CAA Look$ Out$ide
Creative Artists Agency managing partner Bryan Lourd publicly acknowledged June 14 that the agency is in discussions with a private equity firm interested in buying a stake in the company.
Published sources have pegged the investment figure at as much as $250 million.
While Lourd declined to name the potential buyer, Kohlberg Kravis Roberts & Co. is the firm in question, according to the New York Times and Wall Street Journal.
The talks are reportedly in very early stages and sources told the WSJ that they may not reach a conclusion. But if there is a $250 million investment by KKR, it would give the Wall Streeter a major stake in the agency while allowing CAA’s owners to partially cash out their stakes in the firm.
CAA was founded in 1975 and rose to prominence under then-president Michael Ovitz. He and remaining co-founder Ron Meyer sold the business to a small group of agents in 1995.
The talks come at a particularly tough time for full-service agencies, thanks to shrinking commissions and package fees caused in part by plummeting DVD sales and the credit crunch forcing studios to produce fewer films, thus hiring fewer clients.
While some agencies have consolidated (i.e. Endeavor and William Morris Agency), it should come as no surprise that CAA would be looking for new sources of capital to invest in further growth.
One growth area is believed to be in the sports agency sector. CAA currently represents more than 500 athletes, including the NBA’s Carmelo Anthony and LeBron James, the Yankees’ Derek Jeter, Dallas Cowboys QB Tony Romo and soccer superstars David Beckham and Cristiano Ronaldo.
An interesting backstory for KKR is that one of its co-founders, Ted Forstmann, outbid his old company in 2004 to purchase sports agency IMG Worldwide. Should KKR successfully acquire a chunk of CAA, it would pit its other co-founder, Henry Kravis, against now-rival Forstmann in the sports biz for a second time.
Lourd spilled the beans about the potential sale of a CAA stake at the Financial Times’ Business of Luxury Summit in Beverly Hills, according to the Los Angeles Times. He said in a keynote address the move into sports has been financed by internal funds, adding, “I’m told that’s unusual. I’m told there’s a better way.”
Though the entry of KKR as a minority stakeholder could allow some of CAA’s top brass to cash out, Lourd said that he and other top agents, Kevin Huvane, Richard Lovett and David O’Conner, would remain, according to the Times.
“That’s not accurate that we’d ever turn over control of our company or leave,” Lourd told the paper of the cashout rumors. “We all love it.”