We knew this was coming, but due to pending legal entanglements, Rory McIlroy hasn’t been able to speak about his pending break-up with his management company, Horizon Sports Management. Now that the split is official, the disagreement between McIlroy and Horizon is in the hands of their respective lawyers, with Rory pulling the trigger first.
McIlroy fired Horizon because he felt they were taking too high of a percentage of his off-course earnings, according to the Irish Independent. The report states that Rory paid out €5 million (approximately $6.8 million) over 18 months.
Horizon Sports Management and its chief Conor Ridge were notified on Friday that the golfer had severed ties with the company, sparking what is expected to be a lengthy court battle between both sides.
The massive financial outlay – a fraction of what Horizon would have expected over the lifetime of the contract – was key to the twice Major winner’s decision.
The contract with the 24-year-old is due to run until 2017, with payments to the management agency described by sources close to McIlroy as “very significant indeed”.
Reports (along with insiders) have suggested that McIlroy wasn’t happy with the contract terms, though he signed them readily when he joined Horizon in October 2011.
McIlroy signed a mega-deal with Nike that’s allegedly worth $20 million over 10 years. The world no. 6 also took up endorsement contracts with Bose and Omega, among others.
Horizon also represents Graeme McDowell and it’s been suggested his friendship with Rory prompted him to sign with the company in the first place. Now, the two appear to have drifted a bit, with McIlroy noticeably absent from McDowell’s wedding this past weekend (which is kind of understandable considering the Horizon people were there and Rory probably didn’t want to create an awkward situation at G-Mac’s wedding…*Update: Source says no players were at G-Mac’s wedding, which consisted of only 30 guests, none of which were players).
The Independent’s “financial advisor” gave a vague general breakdown of commissions that management companies take from players’ revenues.
“Twenty per cent commission made sense when sport management first became a profession in the early 1960s,” a financial expert told this newspaper.
“Mark McCormack effectively started the business, back in the days of Palmer, Player and Nicklaus, and the total money was much, much smaller then.
“Roll forward 50 years and the picture is very different. the earnings capacity of a golfer like McIlroy is so enormous that a 20 per cent take is significant.”
One manager, who spoke on condition of to anonymity, said it depends on the athlete and their commercial reach.
“For a player of Rory’s calibre 5-7% would be reasonable given the enormity of his commercial power,” said the manager. “The less marketable the athlete the higher the percentage, but 15% would be the upper echelon. 20% was feasible in 1960 when sports marketing didn’t exist.”
McILROY ANNOUNCES NEW MANAGEMENT STRUCTURE
Rory McIlroy today [27th September ’13] confirmed he has terminated his contract with Horizon
Sports Management and that the details of the termination are in the hands of a legal team led by
A&L Goodbody in Dublin, Ireland.
The golfer’s business interests will from now on be managed by Rory McIlroy Incorporated.
CEO of RMI will be Donal Casey, an actuary by profession with many years of CEO experience.
The Rory Foundation for charity will be run by Barry Funston, a business leader and longtime
friend of the McIlroy family. Both men will serve on the RMI Board, together with Gerry
Media relations for the golfer and his management company will be handled by a team from The
Communications Clinic, led by Terry Prone.
Further information from The Communications Clinic:
00353868139133 Terry Prone
00353874129371 Catherine E. Burke
“Since October 2011, Horizon has achieved exceptional results for Rory in realising his commercial objectives. Under Horizon’s management, Rory has signed some of the most lucrative endorsements in sports history. The current management contract has a number of years to run.
Rory’s decision to seek a termination of the management contract with Horizon is now regrettably in the hands of legal advisors. Horizon will be making no further comment.”
In sum, Rory McIlroy Inc. is now up and running and is responsible for handling Rory’s management and business affairs. It’s his own company, so it will solely focus on Rory’s dealings. Sean O’Flaherty, who looked after Rory at Horizon, will continue to manage Rory’s day-to-day matters.
Although Rory has officially fired Horizon, it appears this unfortunate saga is long from over. McIlroy filed papers in the High Court in Dublin against Horizon, along with two other companies, Gurteen and Canavan Management, according to the Independent.
Stay tuned for more as this story unfolds…as in Rory’s side of the story.