One of the biggest names in luxury has reached a deal to acquire one of the biggest agencies in Hollywood. François-Henri Pinault, the chairman and chief executive of Kering will take over Creative Artists Agency (“CAA”), one of the top talent and sports agencies in the United States. Not merely the latest M&A move from Pinault and his holding company, Artemis, the acquisition, which reportedly gives CAA a valuation of more than $7 billion, will enable the closely-aligned Kering – the group that owns brands like Gucci, Balenciaga, Bottega Veneta, Saint Laurent, and Alexander McQueen – to bolster its position in the market, particularly in light of competition from fellow French luxury conglomerate LVMH.
While Hollywood has monitored the Pinault-CAA acquisition against the backdrop of the ongoing SAG-AFTRA strike, there is no model union (yet) to color the interpretation of the acquisition from a fashion industry point of view. In general, models are considered independent contractors rather than employees, and thus, are not permitted to unionize under existing labor law in the U.S. Additionally, because model agency laws are unclear in many states, standard model agency contracts are drafted to protect the agencies – which technically operate as “management companies” in most instances if they are not licensed – rather than the models.
In New York, for example, there is no equivalent of California’s Talent Agency Act, which states that agencies that procure work for models must be licensed. (It is worth noting that the Fashion Workers Act is working its way through the New York State legislature, and if enacted, it would amend New York state labor law to provide for the registration and duties of model management companies and creative management companies.) New York agencies are bound by general employment law, which requires agencies that procure work for models to be licensed, but there is an “incidental exception” that allows for managers, who are unlicensed, to legally find work for clients if it is “incidental to” their main function.
Many management companies will claim that they fall under this incidental exception, when in reality their main work is, in fact, booking jobs for models. This means that in their contracts they generally state that they are not “procuring work,” but focused on the development of the model’s career. In effect, the reality of the model-manager relationship is not reflected in the contract. This leaves models in a vulnerable position, having few legal protections and little contract leverage.
Pinault’s plans for CAA could change that.
The acquisition could mean that Pinault has a vision for Kering that follows the old Hollywood vertically integrated studio model. Major studios of the past had in-house talent on both sides of the camera, meaning that they had exceptionally long-term, exclusive contracts. Pinault could add a model agency branch to the existing talent and sports agency branches of CAA, and represent models that have contracts with Kering brands, bringing talent in-house. For example, if Kering-owned Gucci needed to hire a model for a campaign, Gucci would hire a CAA model.
This structure would necessitate a different kind of contract for models than the current model management contract, which could take shape in two ways: First, CAA models could have long-term employment contracts with Kering, such that Kering can use them as models at any time for any of its luxury brands (save for an exclusivity contracts that state otherwise). Because models would then be Kering employees, they could unionize. Alternatively, CAA model agents could negotiate individual model contracts with Kering brands as opportunities arise for CAA models. Because this scenario calls for an in-house brand – CAA in this case – to negotiate with another in-house brand (e.g., Gucci), the final contract would likely be fairer to both sides, potentially obviating the need for models unionize.
If Pinault effectuates this strategy, the fashion industry’s top models will likely flock to CAA for fair treatment and favorable work conditions. In-house Kering talent would likely not be permitted to work for any competitor brands, including those owned by LVMH and Richemont, leaving Kering’s biggest ribals scrambling to hire models that have not been snapped up by CAA. If Pinault treats his models well and they stay with CAA long-term, the acquisition of CAA by the Kering chief could crush competition from the groups’ rivals, which will be left with a smaller pool of lesser-known models to choose from as the face of their brands.
Kaitlin Puccio is an attorney specializing in bioethics and fashion law/ethics. A former model and Executive Editor of an international fashion magazine, Kaitlin complements her legal expertise with her knowledge of the fashion industry and standard modeling industry practice.
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