McIlroy claims he paid $6.8m agent’s fees under ‘unconscionable’ agreements

Golfer Rory McIlroy claims he has paid more than $6.8 million to his Dublin agent Horizon based on unreasonable fee rates many times greater than is standard in the sports agency industry.

He is seeking court orders in Dublin cancelling “restrictive” and “unconscionable” representation agreements with Horizon and related companies on various grounds, including alleged negligence and breach of contract.

He also alleges the companies are not entitled to be paid certain fees into the future related to his $20 million a year sponsorship deal with sportswear giant Nike.

Agreements providing for payment to one of the companies of 20 per cent of all pre-tax sums due to him under the Nike deal up to 2017, and 15 per cent of all sums if that contract is renewed after 2017, even if that company was no longer his agent, are “oppressive”, it is alleged.

In letters to Mr McIlroy, solicitors for the companies claimed he had received “extraordinary benefits” from the work of the agents and is seeking to avoid his contractual responsibilities.

Commercial Court
Mr McIlroy's case is against Dublin-based Horizon Sports Management Ltd, Gurteen Limited, with a registered address in Malta, and Dublin-based Canovan Management Services over representation agreements of December 2011 and March 2013.

It was transferred to the Commercial Court yesterday by Mr Justice Peter Kelly and is expected to be heard in the autumn of 2014.

The companies deny the claims and Paul Sreenan SC, for the companies, said they would be bringing a counter-claim. Mr Sreenan said he anticipated extensive discovery of documents would be sought for the action.

Rossa Fanning, for Mr McIlroy, said the sums involved well exceeded the €1 million threshold of the Commercial Court and an autumn 2014 date would suit his client better, given his extensive commitments.

Mr McIlroy (24), who has an address in Monaco, claims to have paid more than $6.8 million to the companies based on commission rates of some 5 per cent on his pre-tax on-course earnings and 20 per cent for off-course earnings.

He claims “reasonable” commission should have been 0 per cent for golf course earnings and 5-7 per cent for off-course earnings and he should be repaid the difference.

Among a series of other claims, Mr McIlroy alleges Horizon gave $166,000 of his money to children’s charity Unicef without his knowledge and converted a first-class flight ticket to Abu Dhabi in his name to business-class tickets for use by the agent’s staff without crediting that payment to his account.

The Unicef payment, which was later reversed, was a deliberate defiance of an instruction from Mr McIlroy, who supports children’s charities through his personal charity foundation, it is claimed.

Mr McIlroy also claims his relationship with the Creative Artists Agency – a worldwide agency acting for high-profile sport and entertainment industry figures including David Beckham – was terminated due to the unreasonable conduct of Horizon and particularly its managing director, Conor Ridge.

Little expertise
Mr McIlroy claims the initial representation agreement he entered into in December 2011 was done at a time when he was aged just 22 and had little expertise in business matters.

That agreement arose after he, following a presentation by Mr Ridge at Mr McIlroy’s Belfast home, entered into a verbal agreement under which Horizon would act as his agent.

The December 2011 agreement was entered into at the offices of solicitors William Fry during Horizon’s Christmas party in “circumstances of great informality” when he had received no independent legal advice and without receiving any draft of that agreement, it is claimed.

That agreement gave Horizon complete control over his affairs, including his commercial activities, and placed the defendants in a “position of great trust”, it is alleged.

Three-year agreement
It is also alleged the defendants had sought to amend the December 2011 agreement, which was for three years, in a manner under which Gurteen Ltd was to be entitled to 20 per cent of all pre-tax sums paid to Mr McIlroy under a contract signed with sportswear giant Nike in late 2012.

He claims the appropriate fees should have been 0 per cent on his golf earnings and 5-7 per cent on off-course earnings.

Nike had agreed to pay Mr McIlroy about $20 million a year under that contract and the amendments to the agreement were adverse to Mr McIlroy’s interests, it is alleged.

Mr McIlroy says he executed an amendment agreement on March 18th last which provided, if his representation agreement with Horizon was terminated for any reason, that Horizon would still continue to be entitled to the relevant fee – between 15-20 per cent – in relation to the Nike contract and any renewal of that.

Mr McIlroy claims those terms are unconscionable and oppressive to his interests. He claims two amendment agreements to the December 2011 agreement have increased the term of his representation agreement with Horizon from three to six years – up to 2018 – and that was entirely to the defendants’ benefit.

He also claims Horizon, particularly Mr Ridge, failed to inform him of a serious dispute with Donal Casey over the success fee arrangements relating to the Nike contract.

Legal proceedings
Mr McIlroy is also seeking an indemnity from Horizon relating to legal proceedings being taken against him in California by Oakley Inc arising from alleged breaches of a sponsorship agreement with that company.

Mr McIlroy claims he has no liability to Oakley but, should that company succeed in its claims, that would arise due to alleged negligence and breach of contract by Horizon as, he contends, Mr Ridge made all the decisions with regard to dealings with Oakley on the relevant issues.