On October 9, Rory McIlroy, two time winner of major golf tournaments, sued Horizon Sports Management in an effort to bring an end to what McIlroy called an “unconscionable” contract that ultimately cost the popular golf pro $6.8 million in fees.  McIlroy signed with Horizon, a Dublin-based company, in December of 2011.  McIlroy said that at the time he signed the deal, he lacked business experience, legal guidance, and was simply too young.

According to the claim McIlroy filed in court, he agreed to the contract with Horizon on the day of the sports management firm’s Christmas party under what he called “circumstances of great informality.”

Horizon claims the company will defend itself vigorously, and said that under the company’s management, McIlroy is one of the most highly remunerated people in the sports field today, having signed some of the most profitable endorsement contracts in the history of sports.  Spokespersons at Horizon maintain the management agency has confidence in its position, supported by the indisputable evidence of the outstanding job the company has done for McIlroy, and a contract which is legally binding.

The contract signed by McIlroy in 2011 with Horizon includes terms that the golfer agreed to pay the management firm 5% of any golf prize winnings, along with 20% of other income the golfer would gain including endorsements.  McIlroy maintains that as one of the world’s top players in golf, he should have paid only between 5% and 7% on income generated through avenues other than golf, and no fees on golf prize winnings.

McIlroy signed on with sports equipment giant Nike recently in a deal said to be worth $20 million annually; because he was being represented by Horizon, the company felt it was entitled to $6.8 million in fees according to the terms of the contract.  This appears to be the underlying issue which led to McIlroy filing the claim.

Ultimately, it sounds as though McIlroy was young and not clear about what the representation agreement contained when he signed on with Horizon in 2011.  This is one example of why it is critical when entering into any type of business contract or agreement, parties involved consult with a seasoned Los Angeles business attorney before signing on the dotted line.