PGA Tour And Saudi-Backed LIV Golf Deal Attracts Antitrust Scrutiny

There are growing concerns among US and European antitrust enforcers over PGA Tour and Saudi Arabia-backed challenger LIV Golf’s proposed merger that ends the divide that has dominated the golf world for the last year, according to Bloomberg, citing people familiar with the matter.

The parties said that the agreement combines the golf-related business from Saudi Arabia’s sovereign wealth fund with the commercial and business rights of the PGA Tour and European Tour into a new, collectively owned for-profit entity. However, antitrust enforcers view the move as riddled with red flags, such as creating a monopoly in the golf world that just recently gained a competitor, said the people. 

“The new for-profit entity involves three of the biggest golf tours in the world proposing to coordinate key aspects of their business on which they currently compete,” the people pointed out. They added:

Competition enforcers are likely to want to know how the proposed partnership will impact players, sponsorships and broadcast rights, they said. The US and United Kingdom — where DP World Tour is based — are certain to ask questions and the European Union’s competition authority may want information as well. 

Instead of the US Federal Trade Commission, the US Justice Department has been investigating PGA Tour’s year-long conflict with LIV. The people said the DoJ would be responsible for reviewing the proposed deal.

According to people familiar with the deal, no antitrust lawyers were involved in the PGA-LIV meetings, which concentrated on how to grow the sport and attract a younger audience. 

The person, who spoke about the confidential negotiations, expects the merger of the three leagues won’t require traditional merger review. 

Antitrust experts say the merger details will be under review by DoJ officials. 

On Tuesday, PGA Tour Chairman Jay Monahan dismissed questions on CNBC about possible antitrust concerns:

“Every single player in men’s professional golf is going to have more opportunity and more growth.

“We are going to grow our industry. This is all positive.”

“There’s been a lot of tension in our sport over the last couple years,” PGA Tour Commissioner Jay Monahan tells @davidfaber. “But what we’re talking about today is coming together to unify the game of golf.” https://t.co/Nz6LcMuIfq pic.twitter.com/D0h099HMuE

— CNBC (@CNBC) June 6, 2023

However, Bloomberg pointed out not everyone agrees with this view:

“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.

“Jay Monahan is no different than John D. Rockefeller, putting independent gas stations out of business and then folding them into Standard Oil,” said Stephen Ross, a professor at Penn State Law. 

Ross expressed uncertainty regarding how the DoJ will come down, stating that it is difficult to predict the outcome without complete details of the deal.

Jodi Balsam, a professor of sports law at Brooklyn Law School, said antitrust lawyers might request changes to some parts of the deal, but it’s likely the partnership will go through:

“People don’t want to see this battle continue, including the regulators — they want to see golfers compete with each other without any barriers,” said Balsam, a former lawyer for the National Football League.

Even though the deal with PGA and LIV will resolve their legal battle, another could be brewing with the DoJ.