THE MOST POWERFUL MAN IN SPORTS
To a lot of people, IMG is a four-letter word.
—CURTIS STRANGE
It is, quite simply, the most powerful, farsighted, far-reaching (some would say grabby) corporation in the world of sport: International Management Group, the company that people love to hate.
Not its clients, of course, who would never refer to IMG with any four letters other than R-I-C-H. Not the Chris Everts and Greg Normans and John Maddens, whom IMG has helped make as wealthy as sheiks by arranging their commercial endorsements and managing their finances. Not the Wimbledons and U.S. Golf Associations and Albertville Olympic Committees, whose coffers are overflowing thanks in large measure to IMG's handling of their licensing, merchandising and television contracts. Not even the Hertzes, Rolexes and Nestlès, corporations that fork out small fortunes to sponsor IMG-run events, rent IMG tents and have outings with IMG clients. Nope, all those folks will turn blue in the face telling you how honest, innovative and dependable IMG—specifically, Mark Hume McCormack, its founder and chief executive officer—is to deal with.
Everyone else in the sports world, though, has it in for IMG. "We're IBM, the 1927 Yankees, whatever," says Hughes Norton, 42, the head of IMG's golf division. "Everybody hates us."
Is it professional jealousy, as IMG proponents maintain? Or is there something insidious about this multinational, Cleveland-headquartered conglomerate, which is one of the great business success stories of the past 30 years?
Competitors, in wooing potential clients, bad-mouth IMG as being too big and impersonal, while inwardly chafing at IMG's swashbuckling corporate arrogance. "They're heavy-handed people," says one ex-IMG executive. "They push for the maximum. I think IMG has often been successful in spite of itself."
Many members of the business community who have never made a deal with McCormack are wary of his reputation as a shrewd negotiator, and vaguely mistrust the personal style and motives of the man who six years ago wrote the best-selling business advice book What They Don't Teach You at Harvard Business School. "My stomach tells me that McCormack is the ultimate hustler, that he will use you to the nth degree," says the head of one Fortune 500 company, whose misgivings about McCormack have kept him from taking the IMG plunge. "There's something shady and unattractive about him—he doesn't give much eye contact. I wish I could be more specific. It's just a feeling I have."
Many in the media are similarly antagonistic toward IMG. The company's agents, like all sports agents, vigilantly shield their biggest clients from all but a handful of interviews. What sets many IMG agents apart is the supercilious manner in which they often deal with the press and public relations people, expending an absolute minimum of courtesy. "The worst thing about being represented by IMG is always having to defend it," says one former client, Greg Lewis, a sportscaster for NBC. "It's like having a tattoo."
And just about everyone vilifies IMG for being, well, too all-encompassing and powerful, with tentacles that reach into the backwaters where sport and the dollar meet.
Whose idea do you suppose it was to spread the Olympic Games, Summer and Winter, over three weekends instead of two, as was first done at Calgary in 1988? Who invented the corporate tent for major sports events, those portable entertainment centers just off the 10th tee or just beyond center court, which have been sprouting like mushrooms after a rain ever since the '74 Wimbledon championships? Who made commonplace the practice of paying golfers appearance fees—sums that are often greater than the first-place money at the tournament in which the golfer is to play—to lure American stars to the European, Japanese and Australian tours? The answer to all these questions is IMG.
How all-encompassing has the world's largest sports (and then some) management company become? IMG promoted Pope John Paul II's 1982 tour of the British Isles. It represents the Nobel Foundation, the Mayo Clinic, Ringling Brothers and violinist Itzhak Perlman. IMG contacts more than 1,200 companies a year in North America, tempting them with marketing ideas and concepts. Want to sponsor a golf tournament in Spain? A tennis tournament in Hong Kong? How about an opera tour of England, Japan and Australia? A super-series of ski races, with Phil and Steve Mahre taking on the world? The America's Cup? Stars on Ice? Or is the world gymnastics championships more your style?
IMG employs more than 1,000 people in 43 offices in 20 countries. Its revenues have increased from $25 million in 1975 to a projected $707 million in '90. IMG revenues grew 430% during the '80s, and while IMG officials expect, even want, that expansion to slow—they only recently lifted a six-month hiring freeze—their company is so well positioned internationally that a significant cooling-off period is not in the forecast. "The company is growing in immense leaps, almost too fast," says McCormack, 59 and still very much the man at the helm, although he has passed much of the day-to-day operating decisions to his top level of managers. "But it's hard to stop it, because if there's an opportunity and you don't fill it, someone else will, and you're creating unnecessary competition."
It is more or less routine for athletes represented by IMG to play in IMG-promoted tournaments that are sponsored by corporations to which IMG serves as consultant, with the TV coverage produced by a company that IMG owns. In business, this is a form of vertical integration and is much applauded, but it raises legitimate concerns about where the line between the best interests of sport ends and the best interests of IMG begins.
"You have to understand that in the sports business, these various cross-representations are the norm, not the oddity," says Seth Abraham, head of HBO Sports, which has bought cable TV rights to the last 15 Wimbledon championships from IMG. "There's nothing nefarious or corrupt about it. If I was unhappy with Mark, I wouldn't be talking with him. If the All England Club was upset with Mark, then presumably they'd fire him."
"I think the conflict-of-interest issue is overplayed," says Frank Craighill, a founder of Advantage International, a competitor of IMG's in the field of athlete representation. "Maybe Mark McCormack is a little greedy, maybe he wants too big a piece of the pie. Fortunately, the market is so huge it really is impossible for one agency to have a monopoly."
It is huge, and it is growing every year. Predicts McCormack: "In the 1990s, Southeast Asia is going to be the growth area for all sports. South America, the decade after that. And Africa, the decade after that." If you were competing against IMG, you would do well to heed McCormack's words. Because wherever McCormack has decided to steer IMG, the sports world—and the big money that accompanies it—has followed.
It all started with golf. The son of a farm journal publisher, McCormack grew up in Chicago, where he began playing golf as therapy after suffering a skull fracture in an auto accident. He won the Chicago prep title and went on to play number one at William & Mary. It was there, during a match with Wake Forest, that McCormack first met Arnold Palmer, the ace of the Demon Deacons team. After graduating from Yale Law School and serving a hitch with the Army in Augusta (where he snuck in a few rounds at Augusta National), McCormack joined the Cleveland firm of Arter & Hadden. He met his first wife, Nancy, on a blind golf date (their three children, Breck, 32, Todd, 29, and Leslie, 24, are all employed by IMG), and in addition to his work for the firm, McCormack began booking exhibitions for pro golfers. Before long, players were asking McCormack to review their endorsement contracts. One of those who turned to McCormack was Palmer. In 1960 McCormack hung out his own shingle, with one client, Palmer, a Calvinistic work ethic and a gut feeling that corporations—not just in the U.S. but all over the world—would pay a lot of money to have their names associated with famous athletes.
In short order McCormack snared unprecedentedly lucrative exhibitions and endorsements for Palmer. After word got out about Palmer's good fortune, McCormack signed two more golf clients, Gary Player and Jack Nicklaus. Suddenly, the Big Three were winning every tournament in sight, and the sports management business has never been the same.
"There are three reasons for IMG's success," says Dustin Murdock, a former vice-president of IMG's golf division, who left in 1985 after nearly six years and is now a partner in the Van Cleef Companies, a real estate and investment firm. "First, there is a lack of competent competition. In client representation, there are a lot of mom-and-pop operations, which is fine because one or two guys can manage a stable of athletes. But when it comes to owning events, administering events, financing cable deals, you need to be more than just a small company. Second, Mark McCormack. He is the best in the business, the most imaginative man I have ever seen. And third, the sports business attracts quality people. Everybody wants to be in sports, and McCormack demands that his people be aggressive, smart and imaginative. He treats his people well. He pays them. He will accept ideas readily, and if you do well, he will leave you-alone."
Not all IMG employees, past or present, are as generous in their assessments of what it is like to work for McCormack. In the words of some, he can be "vicious," "vindictive," "a manipulator" and "Machiavellian." One former IMG executive says that the Cleveland offices were equipped with speakerphones, which McCormack used to eavesdrop on conversations. McCormack denies using the phones for that purpose, although he admits that they could have been used that way. And while nearly everyone agrees that McCormack is more mellow now than he was a few years ago—a personality evolution most attribute to the happiness he has found with his second wife, tennis pro Betsy Nagelsen, whom he married in 1986—he is still a demanding, intimidating chief executive who prides himself on his grasp of corporate minutiae.
"I would describe Mark today as I would have 15 years ago," says Ben Bidwell, chairman of Chrysler Motors and a longtime McCormack friend. "He's competitive, complex, driven to be the best, very loyal to his friends, somewhat scornful of his detractors and competitors. He's been very good at selecting, retaining and motivating a group of very talented people at IMG."
McCormack keeps a hellish personal schedule, rising at 4:30 a.m. each weekday, dictating letters and making overseas phone calls from 5:00 to 7:00 and then proceeding through the day in half-hour increments according to a regimen that is as unwavering as the path of the earth around the sun.
"We're so different, we shouldn't be married," says Nagelsen, 33, who first met McCormack when she was an 18-year-old client back in 1974. "I hate schedules. And I don't like having scheduled meetings with Mark. He says, 'We've got to talk tomorrow at 10,' and I automatically say, 'I'm busy at 10.' Mark's whole life is geared around accomplishing something. Even if he's sleeping, he's accomplishing rest. If he has to cancel a tennis game because of weather or an injury, it kills him. It's a wasted day, because he didn't do everything on his schedule. His favorite thing in the world is to cross things off that list."
McCormack's obsessive attention to detail is one of the trademarks of his company—one of many ways in which IMG has been molded in the founder's image. And though this may be the era of a "kinder, gentler McCormack," as one of his top executives, Alastair Johnston, maintains, McCormack still occasionally upbraids, even humiliates, underlings in front of their peers for mistakes that most CEOs would consider trifling. "I don't know why, in his position, he still has to be like that," says one IMG vice-president. "He can be ruthless internally."
Yet, when it suits his purpose, he can be forgiving, loyal, fair, disarmingly sentimental, and generous. Nearly all of his top officers have a story about how McCormack was at his best when they were not at theirs. Ian Todd, a former British ski racer who has been with IMG since 1971, remembers putting together match races between the Austrian and U.S. ski teams in '77. Races between the women skiers were taped first, then the competition moved to Val-d'Isère, France, for the men's events. Television cameras had been rented, and a production crew was brought to the scene. But Todd had made a big mistake. The Austrian coach had agreed to the exhibition, but Todd had neglected to clear it with Arnold Roller, the president of the Austrian Skiing Federation. The day before the event was to be held, says Todd, "Koller refused to let the Austrian men race. It cost the company a fair amount of money, and when I told Mark about it, I offered to pay him back out of my own pocket. His reaction was, 'Don't be ridiculous, we all make silly mistakes. The important thing is to learn from them, and next time you'll remember to get to the right guy.' "
The rate of attrition among IMG's top people is remarkably low. At a meeting of upper management last year, McCormack figured out that the average age of IMG's top 12 managers—most of whom came to IMG after getting an M.B.A.—was 47, and they had an average of 17 years with the company. And, despite the fact that McCormack has given his top officers no equity in the firm—except for a small interest held in some IMG businesses by Arthur J. Lafave, the chief financial officer, IMG is entirely owned by McCormack—all of IMG's top guns are certain that they would be well compensated in the unlikely event that McCormack were to sell IMG, or if he were struck by a bus.
Not that the top brass is starving now. According to one source, the top executives—Johnston, Lafave, Norton, Todd, Eric Drossart, James Erskine, Barry Frank, Peter Johnson, Bob Kain, Peter Kuhn and Bud Stanner—are paid in the neighborhood of $500,000 a year in salary and bonuses, with the bonus money, in some cases as much as 100% of salary, paid over three years in nine installments. "The golden handcuffs," says Todd. "You have to be here to get it. But the thought of leaving IMG and then trying to compete against us...it would be like beating your head against a brick wall."
Todd did try to break away once, in the mid-1970s, and attempted to take his most important client, Bjorn Borg, with him. McCormack got wind of the impending defection and confronted Todd. "I told him there was no way he could manage an athlete like Borg without a viable international presence," McCormack recalls. "The reason Borg was making a million dollars in endorsements was because we had 50 people working on them. One person, no matter how bright, could not do that. He came back, but it was a fairly testy period."
Says Todd, "He got mad, but he never held it against me. In fact, after that, if anything, Mark gave me more responsibility. And he's never, ever mentioned the incident since that day."
As for the charges that he can be ruthless with his underlings, McCormack says, "If I feel it would help someone to confront him in front of his peers, then I would do it. It's never done without calculation. If I thought a private meeting would do the job better, then I would do that." As for being cutthroat in his business dealings, McCormack tends to think of those charges as pats on, rather than knives in, the back. "If you took 100 of those stories about our being ruthless or sharklike, 90 of them would center on attitudes we have taken on behalf of our clients," he says. "I think being ruthless, in the context in which it is applied to me, is really sort of a compliment."
Let's face it, you don't build a $700 million business from scratch by being Mr. Nice Guy. "A lot of people accuse Mark of driving too hard a bargain," says Frank Olson, CEO of the Hertz Corporation and a longtime business associate of McCormack's. "I think the problem may be that Mark gets himself positioned with leverage, and if he has leverage, like any good businessman, he will use that. And a lot of people resent it."
IMG clients are, unquestionably, the beneficiaries of this leverage. Take Palmer, whose career earnings on the PGA Tour are less than $3 million. IMG's business acumen and Palmer's popularity have combined to create a financial empire for Palmer worth hundreds of millions of dollars. Among Palmer's holdings: two aviation agencies; the Arnold Palmer Golf Management Company, which employs 300 people and operates 15 resorts and golf clubs around the world; the Palmer Course Design Company, which has some 40 golf courses under construction; and six automobile dealerships that rang up some $900 million in sales last year. And how does the IMG leverage work to Palmer's benefit? Well, in 1988, Hertz, in addition to paying Palmer $400,000 for being a company spokesman, also bought more than 60,000 cars from Palmer's dealerships, "at competitive prices," says Olson. "It's not a contractual arrangement. We'd just rather do business with friends than strangers."
Palmer's name is the most widely licensed in Japan—bigger than Ralph Lauren's or Calvin Klein's. It graces things ranging from tearooms to car deodorizers. In 1989, at age 60, and 16 years removed from his last victory on the PGA Tour, Palmer earned $12.5 million in endorsements and appearance fees, more than any other athlete in the world (box, page 102).
Not a bad record to amass for your flagship client, although McCormack's success on Palmer's behalf has cost IMG. Back in 1970, Nicklaus, said to be frustrated at playing second fiddle to Palmer at the firm, severed his relationship with IMG and set out on his own. "To have held on to Nicklaus, I couldn't have expanded the company," McCormack says now. "I'd have had to personally watch over him. Instead, I was creating IMG. I'd have won the battle and lost the war."
The war, for McCormack, has always been global. The domestic market was, and still is, important to IMG, but McCormack's goal was that his firm be the dominant sports management, promotion and marketing organization in the world. Clearly his goal has been attained. "Even back in the early 1960s, when there was very little going on in the way of international business, Mark was doing endorsement deals in Japan and the U.K.," says Ed Keating, a former executive with IMG, who left the company 14 years ago and now heads his own sports management firm. "All of that is paying off tenfold for McCormack today."
"We staffed up internationally before we could really afford to," says McCormack, who has had an IMG office in London since 1966, "and paved our way through some jungles that others won't find easy to follow."
IMG's strategy has been to sign the best athlete in each country and use that association as an entrèe to bigger and better things in the athlete's homeland. McCormack added English golfer Tony Jacklin to IMG's growing stable in 1967, and 10 years later the Royal and Ancient Golf Club of St. Andrews signed IMG to be its overseas television agent for the British Open, a relationship that is still thriving.
The absolute personification of the aggressive, hard-driving American, McCormack was not exactly the first person that most members of the ultraconservative Royal & Ancient (R&A) thought should be handling the club's TV negotiations. Says Colin Maclaine, former captain of the R&A, "One of the concerns we had was that Mark controlled more of professional sport than was healthy. Another was that his methods were dubious, that he was dishonest. I looked into all of this before doing business with him and found the rumors to be quite unfounded. Mark has been very reliable and has produced the gains he said he would. When we got involved with IMG, we earned something like $100,000 to $150,000 a year from ABC. Inside of a year our overseas television contract had soared to $1 million."
Similarly, skier Jean-Claude Killy gave IMG credibility in France. McCormack signed Killy after he won three gold medals at the 1968 Winter Olympics, in Grenoble, and it was Killy who convinced the Albertville Olympic Committee (COJO) to hire IMG as its marketing arm for the '92 Winter Games.
"The McCormack image is not very good in France," says Killy, who is now copresident of COJO. "He is seen as too professional, too hard. But if we are to organize the best Games ever, we must have the best people, and IMG is the best."
With IMG's marketing program, COJO has been able to meet its goal of raising $140 million in sponsorship money from French corporations, nearly twice what the 1988 Calgary organizers took in and about what fund-raisers amassed from sponsors for the 1984 Summer Games in Los Angeles.
While other U.S. businesses are scrambling to gain a foothold overseas in time for 1992, which is when Europe's trade barriers are scheduled to come tumbling down, IMG is already firmly in place. IMG offices have been established in 10 European countries, staffed, for the most part, by citizens of the country in which each is located. And though McCormack & Co. could hardly have predicted the collapse of the Iron Curtain, IMG was nonetheless prepared when it happened. It has had an office in Budapest since 1988, already represents a number of Soviet athletes—mostly tennis and basketball players—and is helping the Soviets build their first golf course.
The global opportunities are so vast that a few giant international advertising conglomerates, such as England's Saatchi and Saatchi and Japan's Dentsu, are getting in on the action, creating sports marketing departments of their own. For now, IMG isn't worried. "We have no competitors within light-years of where we are," says McCormack. "And I can't think of two companies out there who could merge and cause a ripple in our business."
IMG's three backbone divisions are golf, tennis and television (box, page 101). "Nobody is competitive with IMG in golf," says one former IMGer. "Nobody can provide the income for its clients in that sport as IMG can, and making money for clients is the answer at the end of the day."
How much money? "Telephone numbers," says Norton. "People ask what I do for a living, I tell them I make rich people richer."
Greg Norman of Australia, who made some $10 million in endorsement and appearance money last year, is an IMG client. So are Curtis Strange ($4 million) and Nancy Lopez ($1.8 million) of the U.S., Bernhard Langer ($3 million) of West Germany, Nick Faldo ($3 million) of England, Sandy Lyle ($2.5 million) of Scotland, Ayako Okamoto ($2.5 million) and Isao Aoki ($2 million) of Japan and Ian Woosnam ($2 million) of Wales. In an era in which Americans no longer dominate golf, IMG already has a formidable multinational lineup.
The sport, popular not long ago in only the U.S. and the U.K., has been diffused—the best golfers in the world play all over the world—and IMG has taken full advantage of that realignment. For instance, on one of golf's busiest weekends last year, ending on Sunday, Oct. 15, there were five important tournaments in four different countries: the Gatlin Brothers Southwest Senior Classic in Abilene, Texas; the Suntory World Match Play Championship in Virginia Water, England; the BMW International in Munich; the Polaroid Cup Golf Digest in Susono, Japan; and the Fujitsu Ladies Cup in Ichihara, Japan. IMG, which ran the World Match Play Championship, had clients win money in all five events.
Successful golf tours have sprung up in Europe, Japan, Australia and South Africa. How does a player decide which tournament to enter? Let the bidding begin. Appearance money, airline tickets and hotel suites are all negotiable items, and IMG will be happy to do the negotiating—accepting, of course, its standard 25% commission for the service. Thus far, Deane Be-man, the commissioner of the PGA Tour, has held firm against the payment of appearance money in the U.S., where million-dollar purses have, at least for the time being, provided enough of an incentive to attract decent fields. But that too may change, as late-season PGA tournaments, such as the Southern Open and Texas Open, come to grips with the fact that the only way to lure top stars like Mark Calcavecchia, Raymond Floyd and Strange is by matching the guaranteed bucks that are available on the foreign tours.
Says Norton, "One promoter wanted Norman to play in his tournament in Australia, and I told him there was just no way. Greg wanted that week off. The promoter said, 'What would it take to get him?' I said, 'O.K., $500,000.' The guy didn't bat an eye. 'Done.' I called Greg, and his reaction was, 'How can we turn that down?' "
How, indeed? The worry, though, is that chasing the highest bidder all over the globe can bring on golfer burnout, otherwise known as the Bill Rogers syndrome. Rogers, who is now 38, was, he says, "the perfect IMG client. I liked to travel, and I could carry on a decent conversation with clients." So he traveled and conversed. In 1981, when he was the PGA Player of the Year, he won seven tournaments: three PGA events, the British Open, two events in Australia and one in Japan. He was also a member of the winning U.S. team at the Ryder Cup matches, held in England. The only problem was, even with all those victories, Rogers lost his desire to play. He has won only one tournament since and has not finished higher than 128th on the money list in the past six years. He seldom plays competitively anymore.
"Even so, I don't have too many financial problems," says Rogers. "But I had to travel an awful lot to be in a position to say that. I don't blame IMG for my loss of desire. It's not like they're holding a gun to your head saying these are the tournaments to go to."
Says Strange, who is a close friend of Rogers's, "It's tough sometimes to say no. People would get dizzy if they knew what we made off the golf course."
Some folks get dizzy with rage. When David Inglis, the promoter of a tournament called the Australian Classic, found out that Norman's asking price to play in Inglis's event was more than the first prize of 180,000 Australian dollars, he went public with it, to Norman's anger and IMG's dismay, NORMAN DOESN'T COME CHEAP ran the headline in a Melbourne paper, and the story was picked up around the world. McCormack's reaction when Norton told him about the incident? "I hope you didn't lower your price." Norton didn't. Inglis paid. And Norman played.
Says Ken Schofield, executive director of the European PGA Tour, "Appearance money has become a big issue in Europe, and I am pretty concerned about it. But the fact is, it happens. The problem lies not with the receiver but with the payer. And when the person promoting a tournament also happens to represent a stable of players of the caliber of Lyle and Faldo and the others, that can present a conflict of interest."
No kidding. IMG says that as long as everyone knows beforehand that relationships of that sort exist, there is no conflict. But uneasy lies Schofield's hegemony over professional golf in Europe. IMG runs nine of the 34 events on the European tour, including four tournaments that IMG started: the Suntory World Match Play Championship, the Lanc‚Äö√†√∂¬¨•me Trophy in Paris, the Dunhill Cup at St. Andrews and the Austrian Open near Salzburg. IMG also produces the telecasts of 12 tournaments and represents virtually every top European player except Seve Ballesteros. That invests IMG with an enormous amount of leverage, which it is not reluctant to use to get its wishes.
"McCormack is basically all-embracing," Schofield says. "While we do use other promoters, IMG runs more of our tournaments than anybody else. But I do not think that is necessarily bad. It may be very well and nice for those of us involved in the sports industry to tell the promoters that they can only promote, to tell the broadcasters they can only broadcast. But the countries we live and work in don't allow us to do that. Whether McCormack's power is good or bad for sports just is not an issue. He can do what the law says he can."
And that means he can do virtually everything in his power to keep IMG competitors out of the way. "There was the Moroccan Open in 1986, for example," says a former IMG employee. "ProServ [an Arlington, Va.-based firm that is one of IMG's larger competitors] got the deal to market the event and recruit the players. IMG lost the bid. McCormack's immediate reaction was, 'How can we screw it up? How can we make them look bad?' The way to do that was to hold back IMG players. So that's what he tried to do." (As it turned out, it wasn't necessary. According to ProServ, the tournament never got off the ground because of concerns about security.)
Responds McCormack, "I'm not going to deny I might have said that. We do not go out of our way to make our opponents' special events look good, and they don't go out of their way to make ours look good."
And special events are the direction in which golf is heading, much to the chagrin of traditionalists. Last year, for instance, IMG—which created (with producer Don Ohlmeyer) the monumentally successful Skins Game—introduced the Australian Skins Game, the Seniors Skins Game and the RMCC Invitational, hosted by Norman. All are big-name, made-for-television events of which IMG owns all or part. It so happens that Norman's tournament was scheduled opposite the World Cup, a 35-year-old team event that, like IMG's five-year-old Dunhill Cup, is similar to the Davis Cup in tennis.
"Burch Riber, who runs the World Cup, swore at me up and down that we were trying to put him out of business," says Norton. "He wanted to know why we couldn't leave the little guys alone. I told him that November 16-19 were the only dates the PGA had available to hold Greg's tournament. Do we sit around and dream up events to run opposite something we aren't involved in? The answer is no. Are we unhappy when one of our events conflicts with something put on by a competitor? Put it this way, it's not an unpleasing experience to us. But we know we can't run every event, and we don't try to."
It may not be long before IMG owns the very land beneath the golfers' feet. "Golf course design and developments could represent huge, huge dollars for us," says Norton, who cites a report by the National Golf Foundation that says a new course would have to open every day from now until the year 2000 to keep up with the increasing demand. And that's just in the U.S. "Asia, especially Southeast Asia, is going to be an astonishing growth market in golf," says IMG's Johnston.
In Europe, it has been estimated that the number of recreational golfers will double in the next four years. Through one of its subsidiaries, IMG is developing golf and leisure resorts in France, Ireland, West Germany and Belgium and has ones in Hungary and Turkey on the drawing board. McCormack is also working in partnership with Langer Buckley, a golf course design and construction firm based in Germany and Switzerland. Together they have already designed courses in France, Germany, Italy and Austria. In return for a lower fee up front, IMG is usually willing to accept equity in the development projects.
"Then what we say is, when it's finished, if you want a tournament, we'll organize it," says golf course developer Terry Buckley, who opened up shop with IMG and its client Bernhard Langer to form Langer Buckley in 1986. "We may not be able to tell you which tournament it will be, but we're absolutely sure we can do it. It's all part of the A to Z concept. Mark got fed up with taking IMG tournaments to various golf courses around Europe and making those courses famous and their owners very much richer. So the thinking was, why keep creating this cachet for someone else? Why not create it for IMG's projects?"
The strategy makes perfect business sense. But has it made IMG too powerful and created conflicts of interest? If IMG wanted to move one of the tournaments that it runs—say, the German Open—to a new resort that it has built, owns equity in and wants to promote, what's to prevent it from doing so? The tournament organizers would be powerless for fear of alienating the company that represents Langer, Faldo, Woosnam, Norman, Lyle et al. As for the players, they don't care where tournaments are held, as long as they get their appearance fees. And IMG can afford to be generous with appearance fees since the highest ones go mostly to its own clients, and 25% of those fees goes right back to the company coffers. And Schofield isn't about to cross swords with McCormack. His worst nightmare is that he will somehow fall out of bed with IMG, and McCormack will decide to create a rival European tour.
Sinister as all this sounds, IMG has not, to date, abused its considerable power. McCormack is a fine amateur golfer—a seven handicapper who is struggling to get closer to the scratch game he used to play—and an avowed Anglophile who insists that he would be mortified if the British golfing establishment turned against him. "Mark makes us money, he does his job, and he's done it all with a great regard for the game of golf," says Maclaine. "We feel his heart is in the game."
IMG's tentacles are even more embracing in tennis, where, according to Norton, "there is more chaos, which gives us more freedom." In addition to representing 10 of the top 30 men, including Ivan Lendl, Mats Wilander and Andre Agassi, IMG has four of the top 10 women, including Martina Navratilova and Arantxa Sanchez Vicario. Fourteen-year-old star Jennifer Capriati, who had $5 million in endorsement agreements before playing her first pro tournament, is a recent addition to the IMG fold, and Chris Evert, who retired last year, earns millions in endorsements via IMG.
The company has television and promotional contracts with three of the four Grand Slam tournaments and has virtually bought the newly formed ATP Tour. In March 1989, for a minimum guarantee of a whopping $56 million over the next three years, IMG became the exclusive agent for the ATP's sponsorship rights and domestic and international television sales, and the promoter of the tour's singles finals, which will be called the ATP World Championships. "It's not the players' tour anymore, it's the IMG tour," said Thomas Muster, Austria's top player, after the announcement of the ATP-IMG arrangement. "This is very bad for tennis."
But not bad for IMG, which in recent years has devoted more and more of its resources to event management, a more lucrative, less hazardous field than its core business of client representation. As McCormack once pointed out to an IMG executive: "Bjorn Borg can break a leg; Wimbledon cannot."
IMG recouped part of its huge investment in the ATP Tour, which has an 11-month, 75-tournament annual schedule, when IBM agreed to pay at least $9 million over the next two years, with an option for a third, to be the title sponsor of the tour. The pact ended an embarrassingly long search for a sponsor and brings in far less money than IMG had hoped for. But McCormack says, "We've exceeded by a lot our projected earnings for the world TV rights."
"McCormack's doing a great job of developing an empire," groans Philippe Chatrier, head of the French Open, which is the only Grand Slam event in which IMG does not have a significant stake. "I'm afraid he walked into a vacuum."
Since the era of open tennis began in 1968, there has never been a governing body for professionals with the clout to serve the best interests of the game. Money has been the ruling factor. The payment of appearance fees has been standard operating procedure at many tournaments. In some cases, as with golf, those fees exceed the top prize money. At an ATP San Francisco tournament earlier this year, Agassi, the No. 2 seed, was said to have been paid $175,000 just for showing up. The No. 1 seed, Brad Gilbert, received $20,000. Agassi earned only $32,400 for winning the event, and Gilbert was paid his fee even though he lost his first-round match to a virtual unknown.
The recent history of tennis has seen a free-for-all struggle for power among IMG, ProServ, Advantage International, the International Tennis Federation (ITF), the Women's International Professional Tennis Council, the Women's International Tennis Association, the ATP Tour, various national governing bodies, such as the U.S. Tennis Association, and independent operatives like Ion Tiriac.
That chaos has suited IMG to a T, because the company feasts on disarray. "With the ATP package, IMG is dominant," says Eugene L. Scott, 52, a former Davis Cup player and the editor-in-chief of 'Tennis Week. "If you were a 17-year-old player and saw what IMG was going to undertake, you would sure as heck want to be part of the IMG stable. And once there, well, information is money in this business. Someone is always looking for players for outings and the like."
How about if you are a 12-or 13-year-old player? You might already be in IMG's stable, though unofficially, by being enrolled in Nick Bollettieri's Tennis Academy in Bradenton, Fla., which IMG bought for an estimated $8 million in 1987. "It's all part of McCormack's idea of vertically integrating IMG," says one former employee. "He'd like to control the means of production so he can get the young players like Monica Seles."
Bollettieri students Seles, Agassi and 17th-ranked Jim Courier all signed with IMG after the company bought the academy. But Kain, the head of IMG's tennis division, vigorously denies that IMG purchased the academy to have control of a tennis factory. "There's cheaper ways to recruit junior prospects than that," Kain says. "It wasn't in the factoring one iota. We did factor in the ability to open Nick Bollettieri tennis centers around the world, however."
Some of these tennis centers are targeting serious B and C level adult players as their market—all part of IMG's move into resort management. Other Bollettieri Tennis Centers will be modeled after the academy in Florida, which is set up to train world-class junior players who live, go to school and play tennis there full-time. IMG recently opened one such center in Italy.
The company is also trying to sell less developed countries on the idea of letting IMG build and run national training centers based on the Bollettieri approach, a concept that IMG began exploring once tennis became an Olympic sport. Thus will IMG sow the seeds for the future representation of a generation of tennis stars from Thailand, say, or Kenya, while at the same time building a working relationship with the governments of those countries. Should those relationships be fruitful, who do you think would get the call to organize the first Kenyan Open? The IMG web that will ensnare the tennis player of the 21st century is being woven today.
"Why don't I deal with McCormack?" asks Chatrier, who, like many other members of the tennis establishment, feels that IMG should represent clients or tournaments, but not both. "I have an increasingly hard time with some of the things he promotes, the exhibitions like that tiebreaker Shootout in Milan. I am a man of tradition, so how can I be associated with that?"
The Shootout, which will be held for the first time in November, is an IMG creation that is being promoted as tennis's answer to the Skins Game. It is a made-for-television event that will last two hours. Eight players, including IMG's Lendl and Agassi, will play a minitournament of 12-point tiebreakers. The winner of each tiebreaker will advance toward a grand prize of $200,000.
"Things like that are not good for the sport," says Chatrier. "It isn't right to make a circus of the game."
And yet, from IMG's perspective, creating the Shootout is merely another method of generating a money-making opportunity for its tennis-playing clients. The company isn't in the business of preserving traditions. If there is a television audience willing to watch an unorthodox event like the Shootout or the Skins Games, well, isn't that what business is all about, identifying and satisfying untapped markets?
Even Chatrier has come to realize that. Recently, he lent his name and support to a special, nontour event called the Grand Slam Cup. The 16 players with the best records in this year's Grand Slam events will meet in Munich in December to vie for the richest purse in tennis history. First place alone will be worth $2 million. Vive la tradition.
Throughout most of its existence, IMG placed little emphasis on team sports. That is changing. "We've been representing football and basketball players for 20 years, but we've never put a lot behind it until recently," says Peter Johnson, head of IMG's team sports division.
Lower commissions is the main reason for this neglect. An agent for a football or baseball player—and there are hundreds of these agents—generally gets a 3%-5% cut of the client's contract, as opposed to the 25% or so that IMG charges its golfers and tennis players. Because of the regional nature of fans' allegiances, team sport athletes are not as broadly marketable as those involved in individual sports, unless they are superstars like Joe Montana or Michael Jordan. Recently, however, the dollar values of the team contracts have grown so huge—anyone from an infielder who hits .250 to an untried football draft choice may qualify for a multimillion-dollar contract—"that the lower percentage we get is still worthwhile," says McCormack.
How, then, to break into the market? Johnson's idea was, if you can't beat them, buy them. IMG approached a number of the larger baseball agents about acquiring their businesses and in July 1987 bought the firm of Reich, Landman and Berry. IMG's baseball stable had only 10 clients then. Today, with Tom Reich as division president, it has 75, including Jack Clark, Tim Raines, Ruben Sierra, Julio Franco and Steve Sax. "Why get in with IMG?" asks Reich. "What we are seeing in the 1980s is only a precursor of what's to come, a sky's-the-limit type poker game [as baseball and other team sports become increasingly international]. IMG gave me a chance to expand my horizons." Since October, IMG's baseball clients have signed contracts worth more than $50 million.
To beef up its basketball and football divisions, in 1988 IMG took on two more sports agents, Larry Fleisher (the former head of the NBA Players Association, who died suddenly of a heart attack in May 1989; his sons, Eric and Marc, have taken over for him) and Ralph Cindrich, plus their clientele. Today, IMG represents 25 NBA players, including A.C. Green and Mike Gminski, and 40 NFLers, most notably Herschel Walker, Al Toon and John Offerdahl. IMG has only three hockey clients, but they're beauts: Mario Lemieux, Luc Robitaille and Paul Coffey, all of whom Reich signed after joining IMG. In sheer numbers, IMG now handles more team sport athletes than anyone else in the business, and it expects to acquire even more agents and their big-name client lists. Says McCormack, "Basketball has the biggest export potential of the American team sports. Internationally, fans still need more education in football and baseball."
And you can bet that IMG will be part of that educational process, particularly in Great Britain. In March, a newly formed satellite station called the BSB Sports Channel, the ESPN of England, began broadcasting. The company that landed the $250 million, five-year contract to provide some 5,000 hours of sports programming a year to BSB is Trans World International (TWI), the television and film branch of IMG.
TWI purports to be the world's largest independent source of televised sports, producing more than 100 sports shows annually, including the World Professional Figure Skating Championships, the Skins Game, the Seniors Skins Game, several American and European PGA events and some events that are colorfully referred to as trashsports. The Superstars—which has been running for 18 years—Survival of the Fittest, American Gladiators and the World's Strongest Man fall into that category.
One of TWI's most successful ventures is a program called Trans World Sports, a weekly, hourlong show that summarizes the week's sporting events on five continents—from major league baseball to Australian rules football to the Mount Cameroon footrace to badminton in China. The program is put together in London on a scant weekly budget of $75,000, exclusive of salaries. It is translated into 15 languages and distributed to 61 countries, including the U.S., where it is carried by SportsChannel. TWI officials brag that Trans World Sports is the most widely viewed program in the world. "It's the show of the week in Zimbabwe," says Stewart Binns, the program's executive producer. "We've made some big friends covering events in Africa."
Big friends who, no doubt, sometime in the 21st century will be contacted by IMG about running the inaugural Zimbabwe Open.
McCormack closely guards IMG's profit figures, but in terms of revenues, TWI contributes 28% of the company's revenue. And the feeling within IMG is, you ain't seen nothin' yet. "Television is a mature business in the United States, but it's exploding in Europe," says Peter Smith, a senior vice-president of TWI. "And with so many non-Americans winning major sporting events, the climate is like it was during the sports television boom in the U.S. in the 1960s."
Says Drossart, who runs TWI in Europe and the Middle East: "At the beginning of the 1980s, there were only three television stations in the U.K., three in France, two in Spain, four in Italy and three in Germany. Now there are five more stations in Great Britain. France has seven channels. West Germany, seven. Italy, nine. And Spain has three new ones. They need programming."
So, eventually, will the newly liberated Eastern Europeans. The opportunities for IMG there are vast, but they will be slow to unfold, primarily because of the lack of hard currency in those countries. What McCormack will probably do initially is convince a company that would like to sell a product in Eastern Europe—Heinz, for example—to finance the airing of an IMG program like Trans World Sports.
TV stations in Europe will be bidding enormous sums of money for an array of sporting events. IMG has already started the ball rolling in that direction by paying $32 million over three years—almost a quarter of its BSB budget—to televise 40 English and Scottish League soccer games. Other sports that IMG is planning to air on BSB include cricket, snooker, rugby, boxing and Monday night football from the U.S. And, of course, the ATP Tour, which the company already owns the rights to.
The 5,000 hours of sports programming that BSB will air each year are 5,000 hours in which IMG could subtly or shamelessly promote its own clients and special events. Certainly that is one of the fears of IMG's critics, who note that with so many governing bodies, big-name stars and corporate sponsors feeding from the IMG trough, the integrity of the games themselves are at risk. Who is left to block the path of IMG's relentless commercialization of sports in its pursuit of profits? How far down that road are the powers-that-be in sports willing to travel? "An Olympic athlete running in a Hertz uniform is a generation away," predicts McCormack, without regret or apology. "We're heading in that direction."
And no doubt McCormack would like to be around to pull off that particular marketing coup. He has no plans to hand over the IMG reins anytime soon. "Most people retire to do something they've always wanted to do," he says. "I'm already doing it. But I have a lot of intricate plans about what happens to the company when I die. I think I've got a plan that would keep the key people in place after I'm gone, but no one will know what that plan is until something does happen."
McCormack's considerable ego would not allow his successor to be anything less than a heavyweight. Ideally, he, or she—Nagelsen has indicated that she would like to take an active role in the business—would be someone with an international reputation, managerial skills and vision. Oh yes, definitely vision. Because, make no mistake, IMG did not get to be in the position it is in today by exploiting its conflicts of interest, terrorizing the competition and shoving trashsports down the throats of an unwilling public. McCormack foresaw the future and, in the best traditions of American industrialists, prepared to meet it. McCormack not only built a company, he built an entire industry. And in that sense, Mark Hume McCormack and the four-letter word he created—IMG—will go on living for a long, long time.
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LOUIS PSIHOYOS
THREE CHARTS
GREG WAKABAYASHI
THREE ILLUSTRATIONS
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ENRICO FERORELLI
AT 59, MCCORMACK (STANDING) IS STILL VERY MUCH IN CHARGE
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BRET WILLS
THE MCCORMACK PHILOSOPHY FILLS THESE VOLUMES AND MORE
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COURTESY OF IMG
IN THE 1960S, MCCORMACK REPRESENTED NICKLAUS (LEFT), PLAYER AND PALMER ALL AT ONCE.
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RUDI FREY
IMG PROMOTED THE POPE'S 1982 TOUR OF GREAT BRITAIN
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RONALD C. MODRA
MCCORMACK'S PASSION: CROSSING ITEMS OFF HIS AGENDA
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JOHN IACONO
MCCORMACKS TEE IT UP IN SCOTLAND: MARK, LESLIE, BRECK, DAUGHTER-IN-LAW ANNE AND HER HUSBAND, TODD
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ENRICO FERORELLI
NAGELSEN, A MCCORMACK CLIENT BEFORE SHE WED THE BOSS, WATCHES OVER MARK IN THEIR ORLANDO, FLA., HOUSE
TV WILL SOON BE THE BIGGEST SOURCE OF IMG REVENUE
29%
Client Management
28%
Television and Film Production and Sales
23%
Corporate Marketing
20%
Event Management and Marketing