Chubby Chandler’s Gamble Pays Off for Darren Clarke

When Darren Clarke won the Open Championship last week, he not only collected the $1.4 million first prize money from the R & A, he earned a bonus of two million Euros (about $2,833,000) from Dunlop, courtesy of a clever marketing deal created by his agent,  Andrew “Chubby” Chandler.  Lee Westwood, another Chandler client, had the same deal, but didn’t make the cut.

And the winner is....Darren Clarke

Clarke and Westwood were to wear the Dunlop logo on their shirts for no money up front, but each stood to collect a small fortune if he won a major.  Chandler and Clarke were betting on their own success, eschewing a guaranteed payment for the chance at a jackpot.

According to a July 13th report by Charles Sale in the MailOnline, the web version of The Daily Mail, “the agreement was struck six years ago between International Sports Management boss Chubby Chandler…” and Newcastle United football team owner Mike Ashley through Sports Direct, a publicly traded online retailer founded by Ashley which owns the Slazenger and Everlast brands as well as Dunlop.

In looking ahead to the Open, Sale thought Lee Westwood, ranked world’s number two and projected as among the favorites at Royal St. George’s, was the likeliest candidate to earn Ashley’s millions.   David Howell was also eligible for the bonus for winning a major, Sale noted, but wrote that it was a “safe bet that neither Clarke nor Howell, who failed to qualify, will be enjoying Ashley’s millions.”  The bookmakers had Clarke at 125-1.

Matt Judy, EVP of Blue Giraffe Sports out of Atlanta, admires Chandler’s gambling approach to endorsement deals, but also sees the much different market reality in the States making such arrangements unlikely.  “The approach Chubby took was unique and is not a common one in the US market,” Judy says.   “Most deals done here have some type of compensation involved up front and are not totally based upon incentives.”

America may be the theoretical land of unrestrained capitalism, but when it comes to risk, European golfers seem a lot more willing to put their games on the line.  The all-exempt PGA Tour has created a market loaded with incentives to do well enough but not necessarily great.  Top 10s and even top 25s finishes consistently achieved can provide a grand income.

It’s perhaps not surprising that players such as the supremely confident Rory McIlroy—another horse in the Chandler stable—prefer not to commit themselves to the PGA TOUR full time.  They can earn appearance money overseas, but they can also leverage their wins through incentivized endorsement deals.

There are 54 players who have earned over a million dollars on the PGA Tour so far in 2011.  Twenty-six of them have won tournaments (including three two-time winners.)   That means there are twenty-eight players who have already won more than a million dollars this year  without winning an event.

“The kind of deal Chubby’s set up is legal on the US TOUR” says Judy, who is a graduate of Mercer Law School outside Atlanta, “but our market has not yet widely adopted this type of deal from the corporate or the player side.  With more examples of these type of successes, I think a hybrid of these kinds of deals will become more prevalent in certain situations.”

Payments under these “win to get paid” arrangements are usually funded through an insurance policy, Judy explained.  “It’s just like hole-in-one insurance” he said.   The cost of the insurance policy would be roughly the same for a company as the annual endorsement payment to a player of Clarke’s stature.    It’s not clear, however,  how Dunlop has funded its payment to Clarke.

If the payment had been provided through an insurance policy, somebody—probably through Lloyd’s of London—figured out the odds for Clarke winning a major and wrote a policy to cover that unlikely event.  (I would love to meet the actuary whose job it is to handicap players in major championships.  Meeting with the oddsmakers at the betting parlors would surely be a part of the research required.)

Dunlop was not really much at risk for the €2M, even if it has to cough up to Clarke.   Dunlop’s logo is featured in every interview and photo of Clarke, who is immensely popular already and will now be even more in demand.  Dunlop is getting its money’s worth.

Chandler’s players currently hold three major championship trophies:  The Masters (Charl Schwartzel), the US Open (McIlroy) and Clarke’s Claret Jug.   His influence as an agent and International Sports Management’s (ISM) stable will surely grow.   But unless there is a shift in sensibility, Chandler’s clever strategies for leveraging his players’ successes may never play well among American professionals.





3 Responses to “Chubby Chandler’s Gamble Pays Off for Darren Clarke”

  1. Steve

    Ok….more to the story maybe?

    1. After his year this year why would Rory now “gamble” on an incentive when if he came to PGA, he most likely could sign a multiple year (5?) at a per year amount probably equal to or more(?) than the one time incentive payoff?

    2. Why would your average top 54 PGA player “gamble” when the opportunities for guaranteed endorsement $ combined with earnings this year set them for life no matter how well they do next year (assuming properly managed of course)?

    3. I can see a PGA tour player ranked any where from…oh 100 to 175 trying this approach because anyone can have a great week over the contract term. As a player in this category might be lucky to get a small $, one year endorsement; the incentive idea would then be an attractive business decision.

    There is no question in my mind that the Euro tour set up makes a player “work” harder than the exemption setup on the PGA for the equivalent reward. but that’s almost a separate discussion. So finally, is it that one approach is better than the other? Or is it simply just different? I don’t know…but I do agree with Matt Judy; I see a hybrid deal becoming more common in the US. Mainly because Corporate America has been in an economic crunch (granted as has corporates world wide). If they can avail themselves of the same market exposure for less cost, that’s incentive to them.

    Interesting article. Thanks for reading my lengthy thoughts in response!

  2. John Strawn

    Your comments are thoughtful and well-taken. Thanks. For sure Rory is now in a position to command tremendous fees for his endorsement. Chubby won’t be gambling with Rory’s currency. There are many great American golfers for sure, but one has to ask why players from Europe and South Africa (and to some extent Asia, on both the men’s and women’s tours) seem to be having more success on the biggest stages these days (including Ryder Cup victories.) Perhaps it’s just an anomaly, and the pendulum will swing back toward the US players soon, but it may also signal that Americans will never resume their dominance of the majors–no one, of course, can know. But I do suspect that how the US nurture players, both as amateurs and on the PGA TOUR, sets up psychological expectations whose effects are manifested when players compete under the toughest conditions. That being said, I think think Ricky Fowler is going to be a force to reckon with in the majors–and he did outplay Rory at St. George’s, when they played together and had the worst draw and faced inclement weather especially in the first two rounds.

  3. Steve

    Agreed (and thank you for the quick reply!). I think the “pendulum” is with the world for the foreseeable future…Ricky perhaps being one of the few exceptions from the US right now.

    Ricky is a “kid” (I am 52….geeeezzzz – sounded like an old man) and he is obviously having fun! The TOUR needs more like him. I hope that while he continues to play well, thereby making more $$$$, he doesn’t lose that focus. It’s a game…have fun…even when the wind is blowing sideways.).

Leave a Reply

  • (will not be published)