PGA Merger With LIV Golf Should Cause Concern For Antitrust Regulators

For roughly one year, Saudi-backed LIV Golf has engaged in litigation against the PGA Tour, contending that the members of America’s dominant golf tour operated as an illegal monopoly that restrained trade in the market for hosting professional golf competitions. In a surprise move, LIV Golf announced today the end to its litigation against the PGA Tour and a planned a merger with the very golf tour that it once called a “monopoly”—a proposed merger that should make the blood boil of U.S. antitrust regulators that had actively investigated the PGA’s compliance with antitrust laws at the behest of LIV Golf.

Throughout the past year, the emergence of LIV Golf as a competitor to the PGA Tour has received mixed reviews from academics and other commentators. On the one hand, LIV Golf’s ties with the Saudi government and with golf courses owned by former U.S. president Donald Trump has generated some concerns about the wellbeing of U.S. national security. On the other hand, however, the emergence of a new rival golf tour has led to many of the benefits that naturally arise from free market competition—including innovations to the sport of golf, enhanced player prize pools, and greater choice for golfers and sports fans alike.

The proposed merger of LIV Golf and the PGA Tour, to the detriment of consumers, eradicates the competitive benefits of there being two large, national golf tours. From a competitive perspective, a combined professional golf entity would immediately garner an even greater share of the market for hosting professional golf events. If the PGA Tour were not a monopoly before the proposed merger, the combined PGA/LIV entity certainly would amount to one.

As such, it is reasonably likely the U.S. antitrust agencies, which already had engaged in some review of the PGA Tour presumably at the request of LIV Golf, will now seek to review, and perhaps enjoin, the proposed merger of the PGA and LIV Golf as one that is substantially likely to lessen competition to the detriment of sports consumers. Even if LIV Golf feels a merger resolves their personal concerns, antitrust regulators at the Department of Justice and Federal Trade Commission are supposed to make decisions based on broader consumer welfare, and not those of just a complaining business organization. The merger seems to do little to resolve consumer welfare concerns.

This, of course, is not to say that U.S. antitrust agencies never approve of mergers between professional sports associations. In 1970, Congress passed a special statute to allow for the National Football League to merge with the American Football League. Similarly, after the American Basketball Association folded 1976, the National Basketball Association was allowed to expand to include certain defunct ABA teams—perhaps given the failed nature of the ABA.

It is also worth noting this is not the first time that a sports association with ties to former president Trump may have used antitrust laws to try to force the hand of merger into a larger sports association. In the early 1980s, Trump and his fellow USFL owners steered the USFL to file an antitrust lawsuit against the NFL with hopes of earning membership in the NFL. In that case, the strategy was overwhelmingly unsuccessful. The NFL refused to settle with the USFL, and, in a Pyrrhic Victory, the USFL team-owners recovered just a combined $3 in damages.

It remains to be seen what ultimately happens in the case of LIV Golf. But, by all accounts, the legal posturing involving the PGA Tour and LIV Golf is far from over. The two associations may have reached a peace treaty among themselves; however, the peace treaty does not seem to benefit all parties involved. While the interests of the PGA Tour and LIV Golf are now united, it is possible these trade associations will soon find themselves involved in an antitrust dispute against either the Department of Justice or the Federal Trade Commission.

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Marc Edelman ([email protected]) is a Professor of Law at Baruch College’s Zicklin School of Business, Sports Ethics Director of the Robert Zicklin Center on Corporate Integrity, and the founder of Edelman Law. He is an author of “A Short Treatise on Amateurism and Antitrust Law” and “The Collegiate Employee-Athlete,” among many other articles of legal scholarship.