SFX Sports Group, the major sports representation firm owned by Clear Channel Communications, is facing the possible migration of its biggest talent agent. The story appears to have similarities to the concert biz roll-up.
Arn Tellem represents some of the biggest names in sports. In 1999, he sold his Tellem & Associates to SFX, Robert F.X. Sillerman’s growing company that was the precursor to Clear Channel Entertainment. Currently, the D.C.-based SFX Sports Group has revenue topping $100 million a year, according to The Washington Post.
The paper said Tellem is considering leaving the company since his contract expired September 29th and he could take 20 NBA and baseball agents with him along with the more than 200 athletes they represent.
“Arn has the loyalty of every agent in this place,” an anonymous SFX agent told the paper. “Within six months, the entire basketball and baseball staff would be out the door with him. … If they let him leave, it would say to us that they aren’t willing to grow the business.”
Tellem finds himself in an enviable negotiating position because he could become the biggest competitor for Clear Channel.
David Moross, a managing partner in the sports investment firm Sports Capital Partners, told the Post that Clear Channel probably didn’t have any experience in operating sports agencies.
“The assets of these companies are the agents themselves,” Moross said. “They tend to have large egos and know they are in control, which makes them difficult to manage. If the asset goes down the elevator at the end of the day and doesn’t come back up the next, you’ve paid a fortune for what?”
Agents, after taking millions for their various sports firms, joined SFX hoping their clients would have more opportunities for endorsement deals and could cross over into show business.
“These crossover deals turned out to be nothing more than smoke and mirrors,” an agent told the paper. “I’m still waiting for the film careers of Paul Pierce, Jason Kidd or Kevin Garnett to get off the ground.”
Some agents left SFX because they couldn’t stand the corporate atmosphere.
“The clash between the entrepreneurial spirit and corporate culture was quite evident,” former IMG sports agent Bill Strickland told the Post. “One could either endeavor to fit in or endeavor to survive on their own. Given these guys’ former lives as entrepreneurs, many of them elected to leave.”
“We don’t fit in,” a source within SFX said. “Clear Channel is a staid old company, and we’re hip. We should have been spun off from the beginning. They demand unrealistic year-to-year growth even while their stock has taken a beating this year. In my opinion, if Arn stays, it’s only going to be for the short term. At some point, I would expect him to be on his own again.”
Meanwhile, New York buyout firm Forstmann Little & Co. is trying to purchase IMG for $700 million, according to the paper, and Moross is not surprised by the price tag.
“Some of these institutions forgot who they were dealing with,” he said. “These [agents] negotiate for a living.”