UP560 What is IMG now?

0:00Adam Kelly:Do they pay rights fees then? Trust me, they will be. Absolutely. And we know many examples where they're looking at significant investments in rights fees. Hi there. Welcome. It's Richard Gillis here and you're listening to Unofficial Partner. Today's guest is Adam Kelly, president of IMG. Adam has been at IMG since 2001, so he sort of connects back to almost the McCormack years. And that's one of the questions I think that we run through this conversation is what IMG is now, what it wants to be and where it plays in this very different marketplace than existed when it was set up by Mark McCormack in the 60s.

0:38What is it? What does it want to be? And we get into that and we talk about the bets that they're making, but also the threats, bets and threats. It's quite a spiky conversation. I really enjoyed it. I think he did too. We had a chat afterwards, actually. I saw him at Wimbledon a few days after the interview. He said I was a bit grumpy. He was probably right. It was quite hot in the office when we did the recording. So I might have been heat affected. But I think it's a good conversation and I think you'll enjoy it. This episode of Unofficial Pun is sponsored by our friends at the Institute of Sport Humanities, ISH.

1:13ISH educates sports current and future leaders around the world as the leading independent provider of leadership education and insight for the sector. Their strategic sport leadership masters, the MA, is for industry executives to study alongside their careers, designed for professionals who want to build on their experience, strengthen strategic thinking and connect with a global network of peers working across sport. Applications are now open for the next intake on the 2026 Strategic Sport Leadership MA starting in September. Visit sportshumanities.org for more information and there'll be a link in the show notes.

2:02Are you watching Watch of the World Cup?

2:04Adam Kelly:Yeah, I've been watching plenty. there's so much noise around it in terms of from the commercial business point of view and fifa and all those things what do you think is there going to be a longer term impact of it in terms of the way people view big events or the is it going to change anything as of the way which the sports world works i had this we have one of our big tko town halls and uh i got thrown the question you know is the world cup going to be a success in the u.s unscripted and and my instinct then is the same as it is now, which is people have this, there's this weird trend at the moment to kind of play down.

2:40Adam Kelly:Maybe it's not even that recent. London 2012, everybody was calling it was going to be a big disaster. London was going to collapse. Everybody's going to be out of town. Same for Paris, same for other Olympics. These events, you know, in today's world, I think they take a little bit of time to gather momentum. For some reason, the press and parts of the commercial world like to find things to pick at and criticize but when they get going it captures the zeitgeist that captures the imagination and I think it's going to be a huge success I only see positives you know the even the hydration break I think I think people are going to get used to that idea and you know maybe it's going to lead to fewer injuries maybe it's going to lead to a little bit you know as we've seen a couple of times in this world cup so far some better tactical shifts I don't see I don't see a downside and I think it's going to help the sport grow in the US which which is good for everybody when we talk to people on the podcast who are sort of on the brand side so who've spent a lot of money on world cup as a sponsor so they say that it's not FIFA it's the world cup so there is a there is a difference and they're trying to separate FIFA from they want everyone's mind on the football whereas FIFA is and the brand of FIFA is is sort of getting in the way is that how you view it do you see fifa coming out of this as a its reputation in the u.s enhanced from my perspective you know if you're if you're a governing body you've you've got a real challenging task ahead of you you've got to keep you know all sorts of different stakeholders constituents under control appeased comfortable happy but but the main the main obligation is is growing your sport and I think can get lost in some of the political machinations and of course they they happen it's pretty it's pretty out there and it's pretty plain to see but as an organization they they are driving the pinnacle of the game and I even said it around the Club World Cup that had a lot a lot more negativity around it but I don't believe in trickle down economics in the rest of the world but but I do believe it works in sport because the best way to gather brand new fans is through global real meaningful cultural moments like the World Cup and FIFA are doing a great job in in building this as by far and away the best and biggest football event that's ever been so I also a big believer you can hold many concepts and ideas in your head and in your belief system at the same time.

5:17Adam Kelly:So you can believe many things about FIFA, you can believe many things about the leadership, how they operate, and at the same time, believe that they're doing great for football, and therefore great for the sports industry. And I think they are delivering a hugely challenging event and operation across 16 different venues, and across multiple different countries. I mean, what a challenge to think to take on. But what they're doing is, you know, combining what I talk about with clients, these two massive economies, the attention economy and the experience economy. And in sport, you get both of those happening simultaneously, which is unique.

6:01Adam Kelly:So building and capitalizing on that, you know, Richard, you can't predict anything in the world today but you and I both know come 19th of July a billion plus people are going to be tuned in watching that men's world cup final that's that's unbelievable in today's world and how you build on that how you develop it how you drive earnings without kind of in inverted commas exploiting the fans how do you build the right level of experience with hospitality with travel, with all the facilities that they have in the US. The stadia look incredible. The football's been great. I think the extended window is working because you're getting these incredible new nations participating for the first time.

6:47Adam Kelly:And I think you're giving the teams, the managers, the coaches a bit more time to get used to their setup. And I think the quality of the football's the best I've ever seen. So, you know, how many boxes do you need to tick? Yeah, I guess the question from a sort of the lens of the sports business is there's a couple of specifics. I don't disagree with any of what you've just said. And I think it is. Good. Off to a good start. Football is popular is basically what you're saying. And that's great. But I don't want to get into a FIFA conversation particularly. But there are some interesting big threads that come out of it.

7:26And one of them is a sort of expansion of the middle of the governing body. So Infantino's vision of the world, if you look at it, the ticketing question on its own, or if you look at the various other decisions that he makes, it's about expanding the governing body's reach. So a big center. And I wonder if that's, I mean, from a company's IMG's perspective, you're in the bit which is wanting to build and create businesses from the work that is generated by a World Cup. So you've got, you know, on location doing a lot of the hospitality. When a governing body's instinct is to get bigger, what's your philosophical response to that?

8:09You think that's a good thing? You hope that that's going to get copied?

8:12Adam Kelly:I think it goes back to my point. If their responsibility is to grow their sport and in driving new fans to engage with football, you know, football is big, football is strong. but how do you continue to build? How do you continue to extend across the world? It's not everywhere. There's no China, there's no India at this World Cup. That's pushing with a couple of other territories, close to 3 billion people who are not actively participating and supporting. So I think there's a lot of room for football to grow and that's ultimately FIFA's responsibility. Building the machine I don't think is necessarily how I see them working.

8:55Adam Kelly:As he rightly pointed out, working on location on their ticketing and hospitality program. My view is sports have a responsibility to build fandom. And as we're seeing and noticing in North America with a long list of our clients and partners, we've just secured a great new deal to expand South American club football into the US with Comma Ball, the CONCACAF relationship is strong, MLS is strong and WSL, we just announced a groundbreaking deal for the WSL in North America with CBS. So we're seeing trends all lining in a positive direction for football in the US and football globally and I think that's as a result partially of some of the initiatives that fifa are undertaking and and that's where i see them playing you know how much they need to expand their internal machine or otherwise we certainly have a pretty clear view that the very few organizations should be heavily investing in their internal resources and maximizing a more efficient way of working you know ideally with us at img just explain that for a second so you want your you're actually arguing the opposite You're saying, OK, we need governing bodies to be much smaller and the work be subbed out to IMG and its competitive base of larger agencies.

10:21That's essentially that's that's the worldview. It has to be the worldview in the seat that you're sitting in. And Infantino's doing the opposite.

10:29Adam Kelly:Well, it's the case of how how do you build the most efficient organization? How do you get utility from your infrastructure? If you're one of a handful of organizations, you can probably afford to resource up very heavily with your internal machinery, put it that way. But that doesn't mean that's the most efficient and effective way to do it because of the utility you're going to get from that resource base. So what is the role of governing body? I think it is, you know, organization of calendar, it's driving growth, it's innovation, it's rules and regulations, it's stakeholder management, you know, for FIFA and the global organizations.

11:11Adam Kelly:It is how do you work with the confederation level? How do you work with national association level? How do you work with leagues, teams, clubs, athletes? So that is their core being and core focus. Where I think IMG comes in is real depth and expertise in the capabilities that are needed to drive the commercial program. That's been the mandate under my watch at IMG is how do we move from kind of transactional organization, doing deals, brokering deals, into one that truly builds and adds value for our partners. And that could be FIFA, it can be at the confederation level, Comma Ball is a great example.

11:52Adam Kelly:It can support leagues like EuroLeague, like the MLS, like others who have had to reinvent, repurpose, shift and update their assets and supporting them where they don't have the resources in strategy and consulting and insights. And then actually executing that program at a much deeper level. So with FIFA, it's the on location team with others it's you know deep season long year long production and content support in others for others it's it's digital capabilities so that that's how i see the dynamic they need to grow they need to build they need to be strengthened but in a in a way that's efficient and effective and then utilizing the expertise you know that that we provide and you know others others do as well which i guess gets to the question of what img is now because again go back four years you we talked about the role and you laid out the the vision at that point and it was as you've just described now since then you've got img arena is no longer no longer there what else i 160 over 80 i always get the name of that wrong 90 almost 60 over 90 what else has gone i'm just trying to think that well we we kind of we build and adapt as we go endeavor streaming is the one i was missing yeah streaming technology listen we you know we we have built a business over 65 plus years on being pioneers and innovators so there'll be strategies but it's a very different business now than it was under mcmormack under various you know under ted forceman even so you've got a different the legacy of the name is obviously very famous and resonant in the sports industry but people are now wondering okay what is it and they've seen tko that is understandable we can see where that is going and that's a major player in the sports industry and now they're questioning well what is img as part of that if it isn't just a certain other service provider i would say img is is back to the absolute essence of what mccormack founded and created which was the original sports marketing agency.

14:03Adam Kelly:If you go back to the core, sports marketing is the marketing of sports, not marketing in sports. And that's the essence. So, yes, he started on the athlete side, but very quickly moved into a much broader base, working with rights holders, producing, distributing, and driving value. The core goes back to what I mentioned with the World Cup. It's the attention economy. And how do you use the incredible qualities that sport has, where people engage, people will do anything to watch the England-Khara match, even if it doesn't turn out to hit expectations. But you're making and scheduling time to engage with sport.

14:51Adam Kelly:That's a truly unique quality. So what have we done under almost seven years under my watch at IMG? We've reimagined the IMG business back to that sports marketing origin. So that is building a set of capabilities to move from back then we were as IMG media as we were just really doing transactions in sports. So media rights deals, production work, by and large, the two core areas, to really building and driving value long term for our partners. So shifting really from being an entity that really just brokers to one that is an embedded growth partner. And what we did was kind of reimagine the capabilities that were needed.

15:41Adam Kelly:So beyond just media rights, really expanding into and utilizing our global network into much deeper brand partnerships, much deeper, a team of 200 plus now in digital and data. We've integrated our event management capabilities so that the partnerships that we form are now looking to build long term value and kind of answer the big questions that the rights holders should be asking themselves, which is, you know, not how do we just sell this better? But how do we make the sport bigger, more relevant and deepen fandom? And, you know, there's plenty of examples. Where are the sort of high margin bits of the business now?

16:28Because again, everyone, and this is beyond IMG, but everyone is looking at the bits of the sector that you're in and saying, well, actually, these are very difficult businesses now to make money and to be profitable and to make sizable margins that excite investors. So where in your portfolio does that, where's the route out to a very high margin business? because I see a lot of commoditization in the markets that IMG is and was once dominant.

16:58Adam Kelly:I think those are fair questions. The challenge is how do you build your margin? We talk about internally the client surplus. How do we add value to the extent that we earn and deserve a slice of the upside? If these capabilities are simple, if this market is easy to access if if the services we provide can be replicated by others we're dead we don't we don't have a business so again my my direction to my leadership team has been how do we constantly drive incremental gains how do we think like the athletes that that operate in our sports how do we keep improving and and adding that value as and where we do that then we we take a fair share of the upside.

17:48Adam Kelly:And, you know, depends how you look at it. But size and scale of these opportunities means that that can be a very high margin business versus the size and scale of the team that we have. But it relies on us continuing to build, retain and grow a pretty large portfolio. So, you know, the margins that we operate under are fair and certainly well regarded by investors. but in order to drive the returns if we were just looking for margin on its own we wouldn't be in the production space if we were just looking for margin on its own we wouldn't be doing digital consultancy there are lots of segments that we simply wouldn't be in were it not for the fact that when you combine these skills capabilities and the output that it drives it builds the value which then allows us to access so what are those businesses so the production business what was seven league the digital business that is now img digital what is that driving clients to where is the margin at the center that you're if they if those are not the lost leaders or ways in front doors in and then you move them into something else what is the something else that you're moving them to that is of higher margin so it's a kind of process so though though the the content creation the fan identification fan engagement the fan development that this this builds the attention all of these aspects controlling your ip producing the best possible content delivering that content to the best platforms best outlets all of all of that is the build and then when you i agree i agree at it and you know what i'm saying but i'm and you know the bit of the business that is exciting from a commercial point of view is the bit that owns the ip which is tko it owns wwe and ufc that is the answer to your the question if i can i can make that leap but i'm just wondering where if because you if you took we went back to rugby league four years ago and we talked about okay reimagining rugby league is that a route so i'm just trying to get to what the what the various bits add up to sure but but that's part of the process richard which is you you build the audiences you build the engagement and then we monetize with our partners and on behalf of our partners so there are three exciting bits to tko there's ufc there's wwe and and there's uh there's img as the three segments and you know on location is is it is a big part of that as well.

20:25Adam Kelly:But where where a rights holder drives the biggest returns is where we make our biggest margins that that's just the simple economics. So all of those are the foundational principles and, and structures against which you build fandom, which builds value. And then we support them on monetizing that value. So two biggest monetization streams, as you know, for for any, any sport, are there, their media rights in all its guises and the brand partnership space so we are driving returns in those in those two capabilities primarily okay well let's let's pick up on one of those then media and so i had a conversation with jonathan licked at sky which we published this week and one of the things that that stuck with me it's quite interesting point that he made obviously he would wouldn't he he's in charge of uk at sky sports in the uk you know the defense or the attack against global streaming, the global streamers, and what global streamers see when they see sport.

21:26One of the points he made is that it's more local than you might imagine, that fandom is much more condensed. That's the job that Sky is doing is over-servicing a sort of an avid sports community in the UK better than a generic streamer. Let's just talk about that for a minute, because again, it talks to IMG, but I don't necessarily want to talk about IMG specifically but what do you think about when you look at that marketplace in terms of the streaming market and the assumptions that it's making about sport fandom i guess is the question

21:57Adam Kelly:yeah i think i think the entry of the global streaming and technology companies in sport is the single most important shift we will see in in our industry over the next decade at least and I kind of dig into why. And it's not necessarily at the expense of Sky. I think Jonathan makes up some really good points about how would you nurture and develop a sport in the UK? You've got to work with Sky. But if you look at the macro, you now have four of the biggest companies in history focusing and beginning to focus increasingly on sport. Amazon, Apple, Netflix, and Google. Followed up by Disney and Paramount as they drive Paramount Plus, but in a different manner.

22:43Adam Kelly:But the biggest change that these entities are bringing is that these organizations are the best companies in history in converting audiences and attention into earnings, especially those first four that I mentioned. So you combine that with the certainty and predictability and audience volumes that sport delivers. I think you quickly see that sport is going to become central to these global platforms. And what I think is going to be a series of consequences is, I believe you're going to see innovation and further progress. I think that's going to truly benefit sport. And as they're able to access more earnings than anyone else has, if you again, think about it, very, very simple terms.

23:29Adam Kelly:Sky monetized on a monthly subscription basis, is a little bit of advertising. Apple, but particularly Netflix now, especially Google, you know, they are monetizing viewer hours. So every bit of consumption of that content is being monetized. That's much more effective. And then when you step back and sort of check and understand, well why sport? Again I reflect on Ted Sarandos, he said I think it was last year maybe 18 months ago, he was asked to make a comparison between Netflix and YouTube and maybe it was a bit unfair but he said you know the difference is that people spend time, they're spending time on Netflix versus killing time on YouTube.

24:20Adam Kelly:Well I kind of extract that one step further for sport people are making time and scheduling time which is an even bigger bigger commitment and an even greater premium so you combine you combine all of that together the things that you know all too well live appointment to view scarcity loyalty the community all of these things you've got sport as a key acquisition retention and advertising tool i agree with that the sport does a great job for those platforms what should sport extract in return just talk to me about what you think the longer term impact of what's happening at the moment which is sort of a shift and if we see youtube if we take youtube as an example but we'll take the others what is it that there that sport should it should expect back from those platforms and how do we actually do that given their sheer power well it's a it's an economic value exchange and where where they see greater conversion to earnings, sport will see greater returns.

25:21Adam Kelly:If you look in detail at Netflix, from a standing start, what they have been able to bring is the discovery factor. So from a standing start, they have delivered record audiences. Record audiences for boxing, record audiences for WWE, record audiences and huge numbers across the NFL games that they broadcast. The World Baseball Classic was a huge success in Japan, reached almost 40 million audience over the period. And Japan didn't have quite the success they had the previous edition. So what they bring is big numbers. And what that converts to, and when you understand the metrics, you understand the dynamics, we're accessing, you know, greater returns for the partners.

26:14Adam Kelly:So if they're bringing the audience, they're bringing this power, they're bringing this strength, I think they'll continue to invest, they'll continue to innovate, they'll improve the product. And, you know, again, one of the things that I mentioned earlier is the dynamic, and then my macro view is that these platforms are going to be able to convert attention for sports fans in a way that's going to drive bigger and better returns for sport without, in inverted commas, exploiting the fan. Because their ad-funded model is the area in which they're going to considerably grow. Netflix, you know, are going to generate$3 billion this year from their ad platform.

26:57Adam Kelly:That's, you know, getting close to double ITV. Now, of course, you know, it's not comparing apples for apples. But if you start to realize the size and scale, how these businesses work, I can only see this being a force for good. And we're seeing that they are increasingly focusing on sports assets and, you know, investing heavily in producing the best possible content, all of which is going to drive a big return. So what does sport get out of it? I think it's substantial growth and big returns and a bright future. What are the economics of moving from a world of media rights fees, guarantees, the old television model, the bundle to this new world that you're articulating?

27:43What is it? Is it just a greater ad share then of the output? The evidence so far suggests that they'll buy bits and bobs or they'll eventize or they'll, you know, Netflix looks at sport in a different way, which is interesting in and of itself. But actually, if you are a sports entity, you think, I can't rely on that because it's us this week. If it works, great. If it doesn't, we're out. So there's no relationship building, really. It could be dancing. It could be sport. It could be anything. Cooking doesn't matter what the product is. They don't particularly care that it's sport. They just care that there is an eyeball attached to it.

28:20Adam Kelly:I think those are fair kind of scepticisms, but I don't think they truly apply. You know, ad-driven, ad-funded doesn't mean revenue share necessarily. You know, ITV don't offer the Rugby World Cup a revenue share on advertising. They understand their ad market. But they pay a large rights fee though, don't they? No, exactly. But your point was, oh, does this now mean we're going to be in revenue share mode? But do they pay rights fees then? Trust me, they will be. Absolutely. And we know many examples where they're looking at significant investments in rights fees. It's understanding the dynamics, understanding the model.

29:02Adam Kelly:Netflix were looking at sport for, I think, a good 10 years before they eventually went into a more meaningful test. and when they went into the meaningful test it literally blew their systems up the the Tyson Jake Paul fight call it sport or something else you know doubled their highest expectations and that's why they had streaming challenges and from that point that lit a fire under the whole organization saying we need to do more in sport and and that's the power and Amazon the same you know they they start they dip their toe in the water they understand the complexity production challenges and and lots of other issues and concerns but they will build and trust me that they will they will continue to do so and you know i can reflect on you know way back at the start of my my career at img last month that i clocked up 25 years can you believe but people were saying And, you know, can we afford to move to pay TV in this market?

30:05Adam Kelly:Can we afford to move to this particular broadcaster? Because suddenly, you know, what if it doesn't work on their platform and suddenly we've alienated our previous buyers and we'll never be able to go back? Well, the obligation, the duty, the task at hand is to make sure these things deliver and deliver audiences. That's what sports increasingly, under our guidance, are encouraged to do and need to focus on, which is not a short-term transaction to license your content to a particular buyer. And if the focus is Netflix, it's to make sure that drives the best outcomes for the other side. And that economic value exchange is, we know our fans, we know our audiences, we can deliver exactly what you need, predictable, large, heavy attention and audience consumption that you can monetize and that we can benefit from.

31:04Okay.

31:05Adam Kelly:Am I convincing you? You've got that skeptical look on your face. I'm not. I think that's my resting face. I'm sorry. Is it? I get that a lot. I get that a lot. I'm quite a hard sell on various things. I get the big arguments. When you then drill down, you get to some interesting questions. My working theory is that the popularity of sport does mask some bad decisions across the industry. and that's the bit that I think is useful to get to. Richard, I fully agree with you on that. The challenge that I've been really leaning into is this, I describe it, active inertia in sport. You know, that things have been good enough for too long, that people haven't reinvented, that they haven't taken the risk, that they are a chief exec on a three-year mandate and it's like, well, I'm not going to be taking that challenge on my watch because it's too risky.

31:57Adam Kelly:And that has been the biggest issue for sport. Let's pursue that because I think it's a really interesting point. So let's just pursue that and build on that. So I was looking at, let's take an example, the PGA Tour yesterday came out and said they're revamping in a couple of years time and not next season, the season after. And it's promotion relegation. It's a bifurcation of the best and the rest. The argument being that would never have happened in a pre-Live world. So live was the moment where it shook their world sufficiently for them to have to change from being quite a complacent organization that exactly to your point, it was sort of OK for enough of the time that people didn't need to change.

32:39And so the live moment, I think, is quite educative, I think, from the sports point of view. Let's just park the Saudi money investment question for a minute, because I think that's a part of it, but we don't really know the answer to it. But one of the interesting bits is in every sport that there is a, you know, an appetite in the investor side, but for new product coming in that talks more to a sort of YouTube world than it does to traditional television. You know, all of these things. Three years ago, we'd have had the conversation said, yeah, OK, this is the route forward. It's going to blow everything up and it's going to be the market is going to be broken apart and they're going to be new maverick type properties that are overtaking.