SPORTS, EVENT MARKETING SHOPS SEEKING MAINSTREAM ALLIANCES: INTERPUBLIC, OMNICOM IN GROWING FIELD LED BY IMG

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In the rapidly consolidating universe of sports marketing and events marketing agencies, the question isn't whether or not to get hitched, but to whom.

There has been a rash of acquisitions and mergers, as well as several failed attempts to do deals.

In May, for exam-ple, Interpublic Group of Cos. bought Advantage International, Arlington, Va., and a 60% stake in API Group, London, part of the giant communications holding company's continuing effort to diversify the types of resources it can offer clients.

Omnicom Group last year bought a 25% stake in Millsport, Stamford, Conn., and has an option to increase its stake.

The entry of ad agency giants is being countered by consolidations among sports marketing agencies themslelves. Most recently, Washington-based ProServ was absorbed by the Marquee Group, which includes Athletes & Artists, New York, and Sports Marketing & Television International, Greenwich, Conn.

Beyond the financial windfalls-Marquee paid $15 million in stock and cash for ProServ-these specialist agencies are selling, merging and consolidating because they believe bigger is better.

AGENCIES GO GLOBAL

ProServ, with offices in Europe and Japan, will take Marquee into international markets. In 1995, Clarion/Performance Properties, Greenwich, bought International Sports & Entertainment Strategies, Westport, and late last year opened an office in Sydney.

"The phenomenon at large in the marketplace is that critical mass is everything," said Brent Scrimshaw, president of Molstar Sports Entertainment, Toronto, a recently formed sports marketing operation owned by Molson Breweries.

The consolidation wave will continue to sweep through the sports marketing industry, observers said, even though most of the major shops are already spoken for.

"The consolidation in the business of late has been at the top," said Mike Trager, chairman of Marquee-owned Sports Marketing & Television International.

Even Interpublic Chairman-CEO Philip H. Geier Jr. said his company's desire to boost its budding sports marketing practice is being frustrated since there are few shops of suitable size remaining that will bolster or add significantly to what has already been purchased.

Interpublic's lineup also includes Momentum IMC, New York, an event marketing unit under McCann-Erickson Worldwide looking to deepen its resources in the U.S. and expand its global reach. Last week, it formed Momentum Europe, with Senior VP Beth Kohl named to head that operation, based in London.

IMG DOMINATES

The dominant agency in the field remains International Management Group, Cleveland. Once rumored to be an acquisition target of Nike, IMG remains independent after stabs at joint ventures with Young & Rubicam's Burson-Marsteller and Interpublic. Sports marketing executives remain curious about the succession plans of its pioneering chairman-CEO, Mark McCormack.

Two other independents are Integrated Sports International, East Rutherford, N.J., and National Media Group, New York, both of which appear willing to talk. The agencies have been in discussions with Bozell Worldwide, New York, during the past year about a possible deal, agency executives said.

For the shops, choosing a course of action depends not only on the cash that can be made but on how they view the potential for conflicts and restrictions that may arise.

"We have two concerns with being acquired by an ad agency," said Bill Allard, ProServ president-chief operating officer. "We don't want to play second fiddle to their core business. We also don't want to be limited by the number of clients we can talk to because of potential conflicts with the network's other clients."

COOPERATIVE PITCHES UNLIKELY

Millsport President Jim Millman said cooperative pitches for new business with Omnicom shops are unlikely, since clients prefer to pick their ad and sports marketing agencies separately.

It's access to a large agency's clients that is the appeal for one sports marketing shop.

"What's attractive about an agency owner is the pipeline for prospects," Mr. Millman said. "We also benefit from Omnicom's approach to financial planning, targeting and long-term thinking."

"We have reached a point where it has become hard to sustain double-digit growth," said Frank Craighill, co-chairman of Advantage, the new unit of Interpublic. "In order for us to play on a larger playing field, we need to have access to intellectual and financial capital."

Advantage and API are the cornerstones of a larger, IMG-like sports marketing practice that Interpublic wants to build. The reason, said Mr. Geier, is to offer more resources to clients and benefit from the booming sports marketing industry.

Thanks to its acquisitions, Interpublic's sports marketing group opens with billings of $550 million and revenue topping $50 million.

Both API and Advantage remain independent and under their current management, but Interpublic wants to increase its share of API to 100% and the two may eventually be merged.

Messrs. Craighill and Geier said Interpublic is looking to increase its sports marketing assets through additional acquisitions. A priority is to beef up Advantage's TV production resources, so that it may better compete with IMG.

IMG GETS GOLDEN GATE

Last month, IMG strengthened its already considerable muscle by buying key assets and properties from Golden Gate Productions, San Francisco, a sports marketer and programming syndicator.

Executives at Millsport agree with Mr. Craighill's rationale, but are proceeding slowly with Omnicom.

"It let us walk into a relationship before running," Mr. Millman said.

Many of these recently acquired shops, including Advantage, also represent athletes. And industry observers are watching closely for conflicts of interest.

"If a sports agency shops for endorsement deals among a sister company's clients, how do the two agencies negotiate the fee? What master gets served?" asked one executive.

Historically, stabs at synergies such as pairing athletes with ad agency clients haven't worked. Executives said such synergies are often undermined by agencies' entrepreneurial instincts or self-serving mind-sets.

"If cooperation is your goal, the big challenge will be to incentivize the key people in every corridor of communication to focus on what's best for their clients rather than what's best for their pocketbooks," said Mark Dowley, managing director at Momentum IMC.

Contributing: Mercedes M. Cardona

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