The next battleground for Hollywood's hotshot agents is the stadium, not the back lot.
Studios are making fewer films, and paydays for A-list actors and directors aren't as big as they used to be. And though there has been explosive growth in new television platforms, the business is dealing with diminishing ratings and digital upstarts. Big hits are few and far between.
But the fields are greener in sports, with athletes routinely commanding multimillion-dollar contracts and teams and leagues getting billions from networks to televise their events.
Talent agencies are now aggressively seeking a piece of that action, and that's the driving factor behind Wednesday's $2.3-billion purchase of IMG Worldwide by William Morris Endeavor and private equity firm Silver Lake Partners.
"The movie and television business have become mature," said Marc Ganis, head of consulting firm Sportscorp Ltd. "There is still tremendous opportunity and upside in sports."
New York-based IMG is in the thick of the sports business. Not only does it represent star athletes such as NFL quarterback Peyton Manning and tennis player Novak Djokovic, but it also sells media rights to sporting events such as Wimbledon and the Australian Open.
It counts more than 90 universities as clients and represents their media rights, cutting advertising and sponsorship deals on their behalf.
"IMG is thought of as the 800-pound gorilla that touches almost every aspect of the sports business landscape," said Jeff Marks, managing director of Premier Partnerships, a Santa Monica sports business firm that specializes in naming rights and sponsorships.
The deal also helps WME further evolve from a Beverly Hills talent agency into a formidable media company in its own right.
The firm, created by the 2009 merger of William Morris Agency and Endeavor Talent Agency, handles the careers of Hollywood A-listers including Oprah Winfrey, Claire Danes and Christian Bale. This year it bought a 49% interest in advertising firm Droga5. Silver Lake Partners, based in Menlo Park, Calif., has a 31% stake in WME.
The IMG deal is the agency's biggest acquisition to date.
"Size is the weapon du jour," said Chris Bevilacqua, head of media advisory firm Bevilacqua Helfant Ventures. By swallowing IMG, WME will now have more leverage in cutting deals, he said.
In a statement, WME co-Chief Executives Patrick Whitesell and Ari Emanuel said IMG's "global reach, outstanding management team and leadership across sports, fashion and media are a strong complement to our business."
The deal will also ratchet up the fierce rivalry between WME and Creative Artists Agency, which has already made inroads into sports.
CAA has a more than half-decade head start. It launched its sports business in 2006 and now represents 800 to 1,000 athletes. It also handles corporate naming rights for sports facilities, among other services. CAA recently handled the naming rights deal for the San Francisco 49ers' new stadium in Santa Clara and has done long-term sponsorship deals for Yankee Stadium and Madison Square Garden.
"I think WME looked at what CAA has done and said, 'We have to get into this game,'" Marks said.
CAA is also a partial owner in Evolution Media Capital, a boutique investment banking firm that specializes in media and sports and has been involved in numerous deals including the sales of the Texas Rangers and Philadelphia 76ers.
But with 3,500 employees in more than 30 countries, IMG will give WME substantial firepower.
"It will be a new spectator sport, watching these two guys battling it out," Bevilacqua said.
CAA mulled over a bid for IMG early on in the sale process but bailed out this fall. The agency declined to comment. Others that were interested in IMG, people involved in the bidding process said, include the ICM Partners agency, which teamed up with private equity firm Carlyle Group. Also bidding was private equity firm CVC Capital Partners, which had teamed with Chernin Group, the media company of Peter Chernin, the former senior News Corp. and Fox executive.
The WME-IMG deal could lead to more consolidation, said David Carter, executive director of USC's Sports Business Institute.
"You are seeing nothing short of an arms race to ensure cash flow from sports and entertainment," he said. "It's almost as if, if you don't partner, purchase or align, at this rate, you might be on the outside looking in."
Though IMG's talent representation arm may be its most visible, the company's less splashy business of representing colleges — IMG College — is key to its success, Marks and Carter said.
Marks, who competes directly with IMG on sponsorship and naming rights deals, said IMG College was hugely important to the company — and was probably tantalizing to WME — because the media rights deals it cut on behalf of universities provided a steady annual stream of revenue.
Private equity firm Forstmann Little, which bought IMG for $750 million nearly a decade ago, put the unit up for auction after the death of leveraged buyout maven Theodore Forstmann two years ago. Forstmann Little had sought as much as $2.7 billion; the sale was conducted as an auction, and the final round of bidding ended Friday.
According to an executive with direct knowledge of the matter, WME had long been interested in doing a deal with IMG and pursued one with Forstmann before his November 2011 death.
IMG isn't solely in the sports business. The company also represents supermodels such as Gisele Bundchen and pop stars including Taylor Swift.