Let's face it, you don't build a $700 million business from scratch by being Mr. Nice Guy. "A lot of people accuse Mark of driving too hard a bargain," says Frank Olson, CEO of the Hertz Corporation and a longtime business associate of McCormack's. "I think the problem may be that Mark gets himself positioned with leverage, and if he has leverage, like any good businessman, he will use that. And a lot of people resent it."
IMG clients are, unquestionably, the beneficiaries of this leverage. Take Palmer, whose career earnings on the PGA Tour are less than $3 million. IMG's business acumen and Palmer's popularity have combined to create a financial empire for Palmer worth hundreds of millions of dollars. Among Palmer's holdings: two aviation agencies; the Arnold Palmer Golf Management Company, which employs 300 people and operates 15 resorts and golf clubs around the world; the Palmer Course Design Company, which has some 40 golf courses under construction; and six automobile dealerships that rang up some $900 million in sales last year. And how does the IMG leverage work to Palmer's benefit? Well, in 1988, Hertz, in addition to paying Palmer $400,000 for being a company spokesman, also bought more than 60,000 cars from Palmer's dealerships, "at competitive prices," says Olson. "It's not a contractual arrangement. We'd just rather do business with friends than strangers."
Palmer's name is the most widely licensed in Japan—bigger than Ralph Lauren's or Calvin Klein's. It graces things ranging from tearooms to car deodorizers. In 1989, at age 60, and 16 years removed from his last victory on the PGA Tour, Palmer earned $12.5 million in endorsements and appearance fees, more than any other athlete in the world (box, page 102).
Not a bad record to amass for your flagship client, although McCormack's success on Palmer's behalf has cost IMG. Back in 1970, Nicklaus, said to be frustrated at playing second fiddle to Palmer at the firm, severed his relationship with IMG and set out on his own. "To have held on to Nicklaus, I couldn't have expanded the company," McCormack says now. "I'd have had to personally watch over him. Instead, I was creating IMG. I'd have won the battle and lost the war."
The war, for McCormack, has always been global. The domestic market was, and still is, important to IMG, but McCormack's goal was that his firm be the dominant sports management, promotion and marketing organization in the world. Clearly his goal has been attained. "Even back in the early 1960s, when there was very little going on in the way of international business, Mark was doing endorsement deals in Japan and the U.K.," says Ed Keating, a former executive with IMG, who left the company 14 years ago and now heads his own sports management firm. "All of that is paying off tenfold for McCormack today."
"We staffed up internationally before we could really afford to," says McCormack, who has had an IMG office in London since 1966, "and paved our way through some jungles that others won't find easy to follow."
IMG's strategy has been to sign the best athlete in each country and use that association as an entrée to bigger and better things in the athlete's homeland. McCormack added English golfer Tony Jacklin to IMG's growing stable in 1967, and 10 years later the Royal and Ancient Golf Club of St. Andrews signed IMG to be its overseas television agent for the British Open, a relationship that is still thriving.
The absolute personification of the aggressive, hard-driving American, McCormack was not exactly the first person that most members of the ultraconservative Royal & Ancient (R&A) thought should be handling the club's TV negotiations. Says Colin Maclaine, former captain of the R&A, "One of the concerns we had was that Mark controlled more of professional sport than was healthy. Another was that his methods were dubious, that he was dishonest. I looked into all of this before doing business with him and found the rumors to be quite unfounded. Mark has been very reliable and has produced the gains he said he would. When we got involved with IMG, we earned something like $100,000 to $150,000 a year from ABC. Inside of a year our overseas television contract had soared to $1 million."
Similarly, skier Jean-Claude Killy gave IMG credibility in France. McCormack signed Killy after he won three gold medals at the 1968 Winter Olympics, in Grenoble, and it was Killy who convinced the Albertville Olympic Committee (COJO) to hire IMG as its marketing arm for the '92 Winter Games.
"The McCormack image is not very good in France," says Killy, who is now copresident of COJO. "He is seen as too professional, too hard. But if we are to organize the best Games ever, we must have the best people, and IMG is the best."