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Joe_Tucholski

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Nicklaus Companies, LLC
« on: December 05, 2022, 07:59:17 PM »
Interesting article about the relationship between the design firm/brand and Nicklaus.


https://www.si.com/golf/news/jack-nicklaus-felt-owned-by-business-partner-howard-milstein-sworn-affadavit


Corporate entanglement with individuals who are essentially the brand seems like a bad idea. 


I really had no idea that Nicklaus wasn't the owner.  This sort of relationship can't regularly produce high quality design from my perspective.  Hope it all works out.
« Last Edit: December 05, 2022, 09:14:57 PM by Joe_Tucholski »

Tom_Doak

  • Karma: +2/-1
Re: Nicklaus LLC
« Reply #1 on: December 05, 2022, 08:35:50 PM »
Thanks for posting that link.


I could never understand how Nicklaus would sell his name and brand, although I think Gary Player did the same thing years ago with his design business, to similar confusion.  But that company had nowhere near the profile of Jack’s.


Even after reading Jack’s explanation, it’s still a bit hard to understand.  He may know what he thought he was and wasn’t selling, but did he think that was the same as what the buyer thought he was and wasn’t buying?

David_Tepper

  • Karma: +0/-0
Re: Nicklaus LLC
« Reply #2 on: December 05, 2022, 08:38:41 PM »
Yes, that is an interesting article and no doubt a very interesting situation/relationship/arrangement that has developed over the years.  Thanks for the post.

I recall that at least one of JN's sons was involved in JN's course design business. Yet there is no mention of any role the sons have or have had. I wonder if they are still involved in any way.   

Steve Lapper

  • Karma: +0/-0
Re: Nicklaus LLC
« Reply #3 on: December 05, 2022, 09:16:22 PM »
Yes, that is an interesting article and no doubt a very interesting situation/relationship/arrangement that has developed over the years.  Thanks for the post.

 I recall that at least one of JN's sons was involved in JN's course design business. Yet there is no mention of any role the sons have or have had. I wonder if they are still involved in any way.


 After reading the affidavit, there appears to be much more here than meets the eye....on both sides as well as amongst the adjacent (supposed) professionals. It will be quite interesting to see how this plays out.
The conventional view serves to protect us from the painful job of thinking."--John Kenneth Galbraith

Joe_Tucholski

  • Karma: +0/-0
Re: Nicklaus LLC
« Reply #4 on: December 05, 2022, 09:27:08 PM »
Yet there is no mention of any role the sons have or have had. I wonder if they are still involved in any way.


Reading the deposition it talks about Gary and Jack II both being employees of the company with paid salaries (Jack was also on salary).


Also mentions the company threatened a lawsuit against Gary for filing a trademark with the Nicklaus name, Nicklaus Brown and Co.


It also talks about Jack II being an employee of the company in March 2021 in regards to discussion about the Saudi backed golf league.


All of these relationships sound very challenging to navigate.  Life has become quite complex.  I hope these sort of name, image and likeness lawsuits don't become more common.

Ronald Montesano

  • Karma: +0/-0
Re: Nicklaus LLC
« Reply #5 on: December 06, 2022, 06:23:37 AM »

With NIL licensing now a popular practice among younger and younger athletic ones, it's going to be more common and much worse.

All of these relationships sound very challenging to navigate.  Life has become quite complex.  I hope these sort of name, image and likeness lawsuits don't become more common.
Coming in 2024
~Elmira Country Club
~Soaring Eagles
~Bonavista
~Indian Hills
~Maybe some more!!

archie_struthers

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #6 on: December 06, 2022, 07:52:01 AM »
 8)


Just another thing that tells us to enjoy every swing and day in the fresh air. To think that one of the best to ever play has to go thru this at 83 years old, and at least for the last ten years puts it all in perspective. Next time you get a bad lie or some bumpy greens just play on !

John Kavanaugh

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #7 on: December 06, 2022, 08:46:55 AM »
Maybe Jack couldn’t get a personal day off to play Sand Hills before he designed Dismal.

Tom_Doak

  • Karma: +2/-1
Re: Nicklaus Companies, LLC
« Reply #8 on: December 06, 2022, 08:57:37 AM »
Maybe Jack couldn’t get a personal day off to play Sand Hills before he designed Dismal.


John:


That's funny, but I think Jack gets a bad rap for things like that.


He knows very well that if he goes to see someone else's golf course, it's going to be big news, and any comment he makes is going to be amplified.  If he doesn't love it, he's going to sound like a jerk.  And he is not the sort of person who flatters people insincerely.  So, it's just easier not to go.


Not to mention that [according to reports I heard at the time] he only spent two days in the sand hills during the construction of Dismal River, so even if he'd had a third day, he should have felt obligated to spend it working.

John Kavanaugh

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #9 on: December 06, 2022, 09:15:14 AM »
What's a Jack day worth? $50,000 - $300,000? It would be tough to give away if you owned a chunk.

Kalen Braley

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #10 on: December 06, 2022, 11:59:53 AM »
I think this statement is fairly clear on the "why" and it seems pretty reasonable...even if he didn't realize how big the sharks were that he was inviting to the party.

“I wanted my family to retain control of those businesses during my lifetime and beyond, so I decided to monetize a little less than half of the value of the businesses as part of estate planning for the benefit of my children and their families,

Rory Connaughton

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #11 on: December 06, 2022, 12:32:46 PM »
Read the affidavits if you get the opportunity.  Seems like a bizarre deal structure under the circumstances.


Why would he have agreed to what amounts to a seller guarantied transaction? Surely it could not have been the only way for him to obtain a premium. He could have sold an equity stake in his existing enterprises without taking on the risk.


M&A brethren?

Jeff Schley

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #12 on: December 06, 2022, 01:01:50 PM »
I love Jack Nicklaus for many reasons, this is sad to hear how stressful this has been to him and the family the last 15 years. However, he did get a lump sum and while not having the 51% majority of the company anymore he still owns a significant portion I would think. Does it mention that anywhere in the documents?
I recall several years ago where Jack said he was going to retire from designing and now maybe it coincided with this 5 year non-compete?  He seemed to come out of retirement for the right projects.
"To give anything less than your best, is to sacrifice your gifts."
- Steve Prefontaine

Mike_Trenham

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #13 on: December 06, 2022, 01:10:20 PM »
I had a summer internship with GBI in 1998.  Reading this everything fits.  Jack was beloved by his staff in a big part due to his loyalty (its epic).


All of the businesses were unique entities but also unfailingly tied to each other and Jack.  Scott Tolley is about as good a person as anyone will encounter and also talented.  Plus Jack was focused entirely on maintaining his lifestyle for his large and expanding family.


The legal conflict of interest matter is very interesting especially given Jack propensity to trust his staff.
Proud member of a Doak 3.

Kevin_Reilly

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #14 on: December 06, 2022, 01:48:36 PM »
Why would he have agreed to what amounts to a seller guarantied transaction? Surely it could not have been the only way for him to obtain a premium. He could have sold an equity stake in his existing enterprises without taking on the risk.


M&A brethren?


I believe at the time that the enterprise value implied in the Millstein offer was substantially greater than what JN could have gained from a more traditional equity partner.  I was a bit familiar with the process back then, and the Millstein deal, when announced, was shocking in its "on paper" EV.


JN went for the highest value, and didn't ascribe enough importance to the terms.  Happens a lot.
"GOLF COURSES SHOULD BE ENJOYED RATHER THAN RATED" - Tom Watson

Steve Lapper

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #15 on: December 06, 2022, 01:57:08 PM »
Why would he have agreed to what amounts to a seller guarantied transaction? Surely it could not have been the only way for him to obtain a premium. He could have sold an equity stake in his existing enterprises without taking on the risk.


M&A brethren?


I believe at the time that the enterprise value implied in the Millstein offer was substantially greater than what JN could have gained from a more traditional equity partner.  I was a bit familiar with the process back then, and the Millstein deal, when announced, was shocking in its "on paper" EV.


JN went for the highest value, and didn't ascribe enough importance to the terms.  Happens a lot.


Any competent attorney with a minimum amount of deal-related exposure could have and should have alerted Jack to the potentially dangerous nature of PIK paper and its cumulative dilutive effect. Any reasonable attorney representing him (or anywhere near this deal) should've sought out some counsel with experience. I won't describe what not realizing this infers.
« Last Edit: December 07, 2022, 04:40:58 AM by Steve Lapper »
The conventional view serves to protect us from the painful job of thinking."--John Kenneth Galbraith

Steve_ Shaffer

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #16 on: December 06, 2022, 03:48:50 PM »
"Some of us worship in churches, some in synagogues, some on golf courses ... "  Adlai Stevenson
Hyman Roth to Michael Corleone: "We're bigger than US Steel."
Ben Hogan “The most important shot in golf is the next one”

BHoover

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #17 on: December 06, 2022, 06:30:33 PM »
It seems to me, based solely on what I read in the linked articles, that Nicklaus should have engaged better legal representatives to negotiate the deal on his behalf.

I’m only speculating here, so I could well be mistaken, but when the entire family earns its living off one man, that could have played a role in encouraging JN to enter into this arrangement in the first place. It’s not unreasonable to think that the children had an incentive to monetize their father’s brand and likeness. I’m sure JN himself was not disinterested in the idea of monetizing the business and taking a significant upfront payment. It wouldn’t be the first time, and it certainly would not be the last time (see Gary Player and family, for example).

Because I’ve lost respect for Nicklaus over the past few years, I also find it somewhat ironic (and I’ll admit, not entirely without humor) that someone who believes in unfettered capitalism and is worried about being able to “continue to pursue the American Dream and not evolve into a socialist America” (his own words from 2018) is upset that he felt disrespected, controlled, and owned by his business partner. That’s called employment, Jack. Welcome to capitalism.
« Last Edit: December 06, 2022, 07:05:08 PM by BHoover »

SB

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #18 on: December 07, 2022, 09:58:39 AM »
My sympathy is a little limited since this is the second time he's done this.  The first was with Golden Bear Golf in the 90's where he went public with a company essentially licensing his name.  Those were also a bunch of bad dudes who literally scammed millions of dollars through the Paragon Golf construction subsidiary.  I heard from good sources that the rest of the Golden Bear business was pretty shaky/sketchy as well.


Here's an article that sort of describes what happened, skipping out on the part where Paragon charged clients for work that wasn't done.


https://nypost.com/1999/05/30/a-golden-bear-market-nicklaus-business-empire-in-shambles/
« Last Edit: December 07, 2022, 10:03:44 AM by SBusch »

Eric LeFante

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #19 on: December 07, 2022, 11:30:37 AM »
He also had financial difficulty in the mid 1980s, which made him winning the 1986 Masters all the more special. He got involved in bad real estate deals where he personally lost $12M and his company almost filed bankruptcy.


https://www.nytimes.com/1992/02/02/sports/golf-in-bear-market-nicklaus-is-bullish-on-his-business.html


There certainly is a pattern for Jack of not fully understanding the terms of business deals and what could go wrong. With this case, he believes his non compete was for 5 years and that period ended in June 2022. Milstein claims when they renegotiated the original 2007 deal in 2013, which ended up giving Jack an extra $21M he wasn't originally entitled to, it also extended his non-compete.


Milstein has not done well with this investment, generating only $68M over 15 years on his $145M investment. It's very much a cautionary tale of buying a business where all the value is based on one person. I think Milstein agreed to a new compensation structure for Jack in 2013 because Jack wanted out and if he let that happen, it would be very bad for the Nicklaus Company.





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Mike Sweeney

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #20 on: December 08, 2022, 06:03:10 AM »
Jack made mistakes, and made positive contributions to society too:

Miami Children’s Health System undergoes a name change to align the health system with the branding and identity of its flagship, Nicklaus Children’s Hospital. The health system becomes Nicklaus Children’s Health System in recognition of the continued support from the Nicklaus Children’s Health Care Foundation and its founders, golf icon Jack Nicklaus and his wife Barbara.


https://www.nicklauschildrens.org/about-us/history


Not debating the above on his company, just trying to create a balance. Good men do stupid things, but that does not make them bad men.
"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us."

Dr. Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark

Steve Lapper

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #21 on: December 08, 2022, 06:39:55 AM »
Jack made mistakes, and made positive contributions to society too:

Miami Children’s Health System undergoes a name change to align the health system with the branding and identity of its flagship, Nicklaus Children’s Hospital. The health system becomes Nicklaus Children’s Health System in recognition of the continued support from the Nicklaus Children’s Health Care Foundation and its founders, golf icon Jack Nicklaus and his wife Barbara.


https://www.nicklauschildrens.org/about-us/history


Not debating the above on his company, just trying to create a balance. Good men do stupid things, but that does not make them bad men.


Great point Mike. He and Barbara have absolutely made great charitable contributions to society. Maybe even equal to or more than his litigating counterpart?


It is important to draw a balance, especially when weighing the degree with which their celebrity is measured. Our society and world is littered with prime examples of people whose public personas look shiny and spotless, yet beneath the surface lies the dichotic opposite, and vice-versa. Kanye (Ye Doosh) might be the king daddy of this kind of misguided celebrity worship history.


Jack is one of golf's demi-gods. His playing record is simply unassailable. His personal life is just that..personal. His business life is free game for capitalist critics and subject to our country's structure of contract law and judicial system. Apparently, his activities there merit considerable questions.


When Jack uses his pulpit for various purposes, it begs for critique. His extensive efforts on behalf of various charities certainly deserves all the credit in the world. I'm glad you pointed it out. Balance, as you know, is in the eyes of the beholder. That said, Jack absolutely deserves to have his charitable efforts be a strong part of his record.
« Last Edit: December 08, 2022, 04:28:39 PM by Steve Lapper »
The conventional view serves to protect us from the painful job of thinking."--John Kenneth Galbraith

Bruce Katona

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #22 on: December 08, 2022, 10:18:27 AM »
Based on Slapper's data supplied above, one would think the JN & Howard Milstein could get together in a room, just the two of them(no pesky attorneys in the room to take notes and muck things up) and agree to set aside their differences and settle monetarily, with the settlement going to the Miami Children's Health System and Hurricane Relief in Florida - a favorite charity of each participant; and releasing one anther from further litigation in this matter


Imagine the positive press both would receive for being the bigger people in settling this and all the good the funds would perform for both of these noble causes.

Kalen Braley

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #23 on: December 08, 2022, 02:15:35 PM »
Mike,

I don't think anyone has characterized him as "bad".  But given his legendary status in his golf life and public persona, I suspect it may have been he didn't have many people in his inner circle that would say No or provide critical feedback otherwise.

Tim Leahy

  • Karma: +0/-0
Re: Nicklaus Companies, LLC
« Reply #24 on: December 09, 2022, 12:43:42 AM »
Jack made mistakes, and made positive contributions to society too:

Miami Children’s Health System undergoes a name change to align the health system with the branding and identity of its flagship, Nicklaus Children’s Hospital. The health system becomes Nicklaus Children’s Health System in recognition of the continued support from the Nicklaus Children’s Health Care Foundation and its founders, golf icon Jack Nicklaus and his wife Barbara.


https://www.nicklauschildrens.org/about-us/history


Not debating the above on his company, just trying to create a balance. Good men do stupid things, but that does not make them bad men.


Great point Mike. He and Barbara have absolutely made great charitable contributions to society. Maybe even equal to or more than his litigating counterpart?


It is important to draw a balance, especially when weighing the degree with which their celebrity is measured. Our society and world is littered with prime examples of people whose public personas look shiny and spotless, yet beneath the surface lies the dichotic opposite, and vice-versa. Kanye (Ye Doosh) might be the king daddy of this kind of misguided celebrity worship history.


Jack is one of golf's demi-gods. His playing record is simply unassailable. His personal life is just that..personal. His business life is free game for capitalist critics and subject to our country's structure of contract law and judicial system. Apparently, his activities there merit considerable questions.


When Jack uses his pulpit for various purposes, it begs for critique. His extensive efforts on behalf of various charities certainly deserves all the credit in the world. I'm glad you pointed it out. Balance, as you know, is in the eyes of the beholder. That said, Jack absolutely deserves to have his charitable efforts be a strong part of his record.
Jack and Kanye have at least one thing in common, they both endorse comrade Trumpsky. :o
I love golf, the fightin irish, and beautiful women depending on the season and availability.

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