Sunday 22 April 2018

Karl MacGinty: Megastars like Rory McIlroy want to run own affairs

It was inevitable McIlroy would follow same path taken by stars like Tiger Woods and Roger Federer, writes Karl MacGinty

Rory McIlroy and Roger Federer
Rory McIlroy and Roger Federer
Lionel Messi
McIlroy's jet

Karl MacGinty

RORY McILROY must have felt a sense of liberation yesterday as he flew out of Dublin and into a new era in his career.

Freedom, if reports can be believed, came at a price for the 25-year-old Holywood native but still is worth every brass cent to him.

For all the acrimony and expense of 18 months of legal proceedings, this seems to be one of those rare cases in which plaintiff and defendant both effectively emerge from The Four Courts as winners, along with the lawyers, of course.

The settlement McIlroy agreed with Conor Ridge, his former agent at Horizon Sports Management, after talks stretched into the wee, small hours of yesterday morning, lay between US$25m (€22m) and US$30m (€26m) according to one insider.

That's an enormous amount of money by any standards but McIlroy can well afford it.

Even if you add in the several millions McIlroy must pay for his own legal costs, the total is dwarfed not just by the €500m he's conservatively expected to earn over the next 20 years but also the commission payments he'll save in that time by managing his own affairs.

Read more: Rory McIlroy jets out to US as case is settled for €22m

The settlement deal was still being thrashed out long after the Four Courts closed at 9 pm on Tuesday … it's understood that McIlroy, by that point joined by his father Gerry, repaired with his legal team to the Arran Square office of one of his Senior Counsel.

Congratulations

Unlike Ridge, McIlroy wasn't in court yesterday morning to accept in person the congratulations of Mr Justice Cregan for his efforts and that of the lawyers in arriving at a settlement or the judge's hearty wish of success to both the defendant and plaintiff in their respective careers.

The joint statement on their behalf was brief, almost as frosty as the morning air on the quay outside The Four Courts.

"The legal dispute between Rory McIlroy and Horizon Sports Management has been settled to the satisfaction of both parties, who wish each other well for the future."

Read more: Game over - but what was the story with no-show Rory?

For all the bitterness generated by this dispute between two young Irishmen who were friends as well as business associates, it had long appeared an inevitable part of the golfer's destiny to set up a company, Rory McIlroy Inc, to manage his own affairs.

Increasingly, it's part of the growing process for self-minded megastars, whether in the performing arts or entertainment, to take more direct control of their career.

The higher they rise on the income ladder, the greater their motivation to review and reduce commissions.

Without doubt, McIlroy paid heed to Roger Federer when they discussed the business side of sport over dinner in December 2012, when the Ulsterman was in Brazil to watch his then-girlfriend Caroline Wozniacki.

The Swiss superstar "is a role model," McIlroy later would tell the New York Times. "Someone I can pattern myself after."

Interestingly, Federer had split from International Management Group earlier that year to set-up his own company with his close friend and long-standing agent, Tony Godsick.

Tiger Woods in latter years has followed a not entirely dissimilar path with his career-long confidant and adviser Mark Steinberg, while Barcelona football megastar Lionel Messi has long relied on his father and a close circle of family and friends to manage his affairs.

The benefits are obvious. Take the five-year, US$100m (€88m) contract negotiated by Horizon with Nike on McIlroy's behalf at the end of 2012.

Read more: McIlroy settles dispute with agent

The Dublin firm, under the terms of their contract with the golfer, were entitled to 20p, which amounts to $20m (€17.5m) over the life of the deal.

Yet if that deal was struck on the golfer's behalf by salaried 'employees' at his own company, Rory McIlroy Inc, that US$20m would be kept largely 'in house' or in the family, so to speak.

Of course, modest bonuses and other incentives must come into play.

Instead of paying commissions, like the 10pc of first prize money which traditionally goes to the tournament-winner's caddie, it makes sound financial sense for hugely successful performers like Tiger and his bagmen to agree a substantial regular wage and a smaller cut of lucrative prize money.

Though McIlroy won his first Major title, the US Open, in June 2011, he truly graduated into the big league in golf the following year, when he made it to World No 1 and his exciting play and Tiger-like domination of tournaments persuaded Nike to come on board.

He still was a rising star when he moved from English firm International Sports Management to Horizon in December 2011.

Yet that Nike contract and McIlroy's flourishing marketability persuaded Horizon that the time was right to amend and extend their contract with the Ulsterman.

In mid-March 2013, McIlroy signed the new deal, which required him to pay 15pc commission on future contracts (though Horizon's cut of the Nike deal would remain at 20pc until it expired in 2017). Meanwhile, they dropped their five per cent share of his prizemoney to zero.

Within weeks of signing that deal, the golfer informed Ridge in early April that he'd lost trust in him and that he intended to set-up his own management company.

By early summer, the setting-up of Rory McIlroy Inc was well in train.

The World No 1 might have saved himself the aggravation and expense of legal proceedings if advice sought from Dermot Desmond and, by extension, the Irish business icon's legal adviser in April 2013, had been followed.

Who's to say if Desmond's recommendation to "decide on a strategy for an amicable separation between Rory and Horizon" would have worked?

A series of events and mishaps from December 2012 to March 2013, each of which now appear relatively trivial to the casual outsider, plainly had the cumulative effect at that time of frustrating, then infuriating McIlroy and those closest to him.

The golfer's trust was replaced by anger and this was at the heart of their bitter legal battle to rescind the contract which bonded them together.

The reported settlement sum actually compares quite closely the commission which would have been due to Horizon over the five years of their agreement.

It was revealed last November, for example, that US$9m unpaid commission was due under the management deal, which by then had run one third of its course … making US$27m the sum-total for 60 months!

Spared the trauma of at least seven days under forensic cross-examination in the witness box, Rory McIlroy (Incorporated or otherwise) is, after two years, completely free to pursue his destiny on and off the course, especially April's bid for Career Grand Slam glory at The Masters.

Irish Independent

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