An Arbitrator appointed to resolve a dispute between Jack W. Nicklaus and Nicklaus Companies, LLC has determined that Mr. Nicklaus is free to compete with the company that bears his name. After a Final Hearing that spanned 18 days over six months, the Arbitrator ruled that the restrictive covenants in Mr. Nicklaus’ Employment Agreement expired on June 1, 2022, and “he is now free to engage in the activities” once restricted by those covenants, which includes, among other things, the design of golf courses and the solicitation of the Companies’ customers and employees.
“The arbitration process was an arduous learning experience, but I am thankful for how it ended,” Nicklaus said. “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. My goal has always been to create courses that challenge tour professionals yet still provide an enjoyable experience for the many golfers whose love for the game might be greater than their ability. I also try to respect the natural environment that existed before I showed up with a pencil and paper in hand. 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.”
Regarded by many as the best to ever play the game, Nicklaus’ 18 major championships established a record in professional golf that may never be surpassed. He is also one of the game’s most acclaimed golf course designers, with more than 300 golf courses to his credit around the world.
After Jack Nicklaus retired from competitive golf in 2005, he was urged to monetize a minority interest in certain of his businesses – including his golf course design business. That led to a relationship with New York businessman Howard Milstein, whose family now owns and controls the Nicklaus Companies.
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Mr. Nicklaus sold a little less than half of the equity in his businesses in connection with that transaction, but the Great Recession of the late 2000s coupled with the terms of the new relationship reduced the Nicklaus family’s equity to zero and allowed Milstein to gain complete control and ownership of the Nicklaus Companies. Milstein then acquired other golf-related businesses, including Golf Magazine, TrueSpec, and a variety of golf equipment and service enterprises.
Mr. Nicklaus ended his employment with the Companies in June 2017 and was then subject to a five-year non-compete provision, which precluded him from providing golf course design services except through the Companies. He continued to perform design services through the Companies until May 2022, when he severed his professional relationship with the Companies. In late 2022, Nicklaus began offering golf course design services through a subsidiary of the Nicklaus Family Office known as 1-JN.
Arbitration is not the only forum in which Mr. Nicklaus and the Nicklaus Companies are embroiled. Shortly after the arbitration began, the Companies filed a lawsuit in New York addressing similar issues under other agreements. The Judge presiding over the New York case denied the Companies’ request for a preliminary injunction to prevent Mr. Nicklaus from designing golf courses in his own name, finding it unlikely that the Companies would prevail.
The Arbitrator also spoke directly to this issue, stating:
“[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 in the New York case has not been set.
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Nicklaus said 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.” However, he was able to end on a positive note, stating: “If you want a golf course designed by Jack Nicklaus, give me a call.”
Mr. Nicklaus is represented in the pending legal proceedings by Eugene E. Stearns, Matthew W. Buttrick, Cecilia D. Simmons, and Albert D. Lichy of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., in Miami, Florida, and Vincent Levy, Scott M. Danner, and Prishika Raj of Holwell Shuster & Goldberg LLP, in New York.
Mr. Nicklaus is represented in connection with new design opportunities by Michael P. Kenny, who can be reached at (813) 545-4693 or through the Nicklaus Family Office at (561) 763-5600.