Just as his career as a lawyer was taking off, Arthur Lafave was faced with a difficult decision: continue to work for a secure law firm or leave and pursue a risky business venture.
Lafave chose the latter.
“It was an extremely risky move [and] it was difficult to explain to my parents,” said Lafave.
It paid off, though, as Lafave went on to become the Chief Financial Officer and Vice Chairman of International Management Group (IMG), a company founded by Mark McCormack that is recognized today as the global leader in sports, fashion and media.
The company started on a golf course in 1960 with a handshake between McCormack and Arnold Palmer, widely recognized as one of the greatest golfers of all time. The handshake established that McCormack would represent Palmer, negotiating his contracts and tournament appearances.
At the time, both McCormack and Lafave were working for Arter and Hadden, a law firm based out of Cleveland, Ohio. While McCormack was looking for more clients, Lafave was looking for more tax work. The two quickly combined forces and it wasn’t long before they began representing two more golf legends, Jack Nicklaus and Gary Player.
“Basically we were maximizing their incomes and finding them money,” said Lafave, who has a law degree from Yale. “Most of what we found was from people that approached them. The client had no business sophistication to understand how to deal with those offers.”
According to Lafave, Arter and Hadden was ambivalent about representing professional athletes because it was an undignified thing to do.
Undignified or not, the business continued to grow, and Lafave decided to leave Arter and Hadden to work with McCormack full time.
“I had a choice of leaving the firm and going with the business [where I was] making three times as much as what I was making with the firm,” said Lafave. “When I made that decision, I talked to Mark and I wanted to have equity in the business.”
International Management Group was soon officially founded and headquartered in downtown Cleveland. At the time, IMG was promoting Palmer, Nicklaus and Player, also known as “The Big Three,” which created a dramatic increase in their incomes.
While IMG was gaining attention and credibility, Lafave and McCormack had established a solid work relationship.
“Mark was the flair that was attracting attention. He was a golfer, I wasn’t,” said Lafave. “People trusted him. I was much more nuts and bolts; I formed the companies [and] the license agreements. I was the one that made sure we didn’t have options that went on forever.”
While Mark was gaining clientele, Lafave was doing the behind-the-scenes work which included managing the finances of IMG’s clients. His experience as a tax lawyer was invaluable, as he would invent certain methods and strategies that would save his clients’ money.
“I once worked on a structure that substantially reduced that individual’s taxes, I was using something I invented that involved international tax laws. It was completely legal. I wasn’t hiding money or anything like that – everything was reported. That gave me quite a professional thrill, a feeling of accomplishment and it was noticed among the golfers,” said Lafave.
IMG expanded into tennis a few years later and it helped fuel the sport’s growth during the 1970s. The business went from solely representing athletes to distributing and producing televised sports.
“It wasn’t very long before we had an office in New York, an office in Los Angeles, an office in London, and by 1968 or 1969, an office in Tokyo,” said Lafave.
Lafave started working in Tokyo and ultimately convinced McCormack to add the office in Japan. Lafave went on to hire IMG’s first major staff group in Japan, which consisted of about 60 people.
“Golf caught on in Japan because of the American occupation in Japan,” said Lafave. “The Japanese adapted really well.”
As a result, golf courses were sprouting up everywhere in Japan despite the country’s small size. According to Lafave, farmers would “use cash in exchange for a document tantamount to a deed” so that golf courses could be built there. This included each farmer going out into the land with a satchel of cash.
“There’d be a group of about four or five guys [who had a map and plan] for a new golf course, and they’d all take a suitcase full of cash and they’d offer the farmers cold cash for their property,” said Lafave.
Meanwhile, Lafave’s responsibilities were growing. While he continued to handle taxes and legal work, he also led his new staff in Japan, where he visited three times a year often for four to five weeks at a time.
“It’d be 100 dollars for a short call to Cleveland,” said Lafave. “My general rule was that on a trip like that you make one phone call a week to your home.”
In 1980, Lafave became CFO of the company, which now had offices all over the world. Not surprisingly, IMG’s finances were becoming hard to keep track of, and Lafave required that IMG have one check book for organization purposes. In the late 1990s, IMG adopted new German accounting software which “had a global vision in mind.”
In 2004, Lafave sold his interest in IMG to Forstmann Little, but he still holds the position of Vice Chairman Retired.
Steve Levine can be reached at [email protected]. Jess Gannarelli can be reached at [email protected].