McIlroy email raised no issue over commission rates

An email sent by golfer Rory McIlroy in October 2011 indicated he had no difficulty with a proposed representation agreement under which he would pay commission rates of 20 per cent and 5 per cent respectively on his off and on-course earnings, the Commercial Court was told.

Mr McIlroy's email was sent in response to an email from Conor Ridge, managing director of Horizon Sports Management Ltd, setting out the proposed commission rates, said Paul Sreenan SC, for Horizon and two other companies.

Mr Ridge had also stated that another company may be set up to exclusively manage the golfer’s affairs, counsel added.

A company later set up was both for the benefit of Mr McIlroy and for “tax planning” purposes of his agents, the court heard.

Mr Sreenan said Mr Ridge and the law firm William Fry had both suggested Mr McIlroy could get independent legal advice before he signed a representation agreement in December 2011, based on the terms set out in the October 2011 email, but he chose not to do so.

Mr Sreenan was making submissions opposing an application by Mr McIlroy for discovery of certain other documents for his action, expected to be heard later this year, against Dublin-based Horizon Sports Management Ltd; Gurteen Ltd, with a registered address in Malta; and Dublin-based Canovan Management Services.

A central issue in the action concerns the nature of the relationship between Mr McIlroy and the three defendants and the validity and enforceability of the December 2011 representation agreement which, Mr McIlroy insists, he is not bound by. The defendants contend it was agreed with Mr McIlroy the contractual rights under the December 2011 agreement were with Gurteen rather than Horizon but he disputes that.

Horizon admits his relationship concerning the matters at issue in the case was “de facto” with Horizon but contends, once the representation agerement was signed Horizon provided the services as agent for Gurteen and,later, Canovan.

Ms Justice Mary Finlay Geoghegan will today continue hearing applications for discovery of documents concerning those and other issues. Agreement has been reached on some categories of documents but not all.

Mr McIlroy wants all documents concerning the legal and benefical ownership and shareholdings of all three companies but the defendants contend he is only entitled to those documents concerning Gurteen and Canovan, not Horizon.

The ownerrship and shareholdings of Horizon are not relevant in circumstances where Mr McIlroy had been told a sepsrate company might be set up to manage his affairs, it is argued.

Gurteen was set up to assist in managing Mr McIlroy’s affairs and there were also advantages, including tax planning, to the defendants, Mr Sreenan said. Nothing turned on the issue concerning for whose benefit Gurteen was established, he argued.

Earlier, Paul Gallagher SC, for Mr McIlroy, said his client always understood his relationship was with Horizon and not with the other defendants, two special purpose non-trading companies with no assets. Mr McIlroy insisted he only dealt with Horizon as his agent and with Conor Ridge and Colm Morrissey, and had no contractual relationship with the other two defendants.

Solicitors for Mr McIlroy had stated in correspondence Mr Ridge held himself and Horizon out to the world as Mr McIlroy’s representative, Mr Gallagher said.

In his action, Mr McIlroy claims he signed the December 2011 representation agreement under “undue influence” when he was just 22 years old and inexperienced.

He claims he has paid more than US$6.8m based on "unreasonable" fee rates "many times greater" than standard in the sports agency industry. He also alleges the defendants are not entitled to be paid certain fees into the future related to his US$20m a year sponsorship deal with sportswear giant Nike.

The defendants contend Mr McIlroy freely entered into the December 2011 agreement and deny any undue influence or that the terms of agreement were unreasonable or unconscionable.

They have counter-claimed for monies allegedly owed under the agreement, including some US$3m fees for off-course gross revenues. They also want damages over alleged past and continuing breaches of the agreement. They claim they have been denied the opportunity to sell the branding rights to Mr McIlroy’s golf bag and to continue building his global commercial model as per an alleged agreed long term brand strategy.

Among documents sought by the defendants are all documents relating to a settlement of proceedings with Oakley Inc concerning a sponsorship agreement, including any and all negotiations and communications between Mr McIlroy, Nike and Oakley leading to that settlement.

Mr McIlroy wants documents under several categories, including relating to the termination of his contract with International Sports Management Ltd and the defendants' management of his affairs from October 2011, including material relating to commercial contracts entered into by the defendants.