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LIV Golf v. PGA Tour and the Future of Professional Golf Semrushtools

The staid world of professional golf was upended in 2022 with the entry of LIV Golf, a circuit of invitational tournaments featuring both individual and team play. Financed by the vast resources of Saudi Arabia’s Public Investment Fund (“PIF”), LIV Golf recruited some of the world’s top golfers, including Phil Mickelson and Dustin Johnson, by paying each signing bonuses, appearance fees, and tournament purses amounting to tens of millions of dollars. The breakaway circuit positioned itself as an alternative to the PGA Tour, the top level of professional golf. Given that LIV Golf stages its competitions on the same weekends and often on the same continent as PGA Tour events, the Tour invoked its contractual rights and regulations to suspend golfers who took the money and played for LIV. Eleven of those golfers responded with an antitrust lawsuit against the PGA Tour, filed in the Northern District of California. That lawsuit has expanded to include other parties and claims, and is now progressing through pretrial discovery.

The PGA Tour’s Financial and Regulatory Model

The PGA Tour, Inc. is organized as a non-profit trade association. Its membership comprises professional golfers who have aggregated their media and publicity rights to jointly negotiate for television exposure and corporate sponsorship of their tournaments.  The value of those agreements and the revenue that flows from them depends on the individual golfers’ collective guarantee of:

The value of TV and sponsorship deals resides in aggregating member golfers’ rights and assigning them to the Tour to sell, with the members agreeing to participate in a minimum of 15 Tour events over the season, and not participate in conflicting golf events and programming. CBS Sports would pay a lot less for televising a tournament if PGA Tour members were free to play in another tournament being held at the same time, or could individually sell their live or archival broadcast rights. The member golfers reap the benefit of bundling their rights through richer purses. 

Over the course of a PGA Tour season, member golfers are eligible for three or more “conflicting event” releases to play in non-Tour tournaments outside North America.  The Commissioner retains discretion to condition those releases on commitments to play in specific Tour events in the future, or to deny releases if it would cause the Tour to violate a contractual commitment or would harm the Tour and its sponsors. Releases were denied to every player seeking to play in a LIV Golf event. Member golfers may resign the Tour at any time to play on a competing tour, including LIV, or to start their own circuit of golf events. And some Tour members who defected to LIV did exactly that.

How Does LIV Golf Differ from the PGA Tour

The PGA Tour stages a golf tournament almost every weekend of the year. A typical Tour event offers a field of between 128 and 156 golfers who compete against each other over four rounds of stroke play (72 holes of golf) to post the lowest score. There is a “cut” after the first two rounds, after which about half the field continues to compete and remains eligible for prize money. In the past, players who are cut have gone home empty-handed, although that has changed to some degree since LIV Golf’s emergence. PGA Tour membership requires playing at least 15 tournaments each year to honor commitments made in the sponsorship and media rights deals that fund the purses.

By contrast, LIV Golf offers shorter tournaments with smaller fields — three rounds of golf instead of four (54 holes), and only 48 players competing in concurrent individual and team play events. Thus, the name LIV (rhymes with “give”), which is the Roman numeral for 54. There is no “cut” in LIV golf events. Every golfer plays all three rounds and is guaranteed prize money that far exceeds potential earnings on the PGA Tour. After the 2022 inaugural season featuring 8 events, LIV Golf plans to offer 14 events in 2023. Its 48 golfers must commit to playing in every event and agree to exclusivity provisions analogous to those in the PGA Tour regulations. Unlike the PGA Tour, LIV is not dependent on TV and sponsorship deals to fund its events, although it recently entered into deals to start generating such revenue. To date, LIV’s exorbitant signing bonuses and prize money have been funded almost entirely by the Saudi PIF.

Other Participants In the Professional Golf Ecosystem

Another key participant in the professional golf ecosystem is the Official World Golf Rankings (“OWGR”), which ranks golfers based on relative performance at eligible tournaments, typically only those that offer the classic four rounds of stroke play. PGA Tour events offer the most ranking points as they attract the most skilled golfers. Golfers will not earn ranking points from LIV events unless an exception is made—its application is pending. That will eventually catch up to LIV golfers in future years when they contend to play in the independent “major” tournaments that are not part of any tour:  the Masters, U.S. Open, Open Championship (British), and PGA of America Championship. The majors select their fields in large part based on OWGR ranking points, as well as prior tournament victories and qualifying events. 

The Antitrust Lawsuit Early Stages

The antitrust complaint alleged a market for the services of elite professional golfers, which the PGA Tour allegedly monopolized (or monopsonized) in violation of the U.S. Sherman Act §2, by requiring exclusive commitments that barred Tour members from playing in conflicting events and participating in competing golf media programming. The complaint also alleged the PGA Tour violated Sherman Act §1 by conspiring with other industry participants to throw up roadblocks to LIV Golf’s successful entry.

The LIV golfers’ TRO motion argued that they would be irreparably harmed if they were not permitted to participate in PGA Tour events pending the outcome of their antitrust claims. That argument failed and the motion was denied. The U.S. district court found that the LIV golfers did not overcome the high bar for such relief, primarily because they had not established irreparable harm. In an August 10, 2022 order,U.S. District Judge Beth Labson Freeman found that the LIV golfers have not been locked out of their sport or its lucrative payouts of prize money and sponsorship fees. To the contrary, Judge Freeman emphasized that the LIV golfers are earning significantly more money than they ever did on the PGA Tour, and that they calculated the money they would lose from missing the FedEx Cup when they negotiated their contracts with LIV Golf. In addition, the LIV golfers and their expert witnesses described LIV events as “elite golf” that equals if not exceeds PGA Tour events in offering meaningful competition to the players and fans. That position undermined the golfers’ portrayal of the Tour as possessing and abusing monopolistic control over the market for elite golfers’ services. 

For example, the amended complaint alleges that the Tour has conspired with other tours and the majors to exclude LIV golfers. As of this writing, all four of the major tournaments have announced that LIV golfers will continue to be eligible to play on the same qualifying grounds as any player.  The amended complaint also alleges that the PGA Tour has conspired with the OWGR to block LIV events from contributing to player rankings. Perhaps in response to that allegation, PGA Tour and DP World Tour representatives on the OWGR Board of Directors have recused themselves from reviewing LIV Golf’s application for event ranking points. 



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