adds that the key to success is to sign promising teenagers and nurture them to become the next Beckham. He says IMG focused too heavily on senior players.
“To find the next generation of stars,” Flanagan says, “requires the right contacts at the right levels and a great deal of luck, which IMG did not have. IMG tried to build up its football business at the wrong time, when players’ wages and transfer fees started to drop.”
While the future of IMG’s management structure is still in flux following McCormack’s death, it is now certain that the focus of its football business will be on TV rights. Player management remains almost a cottage industry, dominated by single-player agents nurturing the dreams of teenagers wanting to be the next Wayne Rooney.
In fact, it may be that McCormack – who wrote corporation-baiting books such as What They Don’t Teach You at Harvard Business School – would have approved.