February 28, 2014 1:12 pm

IMG-William Morris deal: Pairing stars with designers

NEW YORK, NY - FEBRUARY 11: Gisele Bundchen walks the runway at the Alexander Wang Fall 2012 fashion show during Mercedes-Benz Fashion Week at Pier 94 on February 11, 2012 in New York City. (Photo by Rabbani and Solimene Photography/Getty Images)©Getty

IMG model Gisele Bündchen

Ever since 1923, when Salvatore Ferragamo arrived in Hollywood from Italy to open a small shoe shop that evolved into a luxury goods group, the worlds of film and fashion have enjoyed a mutually beneficial relationship. Now the formal monetisation of the exchange is about to reach its apogee, thanks to the impending $2.3bn sale of IMG to William Morris Endeavor Entertainment, combining a sprawling fashion and modelling agency with one of cinema’s top talent groups.

The IMG purchase, financed by Silver Lake, a private equity firm, puts WME into new territory. IMG’s main business is marketing sports events, such as Wimbledon, but fashion is also a sizeable part of the company – about 10 per cent of its $190m annual earnings before interest, tax, depreciation and amortisation.

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It owns and operates 15 fashion weeks – including Milan, New York and London – as well as a modelling agency with Kate Moss and Gisele Bündchen on its books, and Art + Commerce, a photography agency and archive that has long-term relationships with fashion names such as Prada, Versace and Calvin Klein.

So the question being asked around Hollywood is what will WME do with its new asset?

Endeavor was born in 1994 when Ari Emanuel, the hard-charging brother of former White House chief of staff Rahm (now mayor of Chicago) and then an agent with International Creative Management, struck out on his own: in 2001 he brought in Patrick Whitesell, who represents Matt Damon and Ben Affleck, among others. The new company grew rapidly, thanks to a roster of top talent including Mark Wahlberg and Charlize Theron, also one of the faces of Christian Dior, and in 2009 merged with William Morris to become WME, adding book publishing, music – and stars such as Lady Gaga and Justin Timberlake – to its repertoire.

With the IMG deal not yet formally signed, WME declined to comment on its plans. Though the potential of IMG’s sports properties hogged the headlines post-deal – the company is active in highly lucrative college sports leagues as well as golf – a closer examination of IMG reveals plenty of fashion opportunities for its new owners.

Fashion weeks

Detailed coverage from the catwalks of this season’s fashion shows in London, Paris, New York and Milan

Over each fashion week it operates, IMG takes payments from designers and sponsors (such as Mercedes-Benz, which owns the naming rights to New York Fashion Week), and sells and manages the television rights to each event. Those rights should be more valuable if there is a way to incorporate WME’s film, TV or music clients into the event by pairing stars with designers, or aligning them with particular fashion week brands and sponsors. In return, runway-side appearances by celebrities go round the world on the social media highway, providing instant profile-raising. And that does not even begin to get into fashion’s evolution into reality-TV staple.

Meanwhile, WME has other businesses and investments that could benefit from IMG’s fashion division. WME is a partner of Raine, a merchant bank which has taken stakes in companies including Vice, the music and youth culture brand that acquired fashion magazine i-D last year.

For its part, fashion is increasingly using Hollywood storytelling techniques to sell products, engaging directors such as Mike Figgis and Baz Luhrmann to make short films (for Lanvin and Chanel respectively). What if you could package the director, star, show and brand? Ari Emanuel may have the answer but, at least for now, he is not telling.

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