Key members of Anschutz Entertainment Group’s sales and marketing team left for other companies after last year’s departure of Chief Executive Tim Leiweke, prompting the sports business giant to wage a fight against one of the defectors.
Shervin Mirhashemi, former president of AEG’s global partnerships division, left in July to open an L.A. office for rival Legends Sports, a move that was followed by the exit of Bill Pedigo, senior vice president of partnership sales, who went to San Diego’s Competitor Group Inc. in November.
But it was Mirhashemi’s alleged poaching last month of another senior AEG employee, Michael Tomon, that has rankled AEG officers.
The company has launched a legal fight against Mirhashemi, claiming that he stole trade secrets and violated a nonsolicitation clause.
The fight comes as Southern California has emerged as a player in the sports world’s big-money sales and partnership industry. The business involves not only negotiating multimillion-dollar naming rights for sports venues but also more mundane, yet no less lucrative, deals to sell beverages, banners, parking lot signage and other assets. Sports sponsorship spending in North America was estimated at $13.7 billion last year, according to an annual report by consulting firm IEG.
With the announced purchase of New York sports firm IMG by Beverly Hills talent agency William Morris Endeavor in December and the growth of homegrown firms such as Premier Partnerships, the entrance of New York’s Legends into the market has further marked Los Angeles as an epicenter of the business.
That expansion has created opportunities for talent to make a move.
“When Tim Leiweke left, I think it may have signaled a time for others to look at other opportunities and leverage what they did at AEG,” said Jeff Marks, managing director at Premier. “Los Angeles has become a new hub of partnership marketing.”
While Legends is seen as having different strengths from AEG, such as selling premium seating, the Mirhashemi hire is viewed as an attempt to bolster its sponsorship capabilities.
Keith M. Gregory, an attorney who reviewed AEG’s case against Mirhashemi and Legends for the Business Journal, said such lawsuits are often aimed at more than one audience.
“It’s done as a way not just to send a message to the person who left to make sure that they better comply with the contract, but also as a message sent to the current employees that are still there to say if you leave and provide confidential information or poach people away, we’re not messing around and you could be subject to a lawsuit,” he said.
The wrangling comes at a time of high-profile transition for AEG. A year ago, Philip Anschutz was soliciting bids for AEG, only to pull it from the market when he did not receive bids close to the $10 billion he was seeking. At the same time, AEG announced the departure of Leiweke, its chief executive since 1996. The moves raised doubts about its ability to finish downtown L.A. football stadium Farmers Field, though Anschutz has said publicly that he remains committed to the project. Randy Phillips, chief executive of subsidiary AEG Live, was ousted in November.
Executives of Legends and AEG declined to comment.
Leiweke built AEG’s sales and marketing team into an industry force. Mirhashemi ran the team for six years along with Todd Goldstein, who remains AEG’s chief revenue officer. During that time, Mirhashemi worked on naming rights deals that included the $700 million Farmers Field deal and Mercedes-Benz Arena in Shanghai as well as sponsorships with Coca-Cola and Barclays.
Though Mirhashemi’s departure has not been directly attributed to Leiweke’s, he was heavily recruited almost immediately after Leiweke left. In an article last year in Sports Business Journal, Legends Chairman Dave Checketts said that he “turned up the heat” on recruiting Mirhashemi a month after Leiweke’s departure in March. Mirhashemi joined in July as the firm’s L.A.-based president and chief operating officer.
Legends, whose owners include the Dallas Cowboys and New York Yankees, is a sports business company that specializes in food and merchandise services, sales and marketing, and project development. It has recently stepped up its Southern California presence, signing deals to oversee concessions at Angel Stadium of Anaheim and the Los Angeles Memorial Coliseum.
It does not often compete directly with AEG, which handles sponsorships and partnerships for its own properties. Legends even reportedly consulted with AEG on the premium-seat sales for Farmers Field.
Still, AEG sued both Legends and Mirhashemi in Los Angeles Superior Court last month, claiming unfair competition and breach of contract.
It claims that Mirhashemi violated an agreement not to solicit AEG employees for one year when he hired Tomon, senior vice president of premium sales, last month. Tomon was allegedly offered higher compensation and an opportunity to participate in the equity of Legends.
It also claims he violated agreements by taking confidential information to his new employer, though the suit does not say what information was taken or how it’s been used.
“Mirhashemi had access to AEG’s most sensitive and confidential information … including confidential information regarding AEG’s partnership agreements and prospective business opportunities on a worldwide basis,” the lawsuit states.
Though AEG does not often compete directly with Legends for deals, it might be able to argue that the two compete for sponsors, and that Mirhashemi’s knowledge of AEG’s agreements could aid him in getting deals to go his way, Gregory said.
The departures of Leiweke, Mirhashemi and Pedigo leave few key people remaining on either side who negotiated the landmark Farmers Field naming rights deal. Farmers Insurance Group Chief Executive Bob Woudstra and Paul Patsis, its president of enterprise marketing, both retired in 2011. According to an ESPN report, the deal contains a provision that allows Farmers to back out next year if construction has not begun.
A Farmers spokesman expressed optimism that the deal would go through.
“We remain hopeful that the (National Football League) will bring football back to Los Angeles, and we are confident in AEG’s ability to make this happen,” he said.
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