SFX On Its Own Due to Conflict with Clear Channel Owner

SFX Sports 'On its Own' to Avoid Conflict of Interest

Parent company severs ties due to Tom Hick's role as team owner

New York, March 28, 2001 -- According to published reports, Clear Channel Communications, which owns SFX sports group is severing some of the ties between the two because of a conflict of interest with Vice Chair and Texas Rangers owner Tom Hicks, although Clear Channel will remain the ownership of SFX. Under the new arrangement, Clear Channel will not have the right to remove directors or officers of the new company, only to receive the profits.

In August of 2000, Clear Channel acquired SFX, and Tom Hicks became the Vice Chairman of the company. Hicks is the majority owner of the Rangers and Dallas Stars, and Clear Channel also owns small parts of the Colorado Rockies and Tampa Bay Devil Rays. This led to the thinking that Hicks might have a conflict of interest when the company was representing players while simultaneously holding an interest in teams.

According to an Associated Press article, Randy Hendricks, who will become CEO and president of "SFX Baseball Group, Inc." said "this is something we very much wanted to achieve and we've done so. This, in my judgment removed the appearance of conflict because in reality, we don't ever want to have a situation where there is even an appearance of conflict, much less an actual conflict." In a Bloomberg article, Hendricks said that Clear Channel will still own the "reconfigured" agency, but "several provisions are now in place to insulate" it from Clear Channel management.

SFX's client list includes Pedro Martinez, Roger Clemens, Mike Mussina, Nomar Garciaparra, Mariano Rivera, Chuck Knoblauch, Jason Giambi, Larry Walker, Moises Alou, Vladimir Guerrero, Andy Pettitte, Al Leiter and Jim Thome.

According to the Associated Press article, Jim Bronner and Bob Gilhooley, who were fired by SFX last month, sued SFX Entertainment on Feb. 2 in federal court in Chicago, asking for $60 million in damages. They sold their company, Speakers of Sport, to SFX on Feb. 2, 2000, for $29.76 million, plus another $10 million in possible future payments. In their suit, they said they were defrauded because they weren't told about SFX's merger discussions with Clear Channel.

Matthew Roberts

Sources: Bloomberg News 3/22/01
Associated Press (as found on espn.com)