Businessweek Archives

Advantage, Mark Mc Cormack?


The Corporation

ADVANTAGE, MARK McCORMACK?

Want to put your company's logo on Jim Courier's sleeve? Back a concert tour by Jos Carreras? Go golfing with Greg Norman? Have Joe Montana pitch your product? Or perhaps you'd like to boost your brand with an entire event--an ice show, opera, or golf championship?

Take a number, and Mark H. McCormack will be right with you.

At 63, McCormack is the granddaddy of modern sports marketing. Through his International Management Group, he controls a billion-dollar global empire that stretches beyond sports and into areas as diverse as classical music and modeling. McCormack is a never-heard-of compared with the stars he represents--Nancy Lopez, Itzhak Perlman, and Monica Seles, to name a few. But he made a splash with his 1984 common-sense business best-seller, What They Don't Teach You At Harvard Business School, and in 1990, Sports Illustrated called him the most powerful man in sports. That was then. Last month, the magazine put Nike CEO Phil Knight on its cover and dubbed his company "the most powerful force in sports."

Small thing, maybe. Yet it points up the fact that IMG is feeling more heat than it ever has in its 33 years. Sure, IMG remains a towering presence. Says Barrie Gill, chairman of CSS International Holdings PLC, a British sponsorship consultant: "It would take a lot of Davids to knock that particular Goliath over." But everywhere McCormack looks, there's a kid with a slingshot.

That wasn't the case in the sizzling '80s, when IMG revenues grew more than sixfold, to some $700 million. (McCormack is majority owner and declines to divulge precise numbers.) And while that pace hasn't continued in the torpid '90s, IMG has still managed to hit close to the $1 billion mark. "I'd like to tell you we were brilliant and we knew how to deal with the recession," says McCormack, "...but we were also very lucky to be in the right place" as advertisers plowed more into sponsoring sports and special events as an alternative to the glut of traditional messages.

That trend is likely to continue, at least for now. But the very growth that turned IMG into a powerhouse has created a string of new challenges for McCormack.

Nike Inc. is beginning to represent athletes and is hooking up with Hollywood czar Michael Ovitz of Creative Artists Agency to try to stage major sports events--two businesses that are pillars of IMG. Networks are throwing money at late-night talk-show hosts now--not sports. Organizations that once paid IMG to peddle the TV rights to their sporting events have cut out the middleman. Sponsors are demanding concrete results. A field of smaller rivals has mushroomed. And IMG, which creates sporting events while representing athletes that play in them, continues to be dogged by conflict-of-interest charges.

Perhaps the scariest blip on IMG's radar screen is Nike CEO Knight, who has talked with McCormack about buying IMG. Nike, concerned about maintaining closer control over the image of top endorsers such as Michael Jordan, is venturing into athletic representation. So far, it's only fully managing four athletes--Jordan is not one of them--and won't say much about its ambitions.

TOP GUNS. While the threat from Nike, especially its venture with Ovitz and CAA, is more psychological than real at the moment, it underlines the fact that sports and special events have become so lucrative that more and more players want in on the action. International Events Group in Chicago estimates that sponsors worldwide paid organizers of events $8.5 billion in 1992.

With its array of top talent, from Nick Faldo to Wayne Gretzky, and control of events, from the tennis championships of the ATP Tour in Frankfurt to the World Triathalon in Nice, IMG has a far juicier slice of that pie than anyone else. McCormack sees "pretty decent" growth this year and "exceptional" growth in 1994. Some of the reasons: IMG will start promoting and running the world figure-skating championships. Its TV unit, Trans World International (TWI), recently helped negotiate the sale of U.S. TV rights to the 1996 Atlanta Olympics. As the new marketing agent for the U.S. Volleyball Assn., IMG has guaranteed the organization at least $30 million and will help stage 35 or 40 events a year. (Look for a new pro volleyball league after the next Olympics.) Next year, TWI, producer of the Skins Game and more sports programming than anyone except the networks, aims to help get a cable-TV golf channel off the ground (page 73).

Besides all that, IMG is talking for the first time about joint ventures with deep-pocketed partners. One possibility: starting a new U.S.-style pro football league in Europe that could be affiliated with the National Football League.

Clearly, Cleveland-based IMG is looking to be a lot more than a go-between these days. McCormack long ago recognized the importance of running events, not just representing athletes who compete in them: "Wimbledon doesn't break a leg, sprain an ankle, fail a drug test, or lose six-love, six-love," he says.

For 15 years, IMG arranged the NFL's broadcasts overseas. Last year, the NFL took the job in-house. "If you own an event or create it, that isn't going to happen," says McCormack.

So IMG is buying events, such as the Detroit Grand Prix and some Virginia Slims tennis tournaments. It has entered into a partnership with the European PGA Tour to produce events and distribute TV worldwide. And IMG has guaranteed the ATP Tour $100 million over three years for its TV and marketing rights. McCormack's tennis game doesn't stop there. IMG owns the Nick Bollettieri Tennis Academy and handles merchandising and sales of foreign TV rights for Wimbledon.

That pervasive presence and IMG's cocky attitude have long drawn criticism. But they also help explain why McCormack can appear so unconcerned about Nike and CAA. "These guys are capable and they're rich," says McCormack, "but it's a big world and a big market. We're certainly not worried about meeting our payroll."

"TOTALLY DOMINATING." McCormack boasts that no one competes globally with IMG. "Our size in our business is totally dominating," he says. With 62 offices in 21 countries and 60% of its revenues from overseas, IMG has a global reach unmatched by either ProServ Inc. or Advantage International, the companies most often considered its rivals. Hundreds of boutique consultants that have sprung up are pecking at IMG's business, however, and many marketers now have their own special-event departments.

At the same time, companies are "pickier and more conscious of results," says IMG Senior Vice-President Robert Kain. IMG also has to be more of a marketer these days, using promotions to help companies get more bang out of their sponsorships.

Some critics snipe that IMG is more concerned with selling its own vast inventory of athletes and events than in promoting the interests of corporate clients. "Their idea of a strategy is, 'You buy what I'm selling,'" says one rival. But for years, IMG has created major new events, using its athletes and TV connections. And that aspect of the business is a bigger part its growth today. When United Distillers PLC wanted a golf event to promote Johnnie Walker scotch, IMG put together a match in Jamaica featuring top-rated golfers that was televised in 80 countries.

The multiple roles IMG plays in such attractions often spawn charges that the company can't represent so many interests without conflict. IMG is embroiled in a nasty lawsuit with skater Dorothy Hamill. The suit charges, among other things, that "...IMG's self-dealing and conflicts of interest resulted in less favorable terms and monies than Dorothy otherwise would have received...."

IMG denies these allegations. McCormack also points out that by inventing alternatives to Ice Capades and Disney on Ice, IMG has created more opportunities for skating stars. "Without that, they have no place to go, except to become a Smurf or a Dwarf," he says.

Wags call it International Money Grubbers and huff about how McCormack defines his role: to make sports "more popular, better commercial vehicles for companies to use to sell their products." But McCormack makes no bones about his mission: "We're always looking for emerging sports, like P&G is looking for emerging potato chips or liquid soap."

IMG continues to beef up its presence in newer nonsports areas, such as music and real estate. McCormack says IMG has become the second-largest agency for classical music, counting 52 orchestras among its clients. Meanwhile, it has leveraged its brand-name golfers into another business: designing golf courses from Berlin to Bali. And it's looking to grow more in team sports, which has not been its strong suit in the past.

FOCUS ON EUROPE. IMG's biggest growth, though, may come from TV, particularly in Europe. As commercial broadcasting continues to blossom there, the market for sports programming should grow. And both in Europe and the U.S., though growth is sluggish now, IMG sees a big opportunity to supply more and more niche channels. As McCormack sees it, others can fight it out over such newfangled technology as multimedia; he'll be around to provide programming. "I don't know anything about technology," says McCormack, admitting that, if instead of a computer there were "an accountant with a green visor somewhere writing things down, I'd feel better about it."

In many other ways, IMG remains something of an old-fashioned operation. It just hired its first human resources chief, though it employs 1,600 people. The long-serving top cadre is well-paid, but hardly any McCormack lieutenants have a piece of the action; and IMG has no financial goals.

EARLY RISER. That's especially odd since McCormack is so compulsive in his personal life. Rising at about 4:30 a.m., he keeps meticulous track of his time, including how many days each year he is with his wife, tennis pro and 1993 over-35 Wimbledon doubles champ Betsy Nagelsen; how much he has slept; and how much time he has spent doing sit-ups.

McCormack seems much less concerned, however, about the bigger picture. While lots of other CEOs McCormack's age are starting to think about retiring, IMG's chief is clearly not ready to step aside. Why should I, asks McCormack. "Everybody retires to do what I do every day."Zachary Schiller in Cleveland, with Julia Flynn in London Jonathan B. Levine in Parisand bureau reports


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus