Moving Day: Oakley’s Lawsuit Against McIlroy Highlights Challenges of Rights of First Refusal

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Originally published in Sports Litigation Alert, Volume 10, Issue 1, on January 25, 2013.

At the start of 2011, the sunglasses maker Oakley signed a two-year endorsement deal with Rory McIlroy. The agreement paid McIlroy an estimated $6 million for the term of the agreement, which covered “eyewear, apparel and accessories,” and was set to run through the end of 2012. In addition, the contract included a right of first refusal, which afforded Oakley the opportunity to retain McIlroy as an Oakley endorser beyond 2012 by matching any offer covering the same product categories that McIlroy might receive for the period after the expiration of the Oakley deal.

At the time that Oakley embarked on its relationship with McIlroy, he was a somewhat unproven commodity, both as a golfer and as a brand endorser. Although his future stardom had been foretold since his teenage years in northern Ireland, McIlroy had yet to win any of golf’s major championships or to be widely exposed in the U.S. By committing to McIlroy early in his career, Oakley was poised to benefit from McIlroy’s meteoric rise to worldwide stardom after his dominant performance at the 2011 U.S. Open.

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Topics:  Celebrity Endorsements, Endorsements, McIlroy, Nike, Oakley, Right of FIrst Refusal

Published In: Art, Entertainment & Sports Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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