It wasn’t that long ago when CAA‘s foray into the sports game was eyed with some skepticism. That was before WME’s acquisition of IMG, a property that CAA also chased until it dropped out when the bidding got crazy. CAA is still adding to its sports department, the latest move coming with the acquisition of corporate hospitality and event management concern Inside Sports & Entertainment Group.
CAA Sports, a division of Creative Artists Agency (CAA), the world’s leading entertainment and sports agency, has announced that it has acquired Inside Sports & Entertainment Group. The full-service corporate hospitality, event management, and marketing company, started in 2004, is led by founders Alan Baum and Ety Rybak, partners Jim Zissler and Jason Zinna, and industry veteran Richard Ebers. ISEG is now a wholly owned subsidiary of CAA Sports.
“We have enjoyed a long-standing relationship with the team at Inside Sports & Entertainment Group, and have always been impressed by their stellar reputation, commitment to customer service, and level of innovation,” said Michael Levine, Co-Head, CAA Sports. “This expertise will be complementary to our existing sales and marketing efforts, providing a suite of additional service opportunities for our clients in such areas as corporate hospitality, event management and production, and beyond.”
Inside Sports & Entertainment Group works in the areas of corporate hospitality, event management, experiential marketing, integrated marketing, corporate appearances, and digital services, among others. The company has partnerships with teams, leagues, venues, and
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UPDATE: Often described as one of the most prominent baseball player agents in sports, Casey Close was considered a real “get” for CAA Sports division when he arrived back in April 2006 from IMG when CAA raided several agents from there to set up its new division. So his departure when his 5-year contract expires next month has to be considered a real loss as well. SportsBusiness Daily first broke the news, which I’ve confirmed. Close is best known as the longtime rep to Yankees shortstop Derek Jeter and Phillies first baseman Ryan Howard, and just as there was financial sharing when Close left IMG, so, too, will there be the same arrangement when he leaves CAA. It’s not known where Close is heading. Last year, CAA Sports had quietly removed the baseball division from under Close’s management. But Close still reps the two biggest baseball clients CAA has. Insiders told me last year that CAA tried for a contract extension for Close because the agency didn’t want those most marketable stars to leave with Casey “so they gave him a back room office, which basically amounts to a desk job, to keep the business moving”. UPDATE: Before that, other sources told me, CAA Sports had an exclusive agreement with the New York Yankees to bring corporate sponsorships for the 2009 opening of the new Yankee … Read More »
2ND UPDATE 2:20 PM: Sources are now telling me the investment in CAA is tantamount to “hundreds of millions of dollars” in equity and TPG-lined up debt based on a huge valuation of the agency more than double what’s been previously estimated as its worth. One insider this afternoon put the number at $350 million against a valuation of $1 billion. Yikes!
UPDATE 1 PM: News release below. In it, CAA disclosed that the agency and TPG ”have committed to create a $500 million pledge fund, providing access to significant capital for future investments”.
EXCLUSIVE 11:40 AM: This very lucrative deal for a 35% non-controlling minority interest in CAA with the TPG Capital private equity investment firm follows seven months of tough negotiations with potential financial partners pursued by CAA. It represents a big cash infusion considering that CAA’s revenues were around $300 million in 2007 before the financial crisis struck. But the $105M figure estimated by others is only about half the $200M that CAA was initially seeking. The investment was finally wrapped up last night and an announcement will go out later today. ”It’s a real double down play. CAA saw an opportunity to have a partner that has capital and expertise to develop its company faster and stronger and smarter,” an insider tells me. “That’s why it took so long. CAA wanted to be careful about it.”
This liquidity event puts CAA on excellent financial footing after many insider reports of cash flow problems. Most importantly, it allows the tenpercentery’s 2nd generation of owners — one-time Young Turks: Bryan Lourd, Kevin Huvane, Richard Lovett, Doc O’Connor — to monetize their individual pieces of Hollywood’s most powerful agency. But are they going to cash out and leave? My sources deny their exits are imminent and insist that the CAA quartet have all signed “long-term commitments”. Additionally, “part of the proceeds will be distributed to the entire company. Everyone who works in this organization will get money, though some more money than others. It’s exciting to be able to do that,” my insider tell me.
Another reason for the cash need is that CAA has been self-financing its nearly 5-year-old sports business begun by Lovett, despite the fact it’s a notoriously expensive enterprise because of the size of upfront investments in players that don’t pay off for many years. And the powerhouse sports agents which the agency has assembled have been not-so-quietly complaining about their compensation packages. CAA also plans to use the money for expansion into sports production, video games, and other arenas.
Today’s news follows two big investments made by rival WME Entertainment with experienced partners creating new businesses: a worldwide marketing business, and separately a global media fund of which $300M of the desired $500M is already raised. These are two very different strategies, but both demonstrate how Hollywood agencies want and need to reinvent themselves. CAA is not the first major tenpercentery to take an investor: Connecticut-based Rizvi Traverse Management’s equity fund operator Suhail Rizvi is a substantial investor in ICM.
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I’ve heard from multiple sources that, after months and months of pursuing potential financial partners, CAA probably won’t obtain that big fat investment from KKR. (CAA Negotiating $200M Investment From KKR.) The NYC-based private equity firm whose full name is Kohlberg Kravis Roberts & Co, seemed on track to invest a whopping $200M in Hollywood’s most powerful agency. Not any more. Here’s what a KKR bigwig is saying is the reason: “The town is too complex for me.” Forget it, Jake. A far as KKR is concerned, Hollywood is Chinatown.
Another reason for the lack of enthusiasm is that, as The New York Times quipped last month, “the barbarians didn’t exactly storm the gate”. KKR, the subject of the book-into-HBO film Barbarians At The Gate, held its much-anticipated public stock offering July 15th and it fell flat. No hype. No hoopla. No more golden era for private equity when every budding company dreamed of an IPO and Wall Street firms fed at the leveraged buyout trough. The listing does gives KKR ready access to the public markets. That could have enabled CAA to form a financial alliance that might have backed its action outside traditional Hollywood agenting. Where CAA will go next for this $200M cash infusion, huge considering that CAA’s revenues were around $300M before the financial crisis, or how it will fare if none or a much reduced amount is forthcoming, will be a subject of much speculation.
CAA insiders I spoke with don’t seem overly concerned. But CAA is … Read More »
UPDATED: You know that LeBron James hourlong primetime sports special The Decision tonight all about where he’s going to play next season? Well, it was not put together by LeBron James’ sports agency CAA. According to my Hollywood agency sources, Ari Emanuel of arch-rival tenpercentery WME was at one of the NBA playoff finals. Surely you’ve seen him at Laker games sitting in his look-at-me floor seats so courtside he gets drowned by the players’ sweat rivulets.
He began talking with LeBron’s manager Maverick Carter. (WME arranged the financing for LeBron’s documentary More Than A Game and with Carter sold it to Lionsgate.) Then sports announcer Jim Gray came over and suggested that LeBron do a TV show about the decision. (ESPN is now saying its execs were talking to LeBron’s manager about a decision-style show as far back as February during All-Star Weekend.) Emanuel immediately suggested that, instead of offering the show to a broadcast or cable network first, they package it by producing and selling ads for it themselves. The conversation ended on that note.
Carter talked to LeBron, and then Emanuel got a call from the manager telling him, ”Let’s go do this.” LeBron himself makes no money. Instead, all the sponsor dollars are being donated to the Boys & Girls Clubs Of America. I’m told the figure raised for the charity was $3 million, and Nike pledged to match up to another $1 million.
“Richard Lovett keeps touting how he supposedly reps LeBron … Read More »
That’s what the informative sports blog ProFootballTalk.com is reporting. And I think they make a compelling case for it. Especially when only 15 to 20 agents represent 700-plus players under contract with NFL teams. Depending on how many of those players make the final rosters in September, that handful of agents control as much as 40% of the NFL player salaries. But while the NFL Players Association limits agents’ earnings to a maximum fee of 3% on player contracts, marketing contracts are not capped. So the lucrative endorsement deals for high-profile players are gravy, as are the signing bonuses from high-pick draft choices. Repping top NFL draft picks is a very cutthroat biz, so any diss gets magnified, especially since CAA is repping the top 3 candidates who might go No. 1 in the 2008 NFL draft and maybe all 3 in the Top 5.
But let’s not forget that, under Condon’s guidance, primo draft picks Brady Quinn and Matt Leinart plummeted to No. 22 in 2007 and No. 10 in 2006 respectively, losing many millions of dollars as a result. (Lucky for Quinn, he’d already signed a bunch of endorsement contracts. Not Leinart, who a year later fired CAA.) As you know, I’ve reported extensively on CAA’s very costly 2-year-old sports division. So just how costly? Well, CAA Sports hires former NFL assistant coaches as tutors for … Read More »