As legal battle begins, Horizon claim McIlroy to earn minimum $129m over next five years
Rory McIlroy strikes his first official drive with Nike. Since then life’s been anything but smooth for the former world No 1. Picture Stuart Adams www.golftourimages.com: 17th January 2013
As the drip-drip of information on Rory McIlroy’s acrimonious split from his former agents Horizon Sports Management grows to a trickle that promises to become a torrent following the initiation of proceedings in Dublin’s High Court on Monday, the golf writer’s memory begins to suffer flashbacks.
Far from the scene of Monday morning’s legal action - the Four Courts on the banks of the River Liffey once shelled by the warring factions during Ireland’s Civil War - I cast my mind back to McIlroy’s mental disintegration in the Honda Classic on March 1.
Having been told by McIlroy not once but twice that he was not “in a good place mentally” just moments after he walked off the course less than 27 holes into his title defence, I felt the need to ask him if there were any off course problems bothering him.
“Yeah, well there’s a few thi …” McIlroy started to say before deciding not to go down that route at all and return to his original story of mental anguish caused by poor play
Fast-forward seven and a half months and McIlroy wants his contract with Horizon - signed in October 2011 and extended by another three years to 2017 several weeks after the Honda Classic meltdown - made null and void. That the 2013 season has largely been a write off from him is quickly being forgotten
Horizon, who stand to earn fees on McIlroy’s contracts until 2017, are aggressively defending their reputation against all accusations of wrongdoing. It promises to be a ferocious court battle - a sad end to what promised to be the greatest Irish sports-business partnership of all time.
According to a 350-page plus Statement of Claim lodged by McIlroy’s lawyers with the High Court last Friday, McIlroy’s lawyers are claiming that when it came to his contract with Horizon, “an improvident and unconscionable bargain was struck” and that Horizon “did not exercise their fiduciary duty of responsibility towards their young client.”
Horizon vigorously refutes McIlroy’s claims that they somehow took advantage of him to maximise their commissions.
A trail date of late October next year has been set by Mr Justice Peter Kelly - one of Ireland’s keenest legal minds - which should lead to the full resolution of a case that will now hang over McIlroy all year.
The case will also include the counter-claim by Horizon and all will be settled by the Commercial Court - a branch of the High Court set up to try cases with financial interests of more than €1 million. In this case, figures as high as €129m have been mentioned - Horizon’s estimate of McIlroy’s non-tournament earnings, without performance bonuses, over the next five years.
While McIroy’s side are claiming that not only were sponsors queuing up to throw money at him but Horizon’s fees were far too high for a sportsman of that calibre. If he signed the contracts, it was only because he was young, inexperienced and badly advised, court papers claim.
Horizon’s version is that it was their business acumen that led to the huge jump in McIlroy’s income:
According to papers lodged with the High Court by Horizon’s lawyers:
“The history of Mr McIlroy’s relationship with our clients merits some brief comment. As of 2011 Mr McIlroy had achieved significant success on the golf course. However, he was dissatisfied with his commercial performance off the course and the development of his global brand image. He had entered into a number of agreements which, while lucrative in themselves, did not enable him to reach his full earning potential….
“Within a year….our clients had achieved extraordinary results for Mr McIlroy in accordance with his stated objectives. They had extricated him from the less lucrative and conflicting commercial arrangements and secured in their place four very significant and harmonious agreements with Nike, Omega, Bose and Santander. Under the contracts negotiated by his previous management company, Mr McIlroy could have expected to receive approximately US $13 million in 2013. Under the contracts negotiated by our clients, Mr McIlroy will receive approximately US$ 50 million in 2013. The contracts run for periods of up to five years and have an approximate value of US$ 129 million. It should be noted that this is the minimum sum Mr McIlroy will receive irrespective of performance on the golf course, while his previous contracts were heavily dependent on his golf performance.”
“Horizon has confidence in its position,” the company said in a press release issued shortly after the court hearing. “This confidence is underpinned by a legally binding contract and the clear evidence of the exceptional job done for Rory McIlroy by Horizon… This legal action seeks to void his representation contract from its original date, recover fees already paid and avoid paying any further fees as stipulated by the agreement. Regrettably, this legal action has been taken despite Horizon’s efforts to reach an orderly and fair resolution.”
The PR battle has already begun and with most of the court-reporting press now privy to parts of McIlroy’s huge Statement of Claim, cherry picking of the juiciest morsels has already begun in the media.
One of the first reports issued came from the Press Association, which said that court papers claim “McIlroy signed his contract with Dublin-based Horizon at the company’s Christmas party ‘in circumstances of great informality’ and without having seen a draft of the agreement before it was given to him to sign.”
What that story does not state is that McIlroy signed a three-year extension to his original October 2011 contract with Horizon in late March this year, binding them together until 2017.
That would tie him to the Dublin-based company for the duration of what court papers say are a $20m a year contract with Nike. The nub of McIlroy’s complaints relate to fees/commissions which his lawyers say “were so unfavorable towards the plaintiff as to amount to a unconscionable bargain.”
There are also claims of breaches of trust, and PA reports that McIlroy claims: “Horizon paid children’s charity UNICEF $166,000 of his money in March 2013 without his knowledge or consent.”
Horizon disputes the claims made by McIlroy’s lawyers and in a letter from its solicitors, William Fry to McIlroy’s representatives, AL Goodbody (contained in the Statement of Claim) they reject the most eye-catching accusations.
On the money paid to UNICEF for a planned trip to Haiti this year which McIlroy cancelled to play in the Valero Texas Open, Horizon’s lawyers say: “The Unicef donation was made precisely for the purpose of protecting your client and his reputation. Your client had committed to travelling to Haiti as a Unicef ambassador. On the eve of the visit our clients were informed that if a donation was not made in advance of your client landing on the ground in Haiti, that the trip would be cancelled which had the potential to cause significant reputational damage to Mr McIlroy. It was in those circumstances that the donation was made on behalf of your client. As soon as your client expressed dissatisfaction with the donation the transaction was reversed.”
Other points of dispute will focus on disintegration of the relationship between Conor Ridge and Horizon’s former Director of Strategy, Mr Donal Casey, who is now the CEO of Rory McIlroy’s newly constituted management arm, Rory McIlroy Incorporated. The dispute relates to the size of a “success fee” claimed by Mr Casey on completion of the Nike deal.
There are other issues mentioned in the huge Statement of Claim lodged by McIlroy but much of the dispute centres on the exact terms of the 24-year-old’s contracts with Horizon of December 2011 and March 2013. He is seeking orders quashing those on grounds including alleged breach of contract and breach of duty.
Horizon defend their reputation vigorously and in not accepting that “the Representation Agreement has has terminated lawfully” they will counterclaim for the fees due to them so far - US$ 2.6m and counting - as well as damages.
Perhaps the most eye-catching claim made by Horizon is the enormity of the sums now earned by the former world No 1.
If McIlroy had more than poor play and wisdom tooth pain on his mind in the Honda Classic that day, it would be no surprise.
What now appears certain is that he must isolate himself from this legal wrangle as soon as possible and concentrate his mind on getting his game back in shape.
He has often said in the past that the only place he can achieve true peace is between the ropes. This year that has been impossible for him given his struggles with his new clubs, his swing and his former management company.
If the solution is a year-long wait for matters to be settled in court, so be it. On the face of things, it can surely do little to help a player who is already weighed down by more than sacks of money.