Jack vs. Nicklaus

The inside story of Jack Nicklaus' legal battle against his own company. How did the game's greatest champion become embroiled in a lawsuit against the company he founded?

In a threadbare courtroom in lower Manhattan, the 82-year-old defendant took care to avoid the power cords taped to the floor as he mounted the witness stand. The clerk asked him to state his name and provide his business address.

“Jack William Nicklaus,” he said, “I don’t even know a business address.” He gave his home address instead.

That, in a way, was the whole case right there. As his subsequent testimony made clear, Nicklaus still has a sharp memory, so he may have chosen to forget his business address, which would have been understandable under the circumstances. The plaintiff in the case is, in fact, Nicklaus’ own business, and the case is captioned, improbably enough, Nicklaus Companies, LLC v. Jack W. Nicklaus. The lawsuit was filed in May 2022, and it’s very much ongoing. The case raises a variety of complex legal issues, but the most important is this: What the hell is going on here?

Nicklaus’ demeanor can be as revealing as his words on the record. That was apparent when I recently visited him at what’s known in Nicklaus’ world as the “family office,” which is about three miles from the “business” office—the one he couldn’t remember—in Palm Beach County, Florida. Now 83, Nicklaus is a bit stooped, and his golfing days are, alas, behind him. “I don’t play golf anymore,” he told me. “I played four times last year, all in May—twice at Augusta, and I shot 88, 87, and twice at Muirfield Village on the weekend before the tournament, and I shot 86, 84, and I said, ‘That’s enough.’ ” But despite the end of his playing career, even for fun, Nicklaus was in buoyant spirits. I asked him how he felt about his court appearance, which included two days of cross-examination. “I’ll give you two phrases to describe the trial,” he said. "One, I didn’t want to do it, and two, it was a pleasure. I saw a light at the end of the tunnel—that I might get rid of this and might be able to go live a life. If I end up doing nothing other than not working for him, that would be worth it.”

“This guy” is Howard Milstein, a New York real estate and banking magnate and Nicklaus’ erstwhile business partner. They joined forces under Nicklaus’ corporate banner in 2007, and their divorce has taken place like a bankruptcy once described by Ernest Hemingway: “Gradually, then suddenly.”

For the ultimate control freak on the golf course, whose relentless, risk-averse style propelled him to 18 professional majors and arguably the greatest record in the history of the game, Nicklaus has had a surprisingly tumultuous business career, and the Milstein conflagration is the latest chapter. (...)

Throughout these chapters, Nicklaus enjoyed several advantages. His integrity and honesty were never challenged. His reputation as a golfer flourished as he continued winning tournaments during the 1990s on the senior tour. His clothing lines remained popular, especially in Asia. Most importantly, despite his other business reverses, his career as a golf-course designer thrived. In the first decade of the new century, the Nicklaus Companies appeared to be on a healthy trajectory, and his chief financial officer at the time came to Nicklaus with an idea. “He says, ‘You’re not getting any younger,’ ” Nicklaus told me. “Maybe it’s time to pass to my kids, let them monetize something, so they don’t have to wait for me to kick the can to have any kind of money.” The company hired an investment bank that valued the Nicklaus Companies at nearly $300 million and started looking for investors. Revenues for 2006 were $77 million and projected to be $100 million by 2009; profits, in theory, would go from $23 million to $43 million a year.

The company had a variety of suitors, but one put in a bid early and never changed it. Howard Milstein said he would invest $145 million in the company—predicting it could eventually be sold for a billion—and Nicklaus accepted the offer. Nicklaus promptly gave $20 million (after taxes) to each of his five children. In our conversation, Nicklaus called these gifts to his children “not a huge amount of money, but in this day and age, pretty good,” an observation that reveals the rarefied circles in which he travels. By this point, Jack and Barbara Nicklaus had created the template for charitable giving by golf superstars, which Tiger Woods, most notably, has chosen to follow. The Milstein investment allowed the Nicklauses to expand their philanthropic interests, which have amounted to more than $200 million raised for children’s health over the past two decades.

As of 2007, Nicklaus now had a business partner, though he retained ultimate control of the company. “I’m very unsophisticated,” he told me. “I was a golfer, just retired from tournament golf. I knew nothing about business. I’m not a lawyer. I don’t know what all that stuff is. I wish I did because I probably wouldn’t have gotten into what I got into. I never knew what the word ‘vet’ meant. If I did, I probably never would have wound up with Howard Milstein.”

Who is Howard Milstein? For starters, Howard is a Milstein, which is a big deal in New York City. In 1919, Morris Milstein, a Russian immigrant, founded a company that joined in the city’s real estate boom by installing the flooring in skyscrapers, including, eventually, the World Trade Center. From flooring, the family moved into real estate, building and owning residential and office towers in Manhattan and elsewhere. In 1986, the family bought Emigrant Savings Bank and built it into the country’s largest privately owned, family-run bank. The Milstein family is now worth an estimated $5 billion.

The Milsteins, including Howard, are also litigious, including among themselves.

by Jeffrey Toobin, Golf Digest |  Read more:

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