Rory McIlroy is unlikely to have shed a tear in sympathy for Conor Ridge and Horizon Sports Management following the announcement by Graeme McDowell on Sunday night that he's leaving the boutique Irish agency to manage his own affairs.
But despite McIlroy's on--going court case against Horizon over the his contract and the fees he was charged, McDowell's decision smacks of a man with his eye on his own horizons rather than someone who was deeply unhappy about the way he was handled.
There is no doubt that the arrival of Horizon heralded a new era in golf management in Europe and the beginning of the end of the catch-all management companies in golf with smaller client rosters and fewer overheads leaving time to dedicate more time to the bigger player.
As his career enters its second half and a US based family life appears on the scene with his first child due on Monday, McDowell clearly has the brains and the charisma to build a business empire of his own.
The recent downsizing of the client base at agencies such as IMG or Chubby Chandler's ISM — the company that managed both McIlroy and McDowell at the start of their careers — is a sign of straitened times in golf management.
Supestar sportsmen are now moving from agency to boutique to super-boutique or own brand, as we can see from the moves made by tennis stars Roger Federer, Rafa Nadal and Andy Murray and, more recently, McIlroy.
Agents are as expensive as you perceive them to be and for sportsmen like McIlroy, Nadal or Federer — or even McDowell — the costs may well outweigh the benefits as the millions roll in the door.
Federer left IMG in 2012 to go it alone with his long-time personal agent, Tony Godsick and two American investors to form an agency called Team8.
The New York Times's Christopher Clarey reported:
“We’re trying to be a boutique agency that will manage just a small stable of iconic athletes,” Godsick said in a telephone interview from the firm’s new offices in Pepper Pike, Ohio, in Cleveland’s eastern suburbs. “We’re really going to try to be selective here. Some of the other groups, they look to sign as many players as they can and hope a few of them stick and make it, and they really go after the juniors. We’re not going to....
“I can sell Roger Federer really well, but nobody sells Roger better than Roger,” Godsick said. “I always joke with him, ‘Look, you’ve been really successful on the tennis court, but I promise you, you’ll be more successful when you’re done playing tennis.’ ”
Tiger Woods left IMG in 2011 and moved to Excel with his agent, Mark Steinberg.
Nadal let his contract with IMG expire at the end of 2012, saving himself as much as $3.8m, according to Bloomberg's Alex Duff and Danielle Rossingh.
Agencies such as IMG typically take a cut of as much as 15 percent for arranging endorsement deals, according to Marc Ganis, president of Chicago-based consultancy Sportscorp Ltd. Nadal made $25 million in endorsements last year according to Forbes magazine, so he may be saving himself as much as $3.8 million. That’s about half of the prize money he made in 2011, his last full season on the men’s tour.
Greg Norman's business empire is a case in point and it remains to be seen how McIlroy or Tiger Woods fare on retirement and whether they will be as successful as the Australian, or even old school superstars such as Arnold Palmer and Jack Nicklaus, who continued to top the rich lists that are published at the end of every season.
As the Clarey's NYT story pointed out:
“Roger is going to have a legacy and a business that is going to live on well past his playing days, similar to a guy like Arnold Palmer in golf,” said John Tobias, president of Lagardère Unlimited Tennis.
No doubt McDowell's decision will provide more ammunition to lawyers keen to ask questions in the McIlroy court case regarding the size of agency fees and commissions.
The difference between McIlroy and the likes of McDowell, Federer, Nadal or Woods is that he broke his contract with his agent just 18 months after signing a $100m, five-year deal with Nike. He must now argue his case in front of a judge at the risk having to pay millions in fees and damages.
Considering the number of zeroes involved, he clearly feels it's worth the risk.