In late June, U.S.-based sports marketing and talent representation agency Wasserman announced the acquisition of hockey agency Acme World Sports. Acme represents players in North America and throughout Europe, including Bruins goalie Tuukka Rask and Hurricanes up-and-comer Teuvo Teravainen, both Finns. With its rolodex and reach, Acme brings critical global access to Wasserman during an era of increasing globalization of sports. As sports become more international, so too have the agencies that represent their stars, even amid a global pandemic.
Wasserman is the world’s second most valuable sports agency, according to Forbes, with a total contract value figure of $4.2 billion, though it is not alone in announcing a recent acquisition or merger.
Just five days before Wasserman announced its Acme purchase, U.S. agency Tandem Sports + Entertainment and Spanish agency You First Sports—a top-20 player in the space—merged to create an international basketball agency. A week before that, still in June, Wasserman announced the acquisition of Spanish football agency Top Value, which represents a number of up-and-coming La Liga footballers. The move complemented Wasserman’s existing international football presence, which was also bolstered by the March acquisition of Key Sports Management—an even bigger player with nearly $300 million in active contracts in 2019 and 90 clients including Premier League star Jamie Vardy.
As COVID-19 has swept across the world and crippled economies, the pandemic’s effect on the agency industry has been two-fold: For some, like Wasserman, Tandem and You First, growth through globalization has continued undeterred, while others have brought consolidation to a full stop.
Coronavirus-related cancellations and shutdowns have exacerbated financial struggles at companies like Endeavor, the parent company of WME-IMG (the latter serves as the conglomerate’s sports agency). As much a media and live events company as a talent agency, the group secured a $260 million term loan in May—and took a credit rating hit in the process—to supplement an existing $2.8 billion loan, as reported by the Wall Street Journal, to stay afloat after tabling its planned IPO in September.
The IPO would have given the group some cash flow to help reduce its $4.5 billion debt burden, which itself is largely due to a number of recent acquisitions. In 2015, Endeavor purchased the Professional Bull Riders and followed up a year later by buying UFC for more than $4 billion—reported as the single largest transaction in professional sports history. The purchase of IMG in 2013, which came with a $2.3 billion price tag, was largely financed by debt and investor capital from private equity company Silver Lake.
The price of those acquisitions—now debt on the group’s balance sheet—coupled with recent revenue hits due to the impact of COVID-19, have stalled any near-term expansion and resulted in cost-cutting measures including layoffs. Endeavor’s step back, however, has opened the door for other ambitious agency buyers looking to grow.
“There’s always lots of activity with companies in sports looking to strategically expand their reach,” Hal Biagas, a former executive at both Wasserman and Excel Sports, said. “The bigger players are looking to fill in areas where they are lacking. As sports become more global, companies from the U.S. look to buy businesses in Europe or Asia and vice versa. That trend will continue. But when looking at other situations, like with WME-IMG, they appear to be overextended at this point, and as a consequence, they’re reconsidering their scope and breadth as a company.”
For those with financial stability and an emphasis on the sports and representation space, consolidation has continued. The pace of mergers and acquisitions continues to reflect the shrinking global sports community despite predicted economic repercussions of the pandemic.
“With every year you see the increasing globalization of the game. It’s important to be part of an organization that recognizes that and has an impact in many places,” current Tandem president Jim Tanner said.
You First has 20 offices in 12 countries and managed $755 million in contract assets in 2019. Tandem saw value in that reach—in terms of both talent to represent and global opportunities for current clients, like active NBA player Ja Morant or Hall of Famers Ray Allen and Tim Duncan.
At the start of the 2019–20 NBA season, 108 international players from 38 countries and territories were on opening-night rosters—more than four times the presence 25 years ago. A large number of U.S.-born players also pursue professional careers abroad, in both the NBA and WNBA, and a handful of high-profile high school prospects have turned to professional international basketball opportunities over the NCAA.
“Every major professional league and governing body has a marketing and media presence in multiple continents. They also include the participation of athletes from many different countries,” Wasserman’s COO and executive vice president of talent representation, Jason Ranne said. “We believe in working beyond the ‘borders’ of a single sport or country. This allows us to mirror the presence of the leagues, governing bodies and events, and creates a very broad knowledge base to advise our clients.”
While talks for all of these deals began long before the pandemic, recent announcements of global acquisitions have come in rapid succession at a pace somewhat surprising even for a perennial purchaser like Wasserman.
The agency expanded its international football presence with the purchase of Dutch soccer agency Sport-Promotion in 2014 and Paris-based agency Mondial Promotion in 2016. In recent years, the agency has also grown through the acquisition of individual agents, particularly in the NFL and hockey spaces. Hockey agent Judd Moldaver joined Wasserman in 2018, the same time it started practice in the sport. What initially started with an equity interest in Orr Hockey has evolved into Wasserman Hockey today, where Acme will now integrate.
Wasserman started 2020 with a series of similarly subtle moves to expand its international basketball presence, officially acquiring Lithuanian agency BBaltics in February and formally bringing a pair of Serbian and Slovenian agents under its umbrella. But after a few years of growing more quietly, the agency took globalization head-on with its trio of acquisition announcements for a splashy first half of the year while the rest of the world was reeling from the economic fallout of COVID-19.
“There’s opportunity now. You may be able to acquire a business for less than you could under normal circumstances because their revenues may have decreased while games and events aren’t being played and players aren’t being compensated or are receiving less,” Biagas said. “If you’re a buyer, particularly [one] who has cash or the balance sheet to get loans or access to financing, now is a good time to buy a business that you think benefits your long-term objectives because interest rates are so low.”
That opportunity, however, comes with added uncertainty in the current climate.
“There is certainly downside risk when adding a business, employees and expenses, particularly right now without the anticipated revenue to offset those costs if the situation around COVID-19 doesn’t resolve soon and sporting events don’t return soon or if restarts aren’t successful,” Biagas added. “But if you’re a smart and strategic thinker and you’re also an optimist—I think Casey [Wasserman] and the leadership team at Wasserman are definitely both—these are good times to pursue businesses that strengthen your company and grow your brand.”
Globalization helps accomplish both of those goals, and mergers and acquisitions are a faster, and perhaps particularly timely, means to that end. Globalization, though, isn’t just about growth; it’s also about, ironically, localization.
When industry leader Creative Artist Agency’s CAA Sports division—which also acquired the firm Kauffman Sports Management Group in February—purchased London’s Base Soccer Agency in July of 2019, it made its first official foray into international football.
Through a partnership with Polaris Sports, CAA Sports had jointly represented the marketing rights for a number of soccer players and coaches, including Cristiano Ronaldo. The company has also had a longstanding partnership with Jorge Mendes and international soccer agency Gestifute, but the U.S. agency had not ventured directly into soccer representation itself. The buy reflected CAA’s global approach: international success, in soccer or elsewhere, comes from localization.
“If my colleagues go to Dallas or to Miami, it’s the same currency, language, generally the same rules,” Matthew O’Donohoe, head of CAA Sports International, said. “But [in] international, you have to localize everything. Business in France is done in a different language, business culture, rules and regulations. You have to understand the nuances, the cultural differences. We’ve really learned as we’ve gone on that to give ourselves the best chance at success, we need to localize each market.”
O’Donohoe spoke of the value of Base’s Italian presence and their agents on the ground who “eat and drink the market in Italy.” He said the same of its agents in Germany—another major soccer market.
Prior to the Base deal, CAA Sports led all agencies in total on-field contract value under management at over $9.3 billion. Base reportedly managed approximately $394 million in contracts in 2018, helping push CAA Sports’ total up to $10.6 billion under management in 2019, according to Forbes—more than double the size of its next-closest competitor, Wasserman. As the world gets smaller and international opportunities get bigger, agencies have to be prepared. Like CAA Sports saw, that preparation pays off.
“The obvious move you’re seeing is people realize they can’t do it anymore from three offices,” O’Donohoe said, noting that globalization doesn’t mean domestic growth stops, but that expansion continues on a wider scale for the industry’s major players. “You have to get people on the ground.”