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Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Monday, December 17, 2012

World's #1 Golfer Sued for Breach of Endorsement Contract

Rory_McIlroyHaving jumped the shark last week with posts about curricular reform, we have decided to stick with what we know: sports contracts. 

As reported here in the Telegraph, Rory McIlroy (pictured), this year's world #1 golfer, is not Tiger Woods.  In addition, it appears that Mr. McIlroy has been endorsing Oakley sportswar until recently and now wants to jump ship and join team Nike.  Oakley is claiming a right of first refusal and claims that it offered to match Nike's offer to Mr. McIlroy.  He apparently spurned that offer and so is, according to Oakley, in breach of contract.

Oakley is claiming that it is irreparably harmed by the breach and seeks to enjoin Mr. McIlroy from enjoying the benefits of his $200 million Nike agreement.  In the alternative, Oakley is seeking unspecified damages.

Reading between the lines, there do appear to be issues that are of some interest.  Usually a right of first refusal requires the holder of the right to match the competing offer.  But ESPN.com suggests that Oakley was only offering McIlroy $60 million to continue endorsing its products.  Perhaps that amount is equal to the portion of McIlroy's Nike deal that relates to Nike apparel.  In addition, ESPN reports on an e-mail sent by Oakley to McIlroy's agent back in September when contract negotiations were breaking down.  The e-mail read,  "Understood. We are out of the mix. No contract for 2013."

McIlroy will argue that the e-mail suggests that Oakley waived its option to renew its agreement with McIlroy.  Oakley contends that, notwithstanding the September e-mail, negotiations resumed and Oakley claims to have matched Nike's offer.

So, there will be unwonted excitement on the golf tour next year as viewers tune in to see what McIlroy is wearing.

[JT]

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