Saturday, July 13, 2024

Jack Nicklaus again free to design golf courses using his own name and likeness, arbitrator rules

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Jack Nicklaus is free to design golf courses as Jack Nicklaus again after an arbitrator ruled he was no longer under obligation to Nicklaus Companies LLC,  which the golf legend no longer owns.

Nicklaus the man sold equity in Nicklaus Companies in 2007 to New York-based banker Howard Milstein, who has since acquired total ownership of the company, including the golf course design business once headed by the Golden Bear.

Nicklaus – who has designed more than 300 courses around the world – and Milstein fell out in recent years, and the winner of 18 professional major championships for the most part ended his participation with the company in 2017. His contract with the company included a five-year non-compete clause, and Nicklaus continued to work on behalf of Nicklaus Design until May of 2022. He was precluded during that period from designing courses on his own outside Nicklaus Companies.

In late 2022 Nicklaus began offering course-design services through his new company 1-JN, which operates through his family instead of Nicklaus Companies. Milstein had sought to prevent Nicklaus from using his own name and likeness as part of that new 1-JN business, but the arbitrator ruled in Nicklaus’ favor after a hearing that spanned 18 days spread over six months. The arbitrator ruled that Nicklaus “is now free to engage in the activities” once restricted by the contract’s covenants and to compete against the company that bears his name, activities that include among other things the design of golf courses and the solicitation of the Nicklaus Companies’ customers and employees.

“The arbitration process was an arduous learning experience, but I am thankful for how it ended,” Nicklaus said in a media release announcing the decision. “I get to keep doing one of the things that makes me happy – bringing new golf courses to life and making old ones new again. … I am involved in some great projects at the moment and look forward to a lot more of the same now that the effort to keep me on the sidelines has failed.”

Milstein has expanded his reach in golf in recent years and has acquired other golf-related businesses, including Golf Magazine, TrueSpec and a variety of golf equipment and service enterprises.

The media release explains there are still conflicts between Nicklaus and Milstein. Nicklaus Companies have filed a lawsuit against the retired golfer in New York addressing similar issues under other agreements, but the judge in that case has denied the Nicklaus Companies’ request for a preliminary injunction to prevent Nicklaus the man from designing courses in his own name, finding it unlikely that Nicklaus Companies prevail in the suit.

The media release spelled out the arbitrator’s response to those issues as well:

“[T]o the extent the Company attempts to argue in another forum that other agreements prevent Jack Nicklaus from acting as a golf course designer or consultant or lending his personal endorsement to, or providing services as an endorsement spokesman for, any product, service or Person (which would logically include using his name and image), such efforts would circumvent this Tribunal’s decision and be an attempt to implement an unlawful and indefinite non-compete provision which would prevent Mr. Nicklaus from earning a livelihood. It is undisputed that the Employment Agreement’s restrictive covenant provisions were ‘a critical part’ of the overall deal. … They gave the Company significant rights, and they also gave Mr. Nicklaus rights.  He bargained for the ability to end his Employment Term after five years and then compete with the Company five years after that.  The plain language of the [Employment Agreement] compels the conclusion that when the restrictive covenants expired, he would be free to engage in the restricted activities on his own and in his own name. Otherwise, the covenants would be … illusory and effectively be made permanent, as one cannot serve as a designer of record or endorser without the use of one’s name and related publicity rights.”

A trial date for that lawsuit in New York has not been set.

Nicklaus said in the media release that he is sorry his relationship with Milstein did not turn out positively and regrets “having to fight for rights that were an important part of the bargain we made back in 2007.”  Nicklaus ended on a positive note:

“If you want a golf course designed by Jack Nicklaus, give me a call.”

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