LOS ANGELES/NEW YORK (April 2, 2013) – Roc Nation, a full-service entertainment company founded by Shawn “JAY Z” Carter, announced today the launch of Roc Nation Sports, a full-service sports management company, and has signed MLB All-Star Robinson Cano of the New York Yankees. Roc Nation Sports, led by Carter and Juan Perez, who serves as President, has partnered with CAA Sports, a division of Creative Artists Agency (CAA), a leading entertainment and sports agency, to co-represent Cano. Cano will be represented on the field by a team of agents led by CAA Sports’ Brodie Van Wagenen. Since Opening Day 2011, CAA Sports’ baseball group has negotiated more than $1.1 billion in Major League contracts, including eight contracts with a guaranteed value of $50 million or more, of which four exceeds $100 million, more than any other agency. “Jay Z and his team at Roc Nation have successfully orchestrated powerful brand and business-building opportunities for their clients,” said Michael Levine, Co-Head, CAA Sports. “We look forward to combining our wide-reaching resources on behalf of top athlete clients like Robinson Cano to help them accomplish their goals on and off the field.”
CAA Sells 35% Minority Interest To TPG: Lovett Says “This Strategic Partnership Marks New Start For Agency’s Future”
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.
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 …
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 …
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 …