Editor's note: For the latest on the LIV Golf and PGA Tour merger, follow USA TODAY Sports' live updates here.
Something seems awfully ironic about this big new merger between the PGA Tour and LIV Golf.
When LIV Golf and several pro golfers sued the PGA Tour last year for alleged antitrust violations, their attorneys used the word “monopoly” in their complaint against the PGA Tour 44 times in 118 pages.
“Elite Professional Golf Has Stagnated Under the PGA Tour’s Monopoly,” said the amended complaint on Page 22.
The lawsuit describes alleged abuses by the Tour as a “monopoly power,” saying the tour engaged in the “unlawful monopolization of the market for the promotion of elite professional golf events.”
“The Tour’s actions are transparently anticompetitive, as they are aimed purely at kneecapping competition from LIV Golf before it can get off the ground and threaten the Tour’s monopoly,” the complaint states.
But now that litigation is being resolved by merging the two leagues into an even bigger possible “monopolization of the market for the promotion of elite professional golf events.”
Can they do that? And what does that mean for the game?
In some ways, pro sports fans in America have seen this movie before, such as when the American Football League and the NFL merged after an expensive bidding war for players and then permission from the government amid antitrust concerns.
This is different, said Marc Edelman, law professor and antitrust expert at Baruch College. The NFL needed an act of Congress before it merged.
“It’s going to be very hard after LIV Golf has spent a year litigating and claiming the PGA Tour is a monopoly to then turn around and claim their merger with the PGA Tour would not substantially lessen competition in a relevant market,” Edelman said by phone Tuesday.
Much of it could depend on the details of the deal, which haven’t been revealed. In the meantime, USA TODAY Sports consulted with legal experts about how the Saudi Arabia-backed LIV Golf league resolved its complaints of a U.S. monopoly by creating an even bigger global combination with more power and money than ever.
Isn’t this just another monopoly?
It depends. And it’s really up to the U.S. government to decide if it’s legal. The U.S. Department of Justice already had been looking into possible anticompetitive practices of the PGA Tour after it tried to fend off LIV Golf as a rival league and punish players for joining it.
“The PGA-LIV merger is another in a long line of successful efforts by entrenched monopoly organizers of sporting competitions to maintain their dominance through predatory behavior directed toward rivals, followed by swallowing them up,” said Steve Ross, a law professor at Penn State and former attorney with the DOJ and Federal Trade Commission. “From the point of view of law and economics, (PGA Tour commissioner) Jay Monahan is no different than John D. Rockefeller, putting independent gas stations out of business and then folding them into Standard Oil.”
The DOJ declined comment Tuesday. Ross said in an e-mail to USA TODAY Sports that he hoped the DOJ’s antitrust division would review the merger agreement to determine if consumers would be better or worse off because of the arrangement.
“Certainly, allowing all the best golfers to participate at major events is responsive to consumer preference, which the Supreme Court has stated is the 'hallmark' of antitrust,” Ross said. “We can fully assess the overall competitive effect of the merger only after examining the details of the agreement.”
How will it affect the product?
Without viable competition, monopolies theoretically can raise prices for consumers, underpay their labor and not care about customer complaints.
In this case, the new golf entity would “dominate the market for men's professional golf,” said Mark Conrad, director of the sports business concentration and associate professor of law and ethics at Fordham. “No doubt.”
How that domination is exercised is the question. Not surprisingly, Monahan described it as a positive for the PGA Tour “to take the competitor off of the board” after being driven into an expensive competition and legal battle by LIV Golf.
“The concept here is one entity controlling what’s there – fees, sponsorships, admission tickets,” said Martin Edel, co-chair of the Sports Law Practice of Goulston & Storrs in New York. “That’s more controllable (with the merger) and less subject to competition.”
On one hand, a new gusher of money for golf arguably will lift the sport and its players. Elite pro golf will benefit from a massive influx of resources, courtesy of the oil-rich Saudis, whose record on human rights still will continue to taint the relationship. That investment could enhance the game with more innovation, bigger purses and promotion of the game around the world.
What about players?
“The brief period of free agency that golfers had is now gone,” longtime athlete agent Leigh Steinberg told USA TODAY Sports Tuesday. “From the standpoint of representing a golfer on the PGA Tour, that golfer has had options and choices, and that golfer had the competitive bidding between two different tours, one which had very deep pockets. That was a brief period of freedom.”
But nobody’s going to go broke in his merger. By pouring money into the sport, the Saudis could enhance the visibility of golfers globally, further boosting their potential earning power from endorsements.
“A rising tide is going to help all of golfers,” Steinberg said. “On the other hand, the chance to break the monopoly power of the PGA is gone.”
What about that antitrust litigation?
The PGA Tour said the announcement of the merger Tuesday would be followed by a “mutually agreed end to all pending litigation between the participating parties.”
That’s disappointing to Ross at Penn State as an antitrust professor.
“The settlement of litigation precludes a clear holding that dominant competition organizers cannot harm their fans in the short run by degrading their own product in order to exclude others, as the PGA sought to do,” Ross said in his e-mail. “If not for Saudi wealth, the innovative LIV concept likely would have folded. Consumers and sponsors of top-rated PGA events were deprived of top stars like Dustin Johnson and Cameron Smith, it seems to me, primarily to quash LIV.”
This kind of anticompetitive behavior is bad for fans, he said, because the fear of predatory behavior by the monopoly power can suppress innovation by smaller competitors.
“For years, industry leaders like Tiger Woods have complained that the PGA was not deploying its commercial assets in an optimal manner,” Ross said. “Only after LIV’s entry did the PGA respond in a significant way.”
Will it become the NFL of golf?
Other pro sports leagues have merged with upstart competitors and survived antitrust issues. The NFL did with the AFL. The NBA did with the American Basketball Association.
Both leagues are now corporate giants with huge followings, highly paid players and regular complaints from customers about the high price of tickets and cable viewership.
“It’s very rare for a governmental entity to go after a league or a tour claiming it has violated antitrust laws, principally because sports involves a degree of cooperation (between franchises), in order to create a better competitive environment,” Edel said.
Major League Baseball still enjoys an antitrust exemption, for example.
At the same time, Edel notes the Biden Administration is taking a “much more aggressive approach” with antitrust laws. The involvement of the Saudis adds political considerations to the mix, too.
The merger faces a “very uphill battle” to gain approval from the government, Edelman of Baruch College said. “The statements that have been made by LIV Golf for an extended period of time contending that the PGA Tour operated as a monopoly will prove to be very possibly a statement against interests.”
Follow reporter Brent Schrotenboer @Schrotenboer. E-mail: email@example.com
This article originally appeared on USA TODAY: LIV Golf called the PGA Tour a monopoly, but then what is this merger?