SEVENTH ON SIXTH SOLD TO IMG, MALLIS TO RESIGN AS CFDA DIRECTOR
Byline: Eric Wilson
NEW YORK — Seventh on Sixth, the sometimes controversial but mostly successful architect that centralized the big American fashion shows, confirmed Friday that it had reached a deal to privatize itself by selling its trademarks and operations to the sports management and marketing agency IMG.
As part of the deal, Fern Mallis, who is executive director of both the Council of Fashion Designers of America and its offshoot 7th on Sixth — which are operated as separate entities, though with the same staff — will resign her role with the CFDA to join IMG in an as-yet-untitled position, running the fashion show operations.
Stan Herman, who will remain president of the CFDA, said he has also signed a consulting contract with IMG and will commence a search for Mallis’s replacement shortly.
The agreement, pending due diligence, will likely close by April and mark a major transition in the operations of the city’s dominant runway venue, as it would shift hands from the not-for-profit auspices of 7th on Sixth to a private company with global revenues estimated at $1.3 billion.
IMG and 7th on Sixth would not disclose the terms of the deal, but proceeds from the sale will go to the CFDA Foundation to further its philanthropic activities, which are aimed at promoting American fashion, supporting designers, funding scholarships and promoting its campaigns against breast cancer and AIDS. Herman said that an immediate goal for the foundation will be to reestablish 7th on Sale, a massive sample sale last held for a three-day event in 1995 to benefit AIDS charities.
The deal will not affect the fall collections set to open on Thursday and run through Feb. 16, the first New York season to be known as Mercedes-Benz Fashion Week, reflecting 7th on Sixth’s new title sponsorship signed in January, Mallis and Herman said.
But it raises a multitude of possibilities after that, from tapping into IMG’s TV production facilities to broaden the global exposure of the shows and creating new marketing opportunities for designers, such as staging shows in other American cities or for other apparel categories, to creating some fashion show venues that would be open to the public.
On the other hand, some producers have expressed concerns about IMG’s power in the modeling industry — with Gisele Bundchen, Eleanora Bose and Aurele Cladel among the stars on its payroll — and what changes could be made to turn 7th on Sixth into a profit-making venture, such as higher-priced rentals. Some designers have questioned whether the shows could become too commercialized if more sponsors are brought on board or if their artistic integrity would be compromised if the shows were to become open to an abundance of marketing-driven events.
During 7th on Sixth’s explorations into selling the trademarks, City Hall was wondering how the organization planned to sell the tents without the city’s influence over Bryant Park, the home of the shows since their inception in 1993. It was with the city’s support that 7th on Sixth was able to return to Bryant Park after an ill-fated season in 1997, when they were moved to the Chelsea Piers because of difficult negotiations with park management.
At the same time, the CFDA has been the subject of some criticism from the industry for its closely tied connection to 7th on Sixth, which officially operates with the CFDA’s cooperation. Its detractors complained that the organization had become too focused on the business of running fashion shows and had veered too far astray from its original aim, established four decades ago, to further the cause of fashion as an art form and to promote American designers.
Mallis and Herman, both in their 10th year with the organizations, said in an interview Friday that they felt the time was right to reestablish the CFDA as a philanthropic foundation and to partner 7th on Sixth with a marketing giant like IMG that could capitalize on the appeal of fashion shows in ways that are beyond the resources of a not-for-profit company and still beneficial for the designer businesses.
As for the concerns of privatizing 7th on Sixth, Mark H. McCormack, founder and chief executive officer of IMG, responding publicly on Friday for the first time since the company was identified as a potential suitor for the shows in August, said, “The designers should be immensely enthusiastic. You’d be hard pressed to look at anything we’ve been involved with that hasn’t been enhanced in part as a result of our involvement.”
IMG’s scope is greater than its modeling division, with which the fashion industry is most familiar. The company also markets sporting events like Wimbledon, and manages athletes, with clients including Derek Jeter, Serena and Venus Williams and Tiger Woods, represented by an international staff of 3,000 in 80 offices in 32 countries.
Its Trans World International division produces some 6,000 hours of TV programming globally for 240 different sports, while IMG also has a major cultural side, with a literary agency, classical music division that includes Itzhak Perlman as a client, and production and marketing projects for the Nobel Foundation, the Kennedy Space Center and the Smithsonian Institution.
“We’ve been dealing in the fashion arena for five years and we have concluded that for the long-term, this could be a very profitable thing for us,” McCormack said. “But to do that, we have to maintain the shows’ high quality and prestigious image. If we do anything to hurt that, it’s going to destroy our investment.”
Mallis added, “There’s no way we’re going to turn over 7th on Sixth to a company and leave our designers in a lurch. There have been a lot of questions if this will be more expensive or how it will be run, but a well-run business will not be more expensive. They are not going to price themselves out of business.”
As for the concerns maintaining their presence in Bryant Park, which has been a challenging issue for the organization since the shows began in November 1993, Mallis said, “Our status is constantly in negotiations. We intend to sit down with them going forward and hopefully strengthen our relationship and provide more opportunities.”
The designers on 7th on Sixth’s board of directors approved the negotiations with IMG in December, and several of them said Friday that it was a necessary move for the future of the shows.
Calvin Klein said, “We all have the feeling — and we will have controls in this agreement to see to it — that the integrity of 7th on Sixth remains always up to our standards. In truth, we all felt we needed a real company to manage the whole thing on a professional level and a serious business that can do things for us all over the world. They have given us all the reassurances that the board needed to do this.”
Donna Karan said she thinks the sale to IMG is “a great opportunity and I support it 100 percent.”
Joseph Abboud said the deal could provide opportunities for 7th on Sixth and the CFDA to promote American fashion, particularly in supporting emerging designers.
“The development of new talent is extremely important for this industry,” he said. “We also have to promote our designers as American designers and make certain we are not in a backseat to anybody.”
With Mallis’s departure, several staff members of 7th on Sixth, including David Caruso, director of marketing, will join her at IMG. Herman, whose term as president of CFDA expires in June, said he would remain with the organization well through the transition, although he has begun to consider his retirement and succession plans.
As part of his role as a consultant to 7th on Sixth and IMG, he said he will also form an advisory committee, possibly of designers or store buyers, to act as liaison between the CFDA and IMG concerning Mercedes-Benz Fashion Week.
“This is really exciting for the CFDA Foundation,” Herman said. “We’ll have a chance to do all the things that we don’t have the time to do anymore. I will always be involved in the CFDA. I can’t not be. It’s become too much of my life.”
As to the impact of IMG’s ownership on the shows, McCormack said it will likely come in the form of “synergies of IMG’s strengths in television, marketing and fashion.” One possibility is to make the shows available globally on the Internet or television. Seventh on Sixth has a 3-year sponsorship deal with E! Entertainment Television and its Style Network to broadcast fashion shows in the U.S.
Mallis added that fashion shows for the public could be a viable opportunity for IMG to create marketable and profitable events without damaging the reputation of its participants.
IMG’s interest in acquiring the shows comes from the appeal of fashion programming on a global basis, he added. Like sports, it is an event that doesn’t require language to understand, “so it can be as interesting to people in Australia or Canada as it is to people in Germany or South Africa.”
Designers are like athletes, too, as some have a moderate window for their earning careers and they share similar financial and tax problems as they travel around the world, he said.
The CFDA will benefit through its foundation, which will be relieved of the strain of relying primarily on its annual awards gala for its largest source of funding, and it will also have the opportunity to redefine itself as an organization, Herman said.
“It’s a great opportunity for the CFDA board to sit down and regroup, and to decide, ‘What do we want to do now?”‘ Mallis said. “It’s going to be an interesting time for the group and for designers to come back and to be more involved in the organization.”