Jack Nicklaus Says He Felt 'Owned' In Business Deal That Turned Sour
The 83-year-old is being sued by Nicklaus Companies after his relationship with his business partner turned sour
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Jack Nicklaus has said he felt owned in a legal document explaining how a business arrangement went sour.
The 18-time Major winner was the subject of a lawsuit filed against him by his business partner Howard Milstein on 13 May in the Supreme Court of the State of New York. Currently, each side is seeking information to support its case through discovery. Nicklaus was deposed on 28 September, and a sworn affidavit documents how the partnership deteriorated.
After Nicklaus turned his attention to his design business in 2005 following a hugely successful playing career, he settled on a partnership with Emigrant Bank, owned and controlled by Milstein, who bought 49% of Nicklaus Companies, LLC. As part of the deal, it was agreed that Nicklaus would receive $145m in cash and 51% equity interest in the new company.
Emigrant Bank would supply the $145m via a loan to the company with interest of 8.5%, and it would be able to convert it to a 49% equity stake in the company. Following Nicklaus’s $145m payment in 2007, he also began receiving a salary and cash payments, but didn’t receive any additional participation of profits over the next five years.
The onset of the great recession ensured that the company required additional financing, eventually leading to Milstein gaining control of the company and its board and operations. Nicklaus attempted to terminate his employment, which would have left him free by 2017, but he was persuaded not to. The new agreement tied Nicklaus’ compensation to the company’s design and marketing projects while Milstein assumed the controlling vote of all big decisions.
In the affidavit, Nicholas says: “Once Howard had permanent control of the company, he acted as if he owned me. He tried to control every aspect of my life, from what I did, to whom I spoke with, to where I went, as if I was his property. I always tried to be respectful, but there was no respect in return. I also tried very hard to make the relationship work, but it became increasingly obvious that I had aligned myself with a person who didn’t respect me as a human being.”
Fed up with the situation, Nicklaus finally decided to end his employment with the company in 2017 and begin to serve the five years required allowing him to be free to design courses independently. Nevertheless, despite the dispute, he still provided services for the Nicklaus Companies and was compensated in the interim.
However, the relationship soured further when Milstein announced earlier this year that the company was suing Nicklaus’ friend and employee, Scott Tolley, for engaging in tasks on Nicklaus’ behalf, which Nicklaus saw as an effort to control his life. Finally, on 3 May, Nicklaus sent a letter to Milstein resigning from all board offices and directorships and informing him he had filed for arbitration on both his and Tolley’s behalf.
Even then, the company asked Nicklaus to work on existing projects, which he agreed to. However, when Nicklaus added two conditions – that the work had to be without prejudice to either side’s legal position, and he had to work directly for the client without additional cost to the client, his offer was rejected.
In the September affidavit, Nicholas states: “I went from being the company’s owner to being a disrespected employee. I made a deal that I thought would allow me to continue controlling the business I had built, but it did not work out that way. Howard made a deal too, however and that didn’t include ownership of me for the rest of my life.”
On 23 November, Nicklaus Companies succeeded in its request for a preliminary injunction preventing Nicklaus from agreeing new endorsement deals while the legal process is ongoing. Last month, the court also denied Nicklaus and GBI Investors, Inc’s motion to dismiss the lawsuit.
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