Last thursday, during the sun-drenched first round of the AT&T Pebble Beach National Pro-Am, Ted Forstmann, a 65-year-old New York businessman with fluffy white hair and a nobody-rushes-me gait, was smack-dab in the middle of Pebble Beach glamour. A few holes ahead of him on the Spyglass Hill course was golf's Elvis, Phil Mickelson, on his way to shooting a snazzy 62. A hole ahead of Forstmann was Bill Murray, fully engaged in his role as a pied piper for grownups, at one point leading his gallery in a rendition of the old Del
Shannon hit Runaway. Right behind Forstmann was Donald Trump, with his thick waist and weird orange hair, chatting up his fans while sizing up improbable recovery shots. As for Teddy, as his prep-school classmates still refer to him, he was playing with his friend Vijay Singh, the best golfer in the world, and being entouraged by a lady friend maybe half his age and a small group from Forstmann Little & Co., the buyout firm Forstmann runs and Singh endorses. It was a big day. For the first time since he bought IMG last fall for a reported $750 million from the heirs of world-class extrovert Mark McCormack, Forstmann was out front as a public sportsman representing the agency.
IMG manages Vijay Singh and Tiger Woods, the Williams sisters, Derek Jeter and hundreds of other baseball, hockey, football, soccer and tennis players. (The company manages models and announcers too.) IMG, which also owns a television production company that produces a staggering 6,000 hours of sports programming annually, is one of the biggest sports companies in the world. For years, Forstmann has been a regular in The Wall Street Journal and in the gossip columns. (He had a stint as an escort for Lady Diana, and there was a period when he was dating Elizabeth Hurley, the actress and model, who is an IMG client.) But from now on he'll be a sports-page bold-face name too.
When Forstmann bought IMG, he flew to the company's headquarters in Cleveland and met with employees. They had come up, most of them, under McCormack, who cared chiefly about the footprints he left and the athletes he managed, many of whom had his cellphone number. McCormack ran a global company employing about 2,200 people as a small family business, where only the owner got truly rich but almost nobody got fired. "Mark had his way of doing things, and I've got mine," Forstmann said that day. "One thing I have is a knack for making money." For some, his words were encouraging. Others wondered if their days at IMG were numbered. The agency has been reducing its workforce since
McCormack's death in May 2003. A year from now IMG is expected to have about 1,500 employees and is currently undergoing a substantial reorganization. The company is slimming down and tightening up. Many business executives, even IMG competitors, say the agency is likely to flourish under more disciplined management.
In early January, Forstmann asked two dozen of IMG's leading managers, nearly all of them men, to meet in New York, where Forstmann lives and where Forstmann Little is located. They gathered in a private room at 21, the clubby midtown Manhattan restaurant, and sat at a long, narrow table. Forstmann, who had installed himself as IMG's chairman, sat at one end, while the man he had named as president, Bob Kain, sat at the other. The big news was this: For the first time in its 45-year history, IMG would begin a stock option program. At one time sharp young lawyers and MBAs came to IMG because they loved sports and wanted to be around athletes. They stayed because they fell under the spell of McCormack. With Forstmann running the show, it's a brand-new day. Now the incentive to stay is the prospect of a monster payday down the road if Forstmann takes IMG public or decides to sell it, in whole or in pieces, for far more than what he paid for it.
As a dealmaker Forstmann has had two high-tech clunkers in the new millennium, XO Communications and McLeodUSA, but his colossal success with Gulfstream jets and Topps trading cards and Dr Pepper and a dozen or so others over the past 30 years has already made him very rich, with houses and apartments here and there, his own jet, a string of fabulous girlfriends (he has never married) and club memberships from Bel Air in Los Angeles to Shinnecock Hills in Southampton, N.Y. (When Singh played in the U.S. Open at Shinnecock last year, he stayed at Forstmann's Southampton summer home.)
So why did he buy IMG? "To make money for my investors," he said last month, as he sat low in a sleek chair in his corner office in Manhattan, 44 floors above Fifth Avenue. But you get the feeling there may have been a motivation even greater than money. The office gave clues. All around him were artifacts from a life that has crisscrossed with George H.W. Bush and Nelson Mandela and Pope John Paul II. There was also a framed Augusta National scorecard that showed Forstmann shooting 76 and Singh 65, and other evidence of his sporting life. As a boy growing up rich in Greenwich, Conn., he had an abiding love for the Brooklyn Dodgers, and today he owns the film rights to The Boys of Summer, the seminal book about the team. In his winters at Andover and Yale, Forstmann was, he says, "a really good goalie." His mother, Dorothy Forstmann Sammis, diminutive and domineering, pushed him into tennis and away from baseball as his spring sport in high school, and he became good enough to play in elite junior events on the grass courts of Forest Hills. For years he has run a charitable pro-am doubles tennis event called the Huggy Bear at his Southampton home right before tennis's U.S. Open. As kids Forstmann and his brothers, John, Tony and Nicholas, whose death in 2001 at age 54 devastated the family (Forstmann also has two sisters), stomped all over country club courses in Greenwich. Today Forstmann carries an eight handicap at three top-shelf Long Island clubs, Deepdale, the National and Shinnecock Hills. In the early 1990s he asked McCormack, whom he'd met through tennis, to help him examine the books of the Los Angeles Dodgers to see if he should buy the team he had rooted for as a boy. A decade or so later he made his sports play through his purchase of IMG.
McCormack was one of the great salesmen of the 20th century. He sold his athletes so well because he was in awe of their talents. Forstmann is not like him. You don't meet Forstmann and immediately find him warm or charismatic. He has a reputation for being prickly and tough on the help. And he is busy, focused on his work and whatever other tasks are at hand. His Yale hockey teammates have been holding reunions for 40 years, but Forstmann never goes.
He manages himself wisely. Golf represents roughly 25% of IMG's total business (TWI, the agency's television production wing, accounts for about 50%), but Forstmann lets his golf people, most notably Mark Steinberg, who was recently named codirector of the golf division, handle the details. Steinberg's main job is to make sure that Tiger Woods is happy. McCormack, in the early 1960s, was famously aligned with Arnold Palmer, and that caused Jack Nicklaus to leave the fold. But Woods and Singh are unlikely to leave IMG as long as they believe no other firm can make them more money, a position that reflects the consensus among IMG's other golf clients.
If chitchat is not Forstmann's strong suit, forging working alliances is. In a three-page intraoffice memo dated Jan. 21, Kain identified the five men and one woman Forstmann named to IMG's first outside board of directors. Among them are Steve Bornstein, the former CEO of ESPN who now runs the NFL Network; John Breaux, the former U.S. senator from Louisiana and a conservative Democrat; and Chris Davis, the chairwoman of McLeodUSA, a poorly performing telecommunications company of which Forstmann Little is the controlling stockholder. All of the IMG directors are regarded as able people with Palm Pilots overloaded with useful names and numbers. If Forstmann's pattern holds, the only thing he'll want the board members to do is make introductions. They won't be paid until the company is sold, and then they'll each get a big, fat parting gift, a check with at least six figures.
On the McLeod website there's a page dedicated to Singh, congratulating him for being named the 2004 player of the year. The picture of Singh shows him wearing a Forstmann Little golf shirt with a McLeod emblem on the sleeve. Another page lists the McLeod board of directors, Daniel Snyder, the owner of the Washington Redskins, among them. No agency represents more NFL draft picks than IMG, and it never hurts to be tight with management as well.
Regarding the new IMG board, Kain wrote in the Jan. 21 memo that "there is no business executive this group will be unable to access." The comment sounds like a boast--and much like Forstmann--but it was meant as a statement of fact. Is there anything improper in any of this? No, it's how roads are paved in the world of American business. Making money is a lot easier if you're already on the inside. And Forstmann--because he is a white man, because of his schooling and his club memberships and his track record of making money--is such an insider that he can have his secretary return unsolicited telephone calls, even the ones from his social and financial equals.
Forstmann reserves some of his wealth and time for good works, most of them involving children. He is the godfather to Hurley's son. He helps fund a camp in Aspen for children with cancer called Silver Lining Ranch, which is run by Andrea Jaeger, the retired tennis pro. He was the cofounder of a charity called the Children's Scholarship Fund. In the mid-1990s he became the legal guardian of two South African orphan boys. The older, Siya, is now an undergraduate at Pepperdine, and the younger, Everest, attends a boarding school in upstate New York and is a close friend of Singh's 14-year-old son, Qass. Of the scholarship fund, Forstmann said, "I'm not going to tell you how much money I put up, but you can look it up." (It's $50 million.) Of his younger son, he said, "I'm going to get him into Pepperdine too."
He's one of the masters of the universe, to use Tom Wolfe's term from The Bonfire of the Vanities. Forstmann is accustomed to control. He has told people that Hurley was thinking of leaving IMG and he persuaded her to stay. But when Forstmann learned that Sports Illustrated had called Hurley's office to speak with her, he became furious. Hurley seemed fine. She responded to questions quickly by e-mail, praising Forstmann as a father, godfather and adviser on matters personal and professional. She said, "Teddy is brilliant company. I can sit and chat to him for hours. I wouldn't want to play backgammon [for money] with him, though!"
Ever since he became prominent in the business press, in the 1980s, during the heyday of the leveraged buyout, writers have been fascinated with Forstmann. Some view him as part Jay Gatsby, the wealthy rogue protagonist of The Great Gatsby, and part Nick Carraway, the novel's insider narrator. The authors Bryan Burrough and John Helyar took the title of their book Barbarians at the Gate, about the sale of RJR Nabisco, from comments by Forstmann, one of the losing bidders, about the winner, Kohlberg Kravis & Roberts. The New Yorker ran a long piece on Forstmann a decade ago, praising him as the king of the leveraged buyout. Last year, when the state of Connecticut settled its civil suit alleging improper management of state pension money by Forstmann Little & Co., the novelist Jay McInerney wrote a substantial and sympathetic piece about Forstmann in New York magazine. Michael M. Thomas, a writer and former investment banker who went to Yale four years ahead of Forstmann, has often noted Forstmann's comings and goings, business and otherwise, in the pages of The New York Observer. In an interview last week Thomas said, "Teddy's all right, you just get the feeling with him that the fix is in."
Early in 1994, when Forstmann was running Gulfstream, he asked McCormack, one of his Gulfstream board members, what he should do to sell more jets. McCormack told him to go to an event at which potential jet buyers congregated: the AT&T Pebble Beach National Pro-Am, a tournament loaded with corporate chieftains with budgets for jets. Forstmann told McCormack that he hadn't played golf in years, that he didn't have clubs or a handicap or any idea how to get into the event, which is exceedingly difficult to do. In a matter of days McCormack, who was sometimes described as the most powerful person in sports, had the whole thing wired: Forstmann was in, and for a partner he had a name player, Vijay Singh. When McCormack died, he left the overwhelming majority of the company to his second wife, the retired tennis player Betsy Nagelson McCormack. Forstmann knew her and persuaded her, by offering the most money and by saying he would "protect Mark's legacy," to sell the company to him.
On the eve of last week's AT&T Pro-Am, for the first time as the owner of IMG, Forstmann hosted his annual pretournament get-together, still known as the Gulfstream Dinner, at the Pebble Beach restaurant Club IXX, where there's a steak on the menu for $90. The best wines were poured--Forstmann has expensive taste in wine and art, among other things--and the next morning he played in the first round of the tournament.
He hit some good shots and some superb putts, but he also had many more duffs than you would expect from a man who carries an eight handicap. He chunked, he topped, he pulled, he sliced, he picked up often. He tossed clubs. Mild tosses, nothing remotely violent, but it brought to mind a Southampton summer joke: Look, a helicopter's coming in. Oh, no it's not--it's just Teddy's putter again.
The Pro-Am was clearly important to Forstmann, and he left nothing to chance. He took a long lesson from Dave Pelz, the short-game specialist, right before the tournament, and hired a professional Tour caddie for the week. Forstmann's bag was one of those gigantic Tour models filled with Cleveland clubs, just like Singh's. His name was sewn on the front. He and Singh wore shirts with forstmann little & co. embroidered above the left breast. He never quit, taking three to five practice swings before most shots and hundreds of empty-handed phantom swings, a la Tom Watson, over the course of the round. But on Thursday it was all for naught.
"The worst round of golf I've ever played," Forstmann said after coming off the course. If he had finished all 18 holes, his score would've been well into the 90s. "In my practice round yesterday I shot 74 or 75," he added. He was left wondering what all golfers wonder: Where does it go when it goes?
"Teddy is BRILLIANT COMPANY," says Hurley, a former girlfriend. "I can sit and chat with him for hours. I wouldn't want to play backgammon [for money] with him, though!"
"The worst round of golf I've ever played," Forstmann said after coming off the course. "In my practice round yesterday I SHOT 74 OR 75," he added, wondering about his performance.
Photographs by Robert Beck
Photographs by Robert Beck
Forstmann was first paired with Singh in 1994, and they've been partners ever since.
ROBIN PLATZER/TWIN IMAGES/ONLINE USA, INC./GETTY IMAGES
Forstmann with (clockwise from above) Hurley, guests at a benefit for the Silver Lining Ranch, Sarah Ferguson, Jaeger, and as CEO of Gulfstream.
TWO COLOR PHOTOS
ARNALDO MAGNANI/GETTY IMAGES (2)
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EVAN AGOSTINI/GETTY IMAGES
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ROSS KINNAIRD/GETTY IMAGES
Forstmann posed at the Old Course with (from top left) South African tycoon Johann Rupert, Singh and Ernie Els, and with Oprah Winfrey in 2001.
JEFF CHRISTENSEN/AFP/GETTY IMAGES
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Photographs by Robert Beck
Despite a long lesson from Dave Pelz before the AT&T, Forstmann didn't play like an eight handicap last Thursday.