Fascinating New York Times article today reports that CAA has been in discussions with private equity firms like Kohlberg Kravis Roberts and TPG about ways to expand the agency’s sports business. NYT reports there is talk of joint ventures, but that the private equity firms want to buy a minority stake at CAA and that all this could lead CAA into producing entertainment and sports.

The article brings up many hot-button issues. The idea of CAA needing to raise substantial funds for sports is intriguing, since CAA has already spent enough to become the largest broker of on-field athletes. That’s a high volume but low commission business, since athletes pay around 3%, compared to the 10% that talent pays for movie and TV deals. Better money can be made in marketing and endorsements but the real money in the jock game is ownership of programming and venues, which is the IMG business model. We’ll know when they wake up, but I suspect CAA won’t invite others into its ownership pool, if the agency addresses it at all.

Still, the baring of these talks feels like yet another step in the continuing evolution of talent agencies beyond movie and TV dealmaking that softened as first dollar gross deals disappear and TV packages shrink. Major agencies are already building new revenue streams, and both CAA and WME have joint ventures with investment bankers to raise money for media ventures; WME with former Goldman Sachs banker Joe Ravitch and ex-UBS Warburg vet Jeff Sine, and CAA with Evolution Media Capital, run by ex-Merrill Lynch banker Bob Stanley and his team. The traditional lines between agencies and productions blur more every day by necessity–agents in the indie film sector are more indispensable than ever in packaging and financing small films, for instance. I think many job-creating films wouldn’t happen without that close involvement.

Expanding into the production end of sports and entertainment content will be the real test for how entrepreneurial talent agencies can become. Such forays might be easier in sports–rivals have speculated that CAA’s sports endgame isn’t low percentage commission player contracts, but stakes in venues and branded sports programming –but the labor guilds will wage a battle royale to keep agencies out of producing entertainment. They are fearful that too much power could be concentrated in the hands of agencies, but the days when agents simply booked jobs seems antiquated. Every other segment of entertainment is changing radically, and agencies that don’t embrace envelope-pushing entrepreneurial opportunities could struggle to survive.