Tiger Woods' loss of endorsement income cost his management company IMG $4.6 million in fees, according to a confidential document reviewed by CNBC.
The document provides the most comprehensive financial look into the powerful, but private, sports management company in its 50-year history.
IMG, like other agencies, charges its clients between 15 and 20 percent on endorsement deals it secures, so if it lost $4.6 million on Tiger's endorsements, it would mean the golfer himself lost in between $23 million and $30 million in deals last year.
That said, it isn't known what fee Woods pays the company. Presumably, a marquee client such as Woods would pay less than the standard fee. Tiger's agent, Mark Steinberg, who heads up IMG's golf division, wouldn't comment on how much his client lost in endorsement income.
Woods — who is listed in the document under the golf section as "key client" — lost both his Accenture and AT&T deals in December 2009, but lost his Gatorade deal in February of this yearamidst the fallout from his infidelity scandal.
He enters today's second round of the US Open at 3-over par, five shots behind the leaders. His last victory came at the Australian Mastersmore than seven months ago, before the car accident that sparked the beginning of the golfer's downfall.
IMG, the world's largest sports management company, was bought by Forstmann Little in November 2004 for $760 million. It has 2,750 employees in 30 countries. The company is so entrenched in the sports world that they are involved in approximately 11 sports and entertainment events every day.
The document intricately details the revenue of IMG's many businesses and was used to raise in between $300 million and $350 million to refinance current debt and seek out new acquisitions not related to client representation. An IMG spokesman would not publicly comment on the document.
A source with knowledge of the 40-page presentation and its purpose told CNBC that funding was successful and closed last week. The number of investors and their names are not known.
Seeing the Woods loss up against the rest of IMG's numbers makes one realize how insignificant the company's most identifiable athlete is worth to overall revenues.
The report notes that no single client, or any IMG managed property for that matter, earns more than two percent of revenue for its sports and entertainment division.
"The agency part of our business — I'm happy to be in it," IMG chairman and CEO Ted Forstmann told CNBC"s "The Strategy Session" earlier this week. "It's a lot of fun. We are the biggest in all of these things and it's nice to be there, but it's a very small part of our business. So whatever happens with Tiger Woods, it's not going to have a huge effect on IMG."
Last year, IMG said it grossed $764 million from the sports and entertainment division, which includes representation, sponsorship sales and event management, and $241 million from its media arm, which packages and distributes sports programming to viewers in more than 150 countries. The report said the company had a 2009 operating profit of $85.3 million.
News of IMG's infusion comes on the heels of reports that KKR is interested in buying Creative Artists Agency (CAA).The two agencies are often mentioned in the same breath because both represent athletes. In fact, in some cases, they represent the same athletes, as is the case with Peyton and Eli Manning and LaDainian Tomlinson. CAA represents the football players on their contracts, while IMG handles the endorsement business.
The truth is, however, that while CAA is still very involved in the representation business, IMG has found that, in many ways, representing celebrities is not the best way to make money in the 21st century. According to the document, only three percent of IMG's operating profit comes from its clients.
Aside from the 15 to 20 percent take of client sponsorship dollars, the document notes that the firm takes a 10 to 20 percent cut of appearance fees and a three to 20 percent cut of a client's salary as a contract negotiation fee.
With athletes no longer the key focus, a source with knowledge of the fundraising said the new funds would not be used to sign the next Tiger Woods or Roger Federer.
Instead, it will be used to grow its business in Asia, where only 15 percent of its revenues are currently generated, as well as seek to further control the collegiate market they already dominate having acquired both CLC and Host Communications in recent years. College sports is among the fastest growing businesses for the company, contributing $25.8 million in revenue in 2009, trumping its tennis ($16.4 million) and golf ($14.4 million) divisions, according to the financial statements prepared for prospective lenders.
A source with knowledge of future projections made by the company says that it is believed that IMG's college business will grow by 60 percent this year to over $40 million. While they receive plenty of publicity, the company's much publicized group of academies yielded $2.9 million in '09.
Recent international alliances include a content partnership with China's CCTV, a joint venture to develop sports properties with India's largest company and a deal to create the India Premier League, a cricket league which the lender's proposal says realized $1.8 billion in revenue commitments in its first year.
More on CNBC.com including:
- Tiger of Old Threatens to Make Open Appearance
- Nicklaus, Sorenstam Make Co-bid for Olympic Course
- Life on the Greens - America's Top Golf Communities