The PGA brushes with Anti-Trust law in the largest legal case in golfing history

LIV golf and the PGA Tour are locked in a court battle that could decide the future of golf.

The legal aspects


Let's have a look at the players on the leaderboard; on the one hand we have LIV Golf. LIV is funded by the government of the Kingdom of Saudi Arabia through its sovereign wealth investment vehicle, the Public Investment fund. Its first tournament was held on 9 June 2022. LIV has been aggressive in signing up major names in the game. Dustin Johnson, for example, was paid 150m USD for signing on with LIV. Ian Poulter is said to have been offered 30m USD to sign up. Lee Westwood has stated in response to inquiries that he has signed an NDA relating to LIV.
 
On the other side, the PGA Tour dates to April 2016. Whilst Europe was engaged in the Verdun campaign and the British were preparing to open the Somme offensive of WW1, golfers of America were organising. The PGA now organises and runs the professional golf tours for men in North America – at least the ones that matter.
 

What, you may ask, has any of this to do with Anti-Trust or Competition Law?

 
Well let me tell you.
 
On the 10 May 2022, the PGA Tour released the following statement:
 
"We have notified those who have applied that their request has been declined in accordance with the PGA Tour Tournament Regulations. As such, Tour members are not authorized to participate in the Saudi Golf League's London event under our regulations.''
 
"As a membership organization, we believe this decision is in the best interest of the PGA Tour and its players."
 

On 1 June 2022, Reuters was reporting that players who wanted to play in the LIV series would face ‘disciplinary action’.
 
Later in June, Kevin Na resigned from the PGA. He gave as the reason for his resignation the following:
 
"If I exercise my right to choose where and when I play golf, then I cannot remain a PGA Tour player without facing disciplinary proceedings and legal action from the PGA Tour... I hope the current policies change and I'll be able to play on the PGA Tour again."
 
Secondly, the PGA Tour requires players to sign over their media rights to the PGA. In short, the PGA controls the media rights of every single professional who signs up for the Tour.
 
Again, I hear you say… how does any of this involve the law?
 
Well, since you ask…
 
Any organisation in the US or the UK, or indeed any G7 or ‘Westernised’ Nation, must obey anti-trust laws, in this country the Competition Act 1998. In the US, the DOJ lists the three major Federal antitrust laws as: The Sherman Antitrust Act, The Clayton Act, The Federal Trade Commission Act. Broadly, all of these national jurisdictions categorise Anti-Trust into two categories (1) the abuse of a monopolistic position within the market and (2) acting in concert with other organisations to affect the market (we can loosely call this ‘acting as a cartel’).
 
It will immediately be apparent that the PGA holds a powerful position in the market, the market being professional golfing in the US. Indeed it arguably holds a monopoly of all the events that actually matter to anyone, be they professional or be they spectator.
 
Tthis game is worth millions. Exactly USD $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 0939.

 
But, 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.
 
So the following questions arise:
  1. Is the PGA Tour a commercial organisation like any other? (it has revenues of 1.5Bn USD, so probably, yes)
  2. Does it have a monopoly in the relevant market? (being elite professional golf events in North America, so again probably, yes).
  3. Is the suspension of a player or players for playing in a competitive series (LIV) an abuse of that monopoly?
  4. Is the refusal to release the media rights of players playing for a competitive series an abuse of that monopoly?  
I think the answer to ‘3’ must be ‘yes’. The whole point of the anti-trust legislation in any jurisdiction is to increase competition. Now, the PGA can argue the moral position of the LIV Tour, funded as it is by Saudi Arabia. The counter to this is that the reputation of the PGA Tour is in no way directly affected by the decision of a player to play in either or both of the Tours. Any reputational damage is a matter entirely, surely, for the individual. The writer takes no view on the moral standing of players or regimes except insofar as they are relevant to legal argument.
 

But, I hear you ask, what about the Media Rights? What about question 4?

 
Well, dear reader, all will be revealed.
 
Both LIV and the PGA Tour have decided to fight it out in the courts.
 
Under their PGA Tour contracts, players agree: “not to play in, and thereby contribute their media rights to, non-Tour golf events held in North America that conflict with PGA Tour events,” (PGA PLEADINGS; Source).
 
LIV argues that this is an abuse of monopoly powers. In effect, the PGA Tour holds the right to deny players the right to play outside the PGA tour, by denying them the ability to be filmed doing so.
 
On the face of it, this is a powerful argument. I think it one thing to monopolise rights in your product, ‘The Tour’, but it is quite another to hold the exclusive rights on the players themselves.
 
The question arises as to why the PGA should govern which players play for which organisations and I fear that the PGA Tour has yet to justify its position in terms of competition / anti-trust law.
 
Jonathan Compton
LLB LLM Solicitor Barrister MCIArb
Litigation Partner DMH Stallard LLP
 


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