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Sun 13 Feb 2011 08:25 AM

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Money for nothing

It took Tiger Woods twelve years to earn $99m in prize money. In 2008, Dubai promised him that amount in one contract: to put his name to golf courses that will likely never exist. The best piece of business in the history of sport? You decide.

Money for nothing
Woods’ total earnings reached $92m in 2007.
Money for nothing
Woods’ original deal with Tatweer is understood to have been for a cash payment upfront, a ten percent equity stake in the project, a 16,500 sq ft villa and royalties on residential sales.
Money for nothing
Dubai Properties Group said work on the Tiger Woods golf project has been suspended.
Money for nothing
Money for nothing

Timing is everything in golf. On Monday August 25, 2008, a beaming Tiger Woods arrived in Dubai to unveil the masterplan for a spectacular $1.1bn golf resort bearing his name. Appearing before a frenzy of reporters and fans, the world number one cut straight to the chase, proclaiming “Dubai has the biggest, greatest and newest of everything, and hopefully we’ll create an experience here with this golf course that people will remember.”

Just 72 hours earlier, Woods and his advisors had signed an extraordinary deal with UAE property developer Tatweer, which promised him a staggering $55,416,667 up front, for marketing a golf course that doesn’t exist. In total, Woods was promised $70m, as a “promotional fee” and a further $28,800,000 if he agreed to develop a second project.

Twenty four days later, in America, Lehman Brothers would collapse, sparking a global financial crisis that would eventually result in Woods’ Dubai project being canned. At the time, nobody in Dubai had any inkling of what has come.

Today, as he attempts to win the lucrative Omega Dubai Desert Classic for a record third time, Arabian Business can for the first time reveal full details of Woods’ other record — the signing of what may turn out to be the most lucrative deal for doing nothing in the history of sport.

For the past two years, it has been widely reported Woods received $10m and the promise of a lavish 16,500 sq ft villa in return for lending his name and design expertise to, as well as helping to promote, Tiger Woods Dubai. The figure was considered to be far more generous than the going rate of $1m — $5m for such deals, but given that this was Woods in his heyday, few eyebrows were raised.

The first contract for Tiger Woods Dubai was dated June 20, 2006: a Design and License Agreement between Tatweer and ETW (Eldrick Tiger Woods). Original plans for the 55 million sq ft Tiger Woods Dubai included 287 luxury villas and mansions, an eighteen hole golf course, a golf academy and a luxury boutique hotel designed by Lebanese designer Elie Saab. With the property market in the emirate booming, there appeared little doubt that the $1.1bn project would do what every other mega project was then doing — sell like hot cakes.

Woods’ original deal with Tatweer is understood to have been for a cash payment upfront, a ten percent equity stake in the project, a 16,500 sq ft villa and royalties on residential sales.

But by August 2008, Woods and his advisors had other plans.

On Friday August 22, 2008, Woods signed a new deal with Tatweer. Headed “Amendment to Golf Course Design and License Agreement”, it contained fifteen clauses that were added to supersede the original contract. Instead of having the potential to earn millions of dollars, Woods was given a guarantee for $55,416,667, to be paid within ten days of signing the contract.

The amendment, seen by Arabian Business, first refers to the original contract, saying: “Article 3.1 (b) is hereby deleted in its entirety and replaced with the following”.

The new deal states: “Owner (Tatweer) shall pay ETW the sum of $70m as a promotional fee.” It then breaks down the payments, stating:

“$26,250,000 which has already been paid by the owner and received by ETW”

“$29,166,667, which will be paid to ETW by the Owner within ten days of the full execution by both parties of this Amendment”

“$14,583,333, which will be paid to ETW by the Owner within ten days after Wood’s appearance at the Official Opening.”

But that was just the start. The next clause in the Amendment made sure Woods was already on board for a second project with Tatweer, agreeing to pay him $28,800,000 if a second project ever happened. It states this money would be paid as a “one time fee”.

In total, Tatweer had signed up to pay Woods a potential $98,800,000. The Amendment makes clear $26,250,000 had already been paid to the golfer, but it is not clear whether the next installment of $29,166,667 was paid. However, the copy of the seven page Amendment seen by Arabian Business has been signed by an official representing Tatweer.

The Amendment also makes one other key point — the agreement not just to scrap the much publicised 16,500 square foot villa Woods would receive, but to keep this information confidential. Clause 3 of the Amendment says “ETW waives its right to receive the Chosen Development Unit… The Parties hereto agree to keep confidential the fact that ETW has agreed to waive its right to receive the Chosen Development Unit”.

It was just 24 days later that Woods watched as Lehman Brothers investment bank filed for bankruptcy with debts in excess of $600m, an event which started a domino effect that brought down the global financial system and finally burst the Dubai property bubble.

Dubai real estate prices tumbled by nearly 60 percent in the next two years and credit for large scale developments evaporated.

By March 2009, executives at Tiger Woods Dubai had to admit that things were not going to plan and the original September 2009 deadline was scrapped.

Only six of the greens were ever completed with building work on the course minimal —  an electrical power station, a few floors of a half way house, the pillars of the golf academy and underground works on the clubhouse were completed.

But even up to a year ago in February 2010, Dubai Properties Group (into which Tatweer had now been submerged)  was claiming that “the project was ongoing”.

Then, just two weeks ago on January 31, Dubai Properties Group announced the entire project had been suspended, explaining: “This decision was based on current market conditions that do not support high-end luxury real estate. These conditions will continue to be monitored and a decision will be made in the future when to restart the project.” It added: “We maintain a good relationship with Tiger Woods and his organisation and will retain our commercial agreement together.”

The UAE real estate industry is not anticipating the project to progress. “Not much had been going on in that project so it wasn’t a project that we had factored into our supply database as being ready any time soon. When they announced that (it was suspended) it wasn’t really news to us,” says Charles Neil, CEO of Landmark Properties.

This sentiment is echoed by Tim Bunker, an agent at Better Homes in Dubai.

“It was a good idea during the boom times but I was never comfortable that it was actually going to happen. Mainly because of how far it was away from Dubai central and the properties were huge. I didn’t think there was that much left in the market for those kinds of villas,” he says.

When contacted by Arabian Business, DPG responded by email saying: “We do not comment on the details of contracts or agreements with our partners.”

Mark Steinberg, Woods’ long standing agent at IMG, also declined to comment on the payments received by the golfer.

When approached by Arabian Business last week in Dubai, Woods was asked whether he had a signed an amended contract with Tatweer on 22 August 2008.

“No, I’m not going to talk about that, sorry," he replied. Pressed again by our reporter, Woods said: “Sorry. I'm not going to, sorry.”

This afternoon, thousand of golf fans will camp around the fabulous Emirates Golf Club to see whether Woods will make it a hat trick of victories in the emirate.

But as Woods and his advisors already know, their biggest victory in Dubai was sealed on August 22, 2008.

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Harvey Titen 9 years ago

When you lose concentration your game goes to pot. When Tiger had his Dad on his back he was the best. When he was playing on one leg he won. Tiger can play when the only thing in his mind is golf take that away and is the same as anybody. When Tiger starts thinking like he used to he will win again. I hope he starts to think like his Dad taught him too. Beat them all into the ground.

Paul King 9 years ago

Nice work if you can get it! This project serves as a reminder of how delusional the property sector had become. Of course, it was all Lehman Brothers fault!

Telcoguy 9 years ago

I Find amusing that the news focus on how much tiger was paid... If my reading is right, Tatweer was the one that should be on the headlines,this was really poor management. I seriously fail to see how tiger woods could have forced them into this agreement. Has TW failed to deliver on anything?

Justagolfer 9 years ago

Why does anyone want Tiger to win anything?