Anybody Say Monopoly? What The PGA's New Deal With LIV Means For Antitrust Regulation In Golf

Zinger Key Points
  • The newly formed joint venture has been described as a merger by critics, who say the new entity will now have a monopoly over golf.
  • A previous litigation between PGA and LIV over antitrust laws will be resolved by the deal.

A new joint commercial venture between the world's three largest golf tournaments is raising questions for antitrust regulators across the U.S. and Europe.

The merger, by which U.S.-based PGA Tour and its European counterpart, DP World Tour will unify operations with recently emerged underdog LIV Golf, was called "a landmark agreement to unify the game of golf, on a global basis," by an official PGA Tour release.

Yet the agreement can also be read as a loss of valuable competition and part of a growing trend towards monopoly in the pro sports industry.

Moral implications for PGA Tour: The deal also raises questions about the moral implications of a full-blown alliance from golf's biggest tournaments with Saudi Arabia's Public Investment Fund, which owns 93% of LIV Golf.

Saudi Arabia's involvement with pro golf has been dubbed by critics as "sportswashing," a term used to refer to countries using sports as a way to improve their international image.

According to Amnesty International, Saudi Arabia's authorities continue to undermine freedom of speech and human rights, with events that include the exploitation of migrant workers and the legal codification of discrimination against women. Free assembly is also not a right that Saudi residents enjoy.

Legal battles are over: The merger will also nullify previously ongoing legal disputes between PGA and LIV.

PGA Tour has been the main golf tour operator in the U.S. for the better part of the 20th century and into the new millennium. LIV Golf emerged in 2021, financed by Saudi's Public Investment Fund and signed up major players like Brooks Koepka, Phil Mickelson and Bryson DeChambeau for its 2022 and 2023 seasons.

The two organizations were locked in an antitrust lawsuit after PGA announced it would suspend any player that played in LIV's tournament. The trial had been placed under suspense in April, as a federal judge ruled that the Public Investment Fund and its governor, Yasir Al-Rumayyan, were subject to depositions. 

Antitrust issues: The Public Investment Fund took an "if you can't beat them, join them" approach.

As opposed to sports such as baseball, basketball and football, in which privately owned teams form an association or league (for example, the National Basketball Association, the Major League Baseball or the National Football League) to compete against each other, single-player sports like golf are more prone to monopolies as tours are organized and controlled by single companies. The existence of several major tour organizers adds competition to the industry and reduces the ability of any single corporation to monopolize the sport.

People familiar with the matter told Bloomberg that the U.S. Department of Justice will be reviewing the joint venture, which they said can be described as a merger when looking at the reach that the new joint organization will have in negotiating golf tournament rules and media broadcasting rights.

They said that the U.K. and the European Union will also likely want to investigate the partnership.

Golf stocks reacted positively to news of the partnership.

  • Topgolf Callaway Brands Corp MODG, which sells golfing equipment, was up 1.24% on Wednesday and almost 14% in the last five days.
  • Competitor Acushnet Holdings Corp GOLF, which owns several golf brands, was up 2.4% on Wednesday and more than 10% in the last five days
  • Sports apparel and equipment retailer DICK’S Sporting Goods Inc DKS was up 1% on Wednesday and 6.4% in the last five days.

Photo: Peter Drew on Unsplash.

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Posted In: M&ANewsSportsTop StoriesMarketsGeneralGolfLIV GolfPGA TourPublic Investment FundSaudi Arabia
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