Tinseltown Takes a Sporting Chance

July 24, 2008— -- Hollywood talent agencies, constantly seeking new clients, have latched onto a new source of wealth: sports stars.

At first glance, it seems a strange pairing. But sports really are just another form of entertainment. Movies and sports both have big-name stars and both make us cry, laugh and even scream out in terror.

The agencies already have most of the big-name Hollywood stars signed up. And while a star is born every minute, there are never enough to pay all the bills.

Enter, stage left, sports stars.

"Hollywood itself is not necessarily a growth business for the talent agencies, so they have been trying to branch out to new fields," said Georg Szalai, business editor at the Hollywood Reporter.

Just this week, baseball superstar Alex Rodriguez became the latest celebrity athlete to sign with a Beverly Hills talent agency. The deal with the William Morris Agency is expected to help A-Rod expand his presence beyond the baseball diamond, bringing him -- and the agency -- millions of dollars from new endorsements. The agency has had a sports division since 2001, and Rodriguez now joins a lineup that includes Serena Williams, Maria Sharapova and Kevin Garnett.

A few blocks away, competitor Creative Artists Agency is also well on its way to becoming a powerhouse in the sports world.

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Best known for representing George Clooney, Julia Roberts, Steven Spielberg and Bruce Springsteen, CAA started branching out to sports in early 2006. Its client list now includes brothers Payton and Eli Manning, LeBron James, Derek Jeter, Bode Miller and David Beckham.

CAA doesn't just work out endorsements but also does contract negotiations for its clients. It represented four of the top 10 picks in this year's NFL draft and is working with the New York Yankees on corporate sponsorships of its new stadium.

For the sports stars, this relatively new partnership can mean more money plus the ability to draw on the established resources of these Hollywood agencies. For some that means using their name to start new businesses, maybe outside the sports world. For instance, Magic Johnson is now involved in movie theaters and real estate.

"They all have to worry that by the time they hit their mid-30s or late-30s, their careers are over," Szalai said. "They might have made a lot of money, but what do you do beyond that?"

Szalai said that in people's mind sports and Hollywood have intersected for years. The business world is now catching up.

"Early in the 20th century, you saw people treat sports personalities like celebrities," he said. "You had people in Hollywood dating sports stars. Just think of Marilyn Monroe [who married baseball great Joe Dimaggio]."

Charles Hall, a professor of branding at Virginia Commonwealth University, says talent agencies are "really trying to diversify their offerings."

Jonah Freedman, an editor and producer with Sport Illustrated's Web site, SI.com, said that athletes need the agencies to rake in really big deals.

Take Maria Sharapova and her deal with William Morris.

"She earns like $20 million a year in endorsements and appearances and that is completely as a result of her taking advantage of that deal," Freedman said.

Now he expects Rodriguez to start making some big deals.

"A-Rod's been the highest-paid player in baseball for the last six or seven years, and he's never really capitalized on his endorsement potential," Freedman said. "I think some of this is due to the fact that he is the highest-paid player in baseball."

For years, Freedman said, Rodriguez was working off the stigma of signing a quarter-billion deal.

"The backlash from that sort of destroyed his image for a while," he said. "Everybody was arguing: How can anybody make this much money?"

Now Rodriguez can make some – if not more -- of the millions that his Yankee teammate Derek Jeter makes from endorsements. (Freedman said Jeter is the highest-paid endorser in baseball.)

Rodriguez will "eventually become the all-time home-run king, and I think part of this deal was to capitalize on that," Freedman said. "It's not about acting. He's not going to start appearing in Hollywood movies. This is about him increasing the brand awareness."

The Hollywood agencies are also learning a bit from the video game industry. While movies have struggled in recent years, video games have prospered. And one of the strongest genres is sports.

"Sports games are one of the most time-honored genres in the video games industry, and even as content expands and more nontraditional games find success in the marketplace, the importance of sports games does not diminish," Anita Frazier, a toy and video game analyst with NPD Group said in an e-mail.

Mike Lewis, a professor studying sports marketing at Olin Business School at Washington University in St. Louis, said the trend doesn't surprise him at all.

"We're seen a real trend in the last 15 years towards sports and entertainment becoming the same thing," Lewis said. "Sports just becomes another category within music or film stars."

"In this day and age, we have athletes who make much, much, much more money off the playing field than on the playing field," he added. "The type of trend makes a lot of sense. It's athletes looking for expertise in this whole other realm."