LIV golf and the PGA Tour are locked in a court battle that could decide the future of golf. The legal aspects… At least they were until yesterday, 6 June 2023.
LIV is funded by the Saudi Arabian Public Investment fund. LIV paid huge sums to attract pro golfers to its tour: Sums between 100m USD to 200m USD
On the other side, the PGA Tour dates to April 1916.
By 1 June 2022, Reuters was reporting that players who wanted to play in the LIV series would face ‘disciplinary action’.
And this game is worth millions. Exactly $1,534,021,881 in projected revenue for 2022.
How much the media rights are worth is a matter of conjecture. Golf.com reports as follows:
Like every other major professional sport, rights deals are the lifeblood of the PGA Tour’s business apparatus, bringing in more than $600 million annually through agreements with both domestic partners (NBC, CBS and ESPN+) and international ones (Discovery)
Source: website 10.08.2022 09:39.
If you are a player, you either sign over your exclusive media rights in the Tour to the PGA Tour or you don’t play in the Tour.
When it was announced by the PGA that players signing up for the LIV tour would not be eligible to play on the PGA tour, 11 players sued the PGA for anti-competitive trade practices. In any view, the PGA holds a dominant position in the market of pro-golf and the media rights thereto. To use that position to force players to play for you is, prima facie, an abuse of a dominant market position and the USFTC and Competition Authorities throughout the world may well have taken the same view.
To complicate matters further, Judge Susan Keulen ruled on 9 February (US District Court N. California) that Yasir Al- Rumayyan (chair of the SA PIF) cannot claim sovereign immunity and can be deposed in the PGA/LIV action.
Yesterday peace broke out when the PGA and LIV agreed to merge.
The headlines are that the parties will drop the litigation and establish a procedure for those expelled by the PGA to re-join that organisation.
Both organisations will now create a third organisation that will:
combine PIF’s golf-related commercial businesses and rights (including LIV Golf) with the commercial businesses and rights of the PGA TOUR and DP World Tour into a new, collectively owned, for-profit entity to ensure that all stakeholders benefit from a model that delivers maximum excitement and competition among the game’s best players. [PGA Press Release 06.06.2023]
The problem is that what is being created here is a worldwide monopoly. It is true to say that PGA TOUR Inc will remain in existence as a 501(c)(6) tax exempt organisation but its role will be limited to setting the rules and giving approvals to new events:
[PGA TOUR Inc] and retains administrative oversight of events for those assets contributed by the PGA TOUR, including the sanctioning of events, the administration of the competition and rules, as well as all other “inside the ropes” responsibilities, with Jay Monahan as Commissioner and Ed Herlihy as PGA TOUR Policy Board Chairman. PIF’s Governor Yasir Al-Rumayyan will join the PGA TOUR Policy Board. The DP World Tour and LIV Golf will retain similar administrative oversight of events on their respective Tours. [PGA Press Release 06.06.2023]
The problem is that the Competition Authorities, most notably the USFTC, the EU Commission and the CMA will want to examine the deal very closely and have the powers to stop the deal going ahead. It is the job of these authorities to promote market competition, and the creation of a self-declared monopoly on a global basis may raise regulatory concerns.
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