Author: Luke Hasskamp
Hello, friends. Let’s talk about some of the latest developments in the world of professional golf, at least from an antitrust perspective.
Last spring I wrote about the PGA Tour’s response to a potential competitor golf league. The new league promised to shake up professional golf, guaranteeing massive payouts to attract some of the top players in the game and offering unique competitions and tournament formats different from the standard PGA Tour event.
As with many upstart competitors, the new league generated a great deal of controversy. By far, the most controversial aspect is the league’s association with Saudi Arabia. Indeed, the league is mostly funded by the Saudi Arabia government not a golf hotbed. Saudi Arabia’s investments have been criticized as “sportswashing,”—“the practice of investing or hosting sporting events in a bid to obscure the Kingdom’s poor human rights record, and tout itself as a new leading global venue for tourism and events.”
This upstart league has gone through a few iterations and, with it, a few different names. Last spring it was referred to the Premier Golf League, and it has also been called the Super Golf League. The current moniker appears to be LIV Golf. (We’re excited to see what name they come up with next!)
Reports suggested that individual players were being offered substantial sums of money, upwards of nine-figure deals, simply to join the LIV league—including a reported $125 million offered to Dustin Johnson, the most prominent player to announce his intention to play in the LIV league. To put that in perspective, Tiger Woods is the all-time career money leader with $120 million (and only one other player has ever won more than $75 million all time (Phil Mickelson, $92 million).
My last article speculated on whether other actors would join the PGA Tour’s efforts to squelch the upstart league. Well, at least one partner said it would enforce the PGA Tour’s ban. The PGA of America (a separate entity from the PGA Tour) announced that anyone banned from the PGA Tour would also be barred from competing in the PGA Championship (one of golf’s four majors), as well as the biennial Ryder Cup. “If someone wants to play on a Ryder Cup for the U.S., they’re going to need to be a member of the PGA of America, and they get that membership through being a member of the Tour,” PGA of America CEO Seth Waugh said last May.
Waugh added that “the Europeans feel the same way,” suggesting the European tour would also enforce the PGA Tour’s ban at its events. And, indeed, the European tour (the DP World Tour) later issued a “warning memo” to its members against participating in LIV events. And, just recently, the United States Golf Association—the organization that hosts the U.S. Open, one of golf’s four majors—announced that “although the USGA ‘prides themselves on the openness of their tournament,’ they will also make their own decision about the eligibility of players at the upcoming U.S. Open . . . on a case-by-case basis.” This appears to be another not so subtle attempt at dissuading golfers from jumping to the Saudi league.
Along those lines, Phil Mickelson was not a participant at this year’s Masters tournament. Mickelson, as a past champion, has a standing invitation to play in the Masters, part of the tournament’s storied tradition. There was speculation that Masters officials instructed Mickelson not to attend the tournament due to the controversy. But Masters officials denied the report, stating that Mickelson decided not to participate in this year’s event. (Mickelson has not commented publicly on the specifics.) Mickelson also did not participate in this year’s PGA Championship, another major and one where Mickelson was the defending champion.
Sponsors also appear to be siding with the PGA Tour (or, perhaps, simply do not wish to align themselves with LIV and its Saudi connections). RBC announced that it was dropping its sponsorship deals with Dustin Johnson and Graeme McDowell after both golfers were linked to the Saudi league. Similarly, UPS dropped its deals with Lee Westwood and Louis Oosthuizen.
This all comes on the heels of the latest development: the LIV league’s first event is coming to fruition. It is scheduled for June 9-11 in London, at the same time as the PGA Tour’s RBC Canadian Open event. Because these are conflicting events, PGA Tour members needed to obtain express permission from the PGA Tour to participate. But the Tour rejected all requests for an exemption (as did the European tour). But several dozen players announced that they were in the field for the LIV event, a surprising number for an league that seemed on more than one occasion as if it would never get off the ground. (Interestingly, Phil Mickelson has not announced whether he will participate, and he was not listed as one of the 48 participants, although six spots were unannounced so it’s possible he’ll still be in the field.)
In response, the PGA Tour reportedly “drew a line in the sand,” and stated that players who participate in the LIV tournament are “subject to disciplinary action,” which could include fines, suspensions, or even lifetime bans. But no disciplinary action has been taken so far. Notably, one player—Kevin Na, the 33rd ranked player in the world who is participating in the LIV tournament—announced that he was resigning from the PGA Tour rather than face disciplinary proceedings and resulting litigation.
It will be fascinating to see how this develops. When we wrote previously, we speculated that the PGA Tour’s conduct could implicate federal antitrust laws (Section 2 of the Sherman Act) given the PGA Tour’s status as a possible monopolist in the professional golf market. The antitrust laws frown upon a monopolist’s effort to frustrate a would-be competitor’s entry into the market. But employers admittedly have some ability to restrict who their employees work for (though PGA Tour players are not employees).
We also speculated that the PGA Tour’s alignment with others in the golf world—including the PGA of America, the European tour, and the USGA—could implicate Section 1 of the Sherman Act, which bars anticompetitive agreements. Would such conduct constitute an unlawful group boycott? It’s unclear, but that won’t stop us from speculating.
What is clear is that neither side appears to be blinking. The PGA Tour and related entities are continuing the strong language—including the threat of lifetime bans—in the face of the LIV league’s ascendence to a real league with actual events. And the players are not blinking. Indeed, at least some appear to be daring the Tour to take action (Kick him off the Tour, Doug!). Whether they do so will be the next question, but if they do, legal action under federal antitrust laws appears to be the next stop.