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PACIFIC LIFE MEDIA CONFERENCE

March 1, 2006

MATT VAN TUINEN: I'd like to do a brief introduction for the folks that are going to be involved with the call that will be available to take questions. They may not be on at this very second, but they will be joining us shortly if they're not here already.
I have the two principals of PM Sports, Charlie Pasarell and Raymond Moore. Our friend Pete Sampras, great tennis legend should be joining us shortly as well. George Mackin, the owner of Tennis Magazine. Patrick Imeson of Calim Private Equity. We have Ed Monarch, the mayor of the City of Indian Wells. Franklin Johnson, the president and chairman of the board of the USTA. I have Etienne de Villiers from the ATP Tour. Larry Scott, the CEO of the Sonny Ericsson WTA Tour. Also Arlen Kantarian, chief executive of professional tennis of the USTA.
We'll start with some comments from Charlie Pasarell and Raymond Moore, then I will take a few preset questions from reporters, then we'll open it up for general questions.
With that, I'm going to turn it over to Charlie and he will open up the call.
CHARLIE PASARELL: I am delighted to be here today with my partner and friend Raymond Moore to announce our new partnership for the Pacific Life Open. Since my initial involvement with this event, I have had a great vision and passion to see it become one of the premiere events in the world. Many chapters of the successes have opened and closed, and I am very, very proud to start this new and exciting chapter with a new group of partners.
I would like to take this opportunity to express my appreciation to all of those who believed in this tournament and invested to keep it here in the City of Indian Wells. In particular, I want to single out the City of Indian Wells for stepping up at the very beginning of the process, the USTA and its president Franklin Johnson, its board, for having faith and strongly supporting what we are doing here at Indian Wells, tennis legends Pete Sampras, Chris Evert and Billie Jean King, as well as George Mackin and Bob Miller from Tennis Magazine for sharing our vision. To them and to all the other investors, we're very grateful.
At this time it is my great pleasure to introduce my partner and president of PM Sports Management, Raymond Moore, who along with George Mackin who unremittingly spearheaded this endeavor, without them this press conference would not be taking place today. So welcome to all of you. Raymond.
RAYMOND MOORE: Good morning to everyone. Those of you in Europe, good evening. My name is Raymond Moore. I'm Charlie's partner. It's really my pleasure to welcome new partners to this endeavor.
I think what we've done is we have assembled the most powerful strategic tennis partnership in the game today. I think we are the only entity that can lay claim to have a Grand Slam as a partner, the USTA, Grand Slam winners, legends, Pete, Chrissy and Billie Jean, as well as the largest tennis magazine in the world, Tennis. With that, I can say that we are very, very excited to have formed this strategic partnership, and we look forward to making this truly the US Open of the West.
With that, we'll take your questions.
MATT VAN TUINEN: We'll go ahead and take questions.
Q. I'm curious as to how you managed to persuade the likes of Pete and Billie Jean and Chris to be a part of this endeavor, and exactly what their contribution to it is going to be?
RAYMOND MOORE: In fact, the credit to getting the three superstars goes to George Mackin and Bob Miller, who actually were responsible for bringing the three superstars in. This is not a transparent partnership or effort on their part. They have written real checks. We're not just using their names. They have, in fact, written substantial checks as investors. We are extremely excited at having them aboard to help grow this event.
Q. I think I may be right in saying, is this the first time, Ray, in your long and distinguished history involved in tennis that players have actually done this, have signed to supplement and underline a tournament like this? I think it's an unbelievable achievement on everyone's behalf.
RAYMOND MOORE: I agree. I've never known of that to happen in the past.
Q. Historic in many ways.
RAYMOND MOORE: Yes, it is. People always talk, you know, about athletes guarding their financial net worth once they've accumulated it, for not giving back to the game. Here we have a contradiction. Pete Sampras, Billie Jean King and Chris Evert, reaching into their pockets to keep this great event in the United States, in California, in the City of Indian Wells. We are grateful to them, and especially to George Mackin and Bob Miller for making this happen.
Q. How close were you to having this thing spirited off to Shanghai, Doha or any other precinct?
RAYMOND MOORE: Well, too close. We were skating on thin ice many, many times. Again, I would like to pay tribute to Ted Forstmann of IMG who could have pulled the plug on us at any time if he wanted to. He certainly had the wherewithal to do that and the right, but he did not. He exhibited patience. He gave us an inordinate amount of time to assemble the investors.
We missed deadline after deadline. He would have been within his right to pull the plug. He did not. Along with three key people in IMG, Bob Kain, Gavin Forbes and Stephanie Tolleson, who actively supported keeping this event in Indian Wells, they gave us the time in which to raise all the funds, put all the pieces together, because this was a very, very complicated deal.
There were many, many times, even this year, 2006, in the last eight weeks, when I thought this event was going to go elsewhere.
Q. Are you talking about Mr. Forstmann?
RAYMOND MOORE: Yes, I am.
Q. I would like to zero in on what I see is the only problem with the tournament. If you come to Indian Wells, you see a magnificent sporting spectacle. If you watch it on television, you see the same. But when you pick up the American press, you search and search and search for a minor paragraph at the bottom of 15 pages of college basketball. Arlen Kantarian, expert on the subject, or Ray Moore or Charlie or anyone, does someone want to suggest different ways of trying to make the sports editors of America realize this is one of the biggest sporting events in the country.
GEORGE MACKIN: Franklin is probably better to answer the question as far as television.
FRANKLIN JOHNSON: I think the point you raise is quite valid. The visibility of tennis in America is not anywhere where we would like it to be in terms of newspapers covering our game. I think that's one of our challenges going forward. I plan to address it.
I know at the grass roots level, we've just recently engaged what we call tennis service representatives to work the local level with tennis. Part of their training is going to be to contact the media in different towns and cities to try to get better coverage for tennis.
But I think we need to do more with also the major papers of America, where in many cities tennis doesn't get the coverage that it deserves.
The point you raise is quite valid. But there's a huge job to be done to get there. I accept that challenge. It's a very valid point.
RAYMOND MOORE: If I may say one thing. It's an anomaly to me the coverage that we get. On one hand, every single year in every major tournament in the United States, the attendance keeps increasing. There are more live bodies going out to watch tennis, but at the same time the television ratings decline. It's difficult for me to be able to resolve those two issues.
But I agree with you. We all need to put our shoulder to the wheel and find ways in which we can publicize the game more favorably. In fact, last year, 2005, from the tennis industry of America, a lot of very positive messages came out. There's been an increase in participation in the game. I think that's been due to a lot of the programs the USTA have implemented. There's been an increase in equipment sales. I think George Mackin and Bob Miller will tell you there's been an increase in the circulation of their magazine.
There are a lot of factors that are working together to increase the visibility. But we're nowhere near satisfied with it.
Q. You mentioned the importance of the television ratings, getting attention. If that's so important, why this huge investment of money in a tournament that is not in a major media center community?
RAYMOND MOORE: Well, I mean, when Charlie and I first came to the dessert, we started this tournament, people said, "What are you doing starting a tennis tournament in a small community like that?" A better way to answer that question, there's a golf tournament that most people know, and it's played in Augusta, Georgia. It's called the Masters. That seems to not to be a media center of the world.
There are several other golf tournaments, and they're referred to as the British Open where they're played in very small towns, not cities, towns, in the northern part of the United Kingdom. To be an authentic sporting event doesn't seem to me the prerequisite is to be in a major media center.
CHARLIE PASARELL: Just to point out a couple of other things. There's also a pretty well-known race here in America called the Kentucky Derby, in a town called Louisville, Kentucky. There's also a very big auto race called the Indy 500 in Indianapolis, not in Chicago, New York or Los Angeles.
In fact, I think the attractiveness of this event is that in March, Indian Wells truly becomes the center of tennis, center of a major sporting event. It's a very appealing place for media, players, fans to come. That's why we have over 280,000 people, great media coverage.
Q. Can one of you elaborate on this concept earlier, the US Open of the West, what you mean by that?
RAYMOND MOORE: What we mean by that, there is only one US Open, and that's played at the end of August in New York. It's a major event. It's been in existence for well over a hundred years. No one is going to duplicate or compete with the US Open.
What we've created here on the West Coast, 3,000 miles away, you know what they say, the best part of flattery is to try and impersonate, and that's what we're trying to do. We're trying to duplicate the US Open on the West Coast. I needed Franklin to help me out there.
ARLEN KANTARIAN: I understand I missed a question on TV and PR. I just wanted to jump in on this question, as well. I think, in addition to what everybody has said, and in addition to the fact that this creates a new really ownership dream team for tennis, what this enables us I think to do more directly is to create a little more leverage as we can potentially going forward package the Pacific Life Open into our discussions with our television partners, sponsor partners, even ticketholders, believe it or not, that we have at the US Open. As you know, we've begun to do that with the US tournaments in the summer.
We are also creating, I don't know if Etienne and Larry Scott are on the phone, a new-found partnership and spirit of cooperation with our friends at the ATP and Sony Ericsson WTA Tour. Several meetings last week involving calendars, scheduling, television packaging. I think this just helps kick in a new era of being able to package for television sponsorship and for the press this sport much more effectively than in the past.
Q. Arlen, is there a possibility then that the Pacific Life Open might be folded in in some way to the US Open Series?
ARLEN KANTARIAN: We've had initial discussions about that, and there are those possibilities that obviously might include the other springtime tournaments, as well. But without giving anything away, that's something we want to talk to Charlie, Raymond and George Mackin about at our initial board meeting.
Q. To the mayor of Indian Wells, I was getting on a train to go to the Monte-Carlo tournament last year, there were a group of about five or six Americans talking about what a great time they'd had at Indian Wells. It's becoming increasingly clear that there is a range of people who are prepared to travel to tennis tournaments all over the world. For everybody, is there more attention being paid towards utilizing travel, getting a European travel agency to aggressively sell Indian Wells as a destination in March to go and watch tennis?
ED MONARCH: My wife and I traveled to Southeast Asia, we've been there nine out of the last 10 years. It's amazing how many people in that area know about Indian Wells only because of the tennis. We think the potential is huge. The television coverage must be phenomenal because everybody sees matches that I know we're not able to see here.
I think the potential for tennis travel out of this country is phenomenal. I'll leave that in the hands of the travel experts, but we in Indian Wells would certainly welcome them.
CHARLIE PASARELL: One of our fastest-growing divisions of revenues has been the travel packages that we started about seven years ago. It is absolutely where we package hotel rooms, basically all the components of people that want to come from outside this community and need hotel rooms and tickets, and even transportation. That is absolutely such a fast-growing division of our operation.
This is just what we do. In addition to that, we work with other people like Steve Furgal, who has actually been very successful in marketing Indian Wells through travel packages. Yes, to answer your questions, we want to pursue this in a much more aggressive way working with all kinds of travel agencies. But this event is, we said it, we've had studies done, it actually has the largest economic impact to this valley of any other event that happens throughout the year.
Q. Is that information available anywhere, the details of that economic information? Where would I track that down?
RAYMOND MOORE: You can get it either from us or the city.
Q. Charlie, I'm interested, have you seen this level of cooperation from past champions in developing and keeping the growth of pro tennis in the US? Have you seen something that rivals the kind of cooperation we're seeing with Evert, King and Sampras for this event?
CHARLIE PASARELL: I didn't quite understand the question.
Q. I'm wondering if you've seen the kind of pull amongst the legends like Chris Evert, Billie Jean King and Pete Sampras coming together for a tennis event ever before in tennis until now?
CHARLIE PASARELL: No, I've never have witnessed anybody. As Raymond made a statement earlier, we know that players have had an affiliation with tournaments before, but never actually being financial investors where, as Raymond pointed out, they have written a check. They have written substantial checks, all three of them.
FRANKLIN JOHNSON: The point I'd like to make is we've been having wonderful cooperation recently in our high-performance area of getting some of the past legends to come out and work with some of our young people. People like Tracy Austin, Jim Courier, Michael Chang, on and on, have just been terrific in terms of coming out and working out with our young people, giving them advice. Before Australia, Michael Chang came and worked with all of our kids going to Australia. Jim Courier has worked many times. Tracy, et cetera. We've had just wonderful success. Any time we've asked them for help, they've said yes.
Q. What is it about the game of tennis that these people are selling to kids and people to get participation in contrast to other established sports like golf and also emerging sports, X Games, other stuff on TV?
FRANKLIN JOHNSON: We have a very sizable program of trying to increase tennis participation and are committing increased dollars. The primary focus for us recently has been the public parks, wherein concert with the National Recreation and Parks Association, we've offered millions of dollars in grants that are matching grants to both improve facilities and improve tennis programs.
We're also starting an advocacy program to get more tennis people turning out at the local level at park and recreation departments to make sure tennis gets more of its fair share of the budgets locally.
We also have hired a lot of people which we call tennis service representatives that are calling on tennis establishments. We're working with schools to try to get after-school programs. We're advertising tennis more in terms of getting people to play. We have a diversity outreach where we're trying to particularly hone in on Hispanics and people of color to attract them to the game with some good success.
These are just some of many programs. We've stepped up our spending in this tennis participation area by about $15 million recently. Glad to see it's having some positive effect.
Q. As far as the sport itself, what is it about the sport that these people are trying to communicate that makes it appealing to kids and communities?
FRANKLIN JOHNSON: Well, I think tennis has so many attributes in terms of its appeal. Kids I think are drawn a lot by role models. As they see Serena and Venus Williams, Andy Roddick, some of our not only US stars, but as they see Rafael Nadal and Roger Federer, Sharapova, et cetera, they find these role models are very appealing.
The game itself, once they get introduced to it, they sure enjoy. We're also trying to play up more the team aspects of getting kids started with teams because kids gravitate towards that.
We're also seeing a resurgence of older people playing tennis where we have competitive tennis now in every age group going up to 90 and over. We're finding a lot of older people really enjoy the social aspects of tennis. There are a lot of positive things happening.
CHARLIE PASARELL: Really there are only two major sports that I know of, that's tennis and golf. Certainly tennis is an unbelievable form of exercise and keeping healthy and in good shape.
All those attributes, plus from what Franklin is talking about, the social aspect of it, really we have a tremendous product to work with. That's why there's so much enthusiasm on so many people's behalf to where they want to make the sport bigger and bigger.
Q. Obviously we live in an era of globalization. What would it have meant if the United States lost this fine tournament in the west? On the flipside of this, what does it mean now that it will be staying here?
FRANKLIN JOHNSON: I think it would have been a very big negative if the tournament had left the US. I think also in terms of just the whole attitude toward the sport, it would be a negative signal for sponsors and for all those that are supporters of tennis. I think particularly in this geographic area of the United States, having this event here is very good for the sport generally. All of the attention that it gets in the local press and media and the local marketplace I think translates into helping the game, getting more people to play tennis, and all the community programs that surround the tournament.
I think it would have been a very big negative if it had gone off shore. I heard from tennis people all across the country that viewed it that way. I think tennis people throughout the country are thrilled with this result.
Q. How does local enthusiasm for these types of events translate into benefit for the sport as a whole?
FRANKLIN JOHNSON: Arlen, are you still on the call?
ARLEN KANTARIAN: We're talking about the second highest attended tennis event in this country. We're talking about the fifth highest attended tennis event in the world. This is a significant marketing engine, whether that be for Southern California or the entire US. Really not unlike the US Open, a real rallying point for the sport. This is, again, one of the most promotional engines locally and nationally that we can have.
I think it would have been very disruptive for this to have moved out of this country. I think you're going to see this thing also now with this new ownership team take it to the next level.
We've proven by research that the more popular these tournaments get, the more interest we have in people wanting to play the game. So the more people that watch tennis on television, that go and see tennis in a stadium, are more compelled to be playing the game as well, which is of course our mission, which is why this is so important to us.
Q. Could I ask George and Bob, you were very important and influential in bringing Chris and Billie Jean and Pete into the party, what did it take and why were they interested in becoming involved in a championship in the levels in which they've become involved in it? It's fascinating.
GEORGE MACKIN: A party indeed it is. Chrissy and Petr are already partners with us at Tennis Magazine. They're part owners of the magazine. We have a long-standing affiliation with Billie Jean. So for us this was just a logical extension of investing in something that could grow the sport of tennis where we could leverage our media assets, Tennis Magazine, Smash and tennis.com, to add value. Plus with Chrissy, Pete and Billie Jean we think collectively, now with the USTA, it's just a powerful group to add immeasurable value to this tournament and separate it from most other tournaments in the world.
Getting these guys all on board and the USTA as a partner, getting them all on board I think was an extension of having a great business relationship at our magazine level, and then having them all come on board with us in our pursuit of this tournament, if that answers your question.
Q. It's quite ironic, because I was chatting with Pete at this very stage last year, Palm Desert five minutes away, he didn't seem to have that much interest in popping down to Indian Wells to see what was going on. Here he is a year later actually investing in the future of the tournament.
GEORGE MACKIN: I think he needed the year off. I don't speak for Pete, I have actually Paul Annacone with me, but I think with Pete having a home out in the desert, he's always said that's been one of his favorite places to play, he has a close relationship with Raymond and Charlie, and I think with Pete it was both a business decision because this after all will be a great business for all the investors.
I think, you know, he wanted to lend his name to our whole challenge of keeping it here. It's all a momentum game, right? Once you get Pete on board, you get Chrissy, Billie Jean, the USTA, it becomes a lot easier to get the rest of the money you need to successfully complete the buyout of IMG.
RAYMOND MOORE: I had some conversations with Pete, I don't know if he's on the call yet, when I talked to Pete after last year's tournament, talking to him about the possibility of becoming an investor here, we're walking around the stadium in Indian Wells, and Pete said to me since winning the US Open, he'd hardly played any tennis at all. He'd been playing a lot of golf, he was board. He said he wanted to get back into tennis in a meaningful way. He felt the vehicle of the Pacific Life Open was perfect for him because it was at a level that he's grown accustom to.
He said he had been offered many other tennis opportunities but none of them intrigued him. The minute that George had gone to him with becoming a partner and investor at Indian Wells, he stepped up to the plate immediately.
Q. How do things stand at the moment? Are you expecting all three of them to attend this year?
RAYMOND MOORE: Yes, we are.
Q. In your darkest day, what was your dreariest thought about this? Once you finally at long-last knew the deal was going to happen, what went through your head?
CHARLIE PASARELL: I can tell you that I've had maybe one of the toughest years I've ever had in my life, just the anxiety of not being able to know whether we're going to be able to keep this event here. I don't want to go into a lot of detail, but about three months ago I had to actually for my own physical health start telling myself, "Whatever happens happens, but I'm not going to develop ulcers, hopefully nothing worse than an ulcer over trying to do this."
I still have very many sleepless nights. I know Raymond had them and George had them also, too. I think even the USTA had them as well. The City of Indian Wells had them, as well. So all of us have been going through a pretty tough year.
This is going to be, needless to say, the most enjoyable tennis tournament I've ever been to in my life. So we're ecstatic about it. It's a very, very happy day here at Indian Wells today.
MATT VAN TUINEN: I want to jump in and take a minute to give a few folks a chance to speak to what's gone on with this deal, their excitement. Larry Scott, are you there?
LARRY SCOTT: Yes, I've joined on. Thanks, Matt.
Just from the tour's perspective, just filled with a lot of admiration today and joy for all the partners that are on the call. It's been certainly evident in the call today a team effort. I don't think I've ever seen so much persistence and tenacity off the court as I've seen into sort of keeping this event alive and keeping it together. There's an awful lot of demand around the world for events at this level. It's really in a rarefied territory.
Just a tremendous effort, so I want to really congratulation everyone on their effort to sort of keep the dream and the vision alive. I certainly concur that the team that's now behind this gives me a lot of optimism that this event's best days are ahead of it.
MATT VAN TUINEN: I want to give the mayor of the City of Indian Wells a chance to speak. Obviously, they played a large part in this. I want to give him a chance to mention a few things.
ED MONARCH: This is a really important day for Indian Wells. We're a small little town out here in the desert. We define ourselves a lot through this tournament. The idea of this tournament leaving our city was tragedy for us. So it's a joyous day for everyone in our city, every one of us who have been involved in this. We're just delighted with the outcome.
MATT VAN TUINEN: We look forward to seeing many of you out at the tournament where we'll have more chances to talk with Charlie, Raymond and other people involved at the tournament. Thanks for joining us today.

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