PGA Tour-LIV Golf Merger Gets U.S. Antitrust Review
The PGA Tour, DP World Tour (European Tour) and LIV Golf have stressed their “newly formed entity” isn’t a done deal.
That tentative description was underscored on Thursday with news the Department of Justice will investigate the three leagues’ plan to “unify the game of golf, on a global basis.”
More from Sportico.com
The Wall Street Journal first reported on the development, which the Department of Justice has not confirmed.
The DOJ has the authority to sue over what it regards as violation of antitrust and other laws, and to seek injunctions from federal judges that would stop formation of a new venture. The DOJ’s antitrust division is already probing the legal ramifications of competition for pro golfers, and the United Kingdom’s Competition and Markets Authority could do the same.
As Sportico detailed on Monday, the entity is vulnerable to the same set of legal arguments LIV brought against the PGA Tour before they surprisingly joined forces. LIV argued the PGA Tour is a monopsony, meaning a monopoly except instead of selling, it’s buying—namely, buying the services of elite pro golfers.
Although the litigation had many rounds to play out, the presiding judge, Beth Labson Freeman, seemed skeptical since LIV successfully recruited some of the PGA Tour’s best golfers. By credibly competing with the PGA Tour, LIV arguably disproved the gravamen of its case.
But if the new entity comes to pass, LIV, the PGA Tour and the European Tour will join forces to create a league that has no rival. At least in theory, the absence of competition could lead to lower (or at least stagnant) pay for golfers; fewer competitions for golfers, broadcasters and sponsors; and a less robust product for golf fans and consumers to follow. Any of those impacted parties could sue under antitrust law, and their cases would be aided if the DOJ sues, too.
The mere presence of a DOJ investigation could be impactful even if it declines to pursue legal claims. Two years ago, the DOJ warned the NCAA about antitrust problems in its NIL plan, which led to the NCAA dropping the plan.
The DOJ’s investigation does not have a timeline. It could last years, during which it would cast a shadow over how the three leagues finalize the deal and secure its approval. If the deal falls apart, LIV and the PGA Tour could conceivably resume their litigation and expand the number of claims to reflect the failed negotiations.
Other potential legal issues involve PGA Tour membership rights. PGA Tour commissioner Jay Monahan, who is stepping away from running the day-to-day of the Tour with an undisclosed medical issue, has said the entity will “require PGA Tour Policy Board approval.” Whether member golfers have a sufficient voice in the approval, and whether their voice will be muted in the new entity, could lead them to sue the PGA Tour and potentially also LIV and the European Tour.
The same is true of golfers who detrimentally relied on the PGA Tour’s fervent and politicized opposition to LIV in deciding to turn down lucrative offers from LIV, only to see the PGA Tour and LIV join hands. They could argue they should be made whole through compensation.
The DOJ’s involvement comes on the heels of the U.S. Senate’s Homeland Security and Governmental Affairs Committee launching its own investigation into the new entity. The Senate has “concerns about the Saudi government’s role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution.”
Alan Milstein, who has led antitrust lawsuits on behalf of athletes against leagues, warns the government’s interest in the new entity is likely shaped by geopolitical considerations as much, if not more, than antitrust worries.
“The Congressional inquiry into the PGA LIV deal seems to be motivated more by a distaste for Saudi Arabia than real antitrust concerns,” Milstein told Sportico.
“After all, the PGA before the birth of LIV was a walking swinging antitrust violation and Congress couldn’t have cared less. What will be interesting is finding out what this deal really is all about since the PGA says it is not a merger but a joint venture. I think we are still a pitching wedge away from concluding if that characterization is accurate.”
