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Sunday, December 21, 2014

Rory McIlroy, Nike sued by Oakley over contract

Oakley is suing golfer Rory McIlroy and apparel giant Nike for an alleged breach of contract. The suit, which was filed in a federal court in Santa Ana, Calif., on Dec. 10, names both McIlroy and Nike as defendants.

Details of the filing are not available through the federal court’s online system, but ESPN’s Lester Munson says Oakley alleges that McIlroy violated his contract with their company by refusing to grant them the “right of first refusal” when the golfer signed a new endorsement deal with Nike.

McIlroy reportedly signed a new deal with Nike recently that has been rumored to be for over $200 million. Oakley says its contract to provide eyewear and apparel for the top golfer runs through the end of the year, and that their counteroffer to Nike was ignored.

The right of first refusal means Oakley would have a chance to match any offer that included payments to McIlroy for eyewear and/or apparel. Its offer to match Nike’s contract with McIlroy would cost them 30% of Nike’s total deal, which might be around $60 million.

Oakley reportedly is seeking an injunction that would block the contract between McIlroy and Nike. They also claim they have spent over $300,000 on a photo shoot and promotional materials for McIlroy in 2013.

Munson reports the defense will argue that an email sent from an Oakley executive to McIlroy’s agent saying, “We are out of the mix. No contract for 2013,” means Oakley forfeited its right of first refusal.

We’re guessing the sides will eventually settle for some fee.

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