The DOJ Is Investigating The PGA Tour
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The battle between the PGA Tour and LIV Golf continues to be one of the most interesting case studies in sports business. Words have been exchanged, millions of dollars have changed hands, and now, the Department of Justice is even investigating the PGA Tour over potential antitrust violations in regard to LIV Golf.
So rather than overstep my bounds in the legal arena, I’ve called in the experts at Conduct Detrimental to break down how we got to this point, what a DOJ probe really means, and what might happen next. Enjoy!
DOJ v. PGA: The Next Legal Phase of Battle
By Dan Lust & Robert Alston
Thank you to Joe for giving us the opportunity to contribute to the newsletter. Our site, Conduct Detrimental, is dedicated to issues at the intersection of Sports and Law. Naturally, we have extensively covered the legal drama between the PGA and the LIV. Our team here correctly predicted certain actions by the PGA including the suspension of a number of its members and we have warned for the potential for anticompetitive activity given the nature of this dispute. We gave a deeper preview on our podcast when the battle first started.
To get you caught up on the current landscape, the instant article boils it down to three components: 1) the brand new DOJ Probe, 2) how we got to this point, and 3) the next steps in the PGA-v-LIV saga.
Department of Justice Announces Probe into PGA
The PGA confirmed that a federal probe into its actions surrounding the LIV golf tour is currently being conducted by the U.S. Department of Justice (DOJ). Several PGA Tour players and their agents have been contacted about the actions taken by the PGA Tour over the last few months. Importantly, this does not necessarily mean the PGA is guilty of any illegal activity, rather that it is being investigated for a potential lawsuit regarding illegal monopolization of the world golf market. Further, the probe does not take away the LIV players’ right to sue the PGA while the investigation is underway. The PGA has banned some of its members indefinitely for violating its bylaws by playing in LIV events. This market restriction gives an avenue to the players to potentially file suit for violation of antitrust laws. A prediction of these claims and an analysis of their viability can be found on the Conduct Detrimental website here. As the DOJ probe ensues, it is necessary to look at the recent historical context of the PGA and LIV to see where the saga will likely go in the future.
How We Got Here
The “kickoff” to the battle between the LIV and PGA started with Robert Garrigus. On April 18th, he became the first player to file for a release from the PGA Tour in order to play in the Saudi & Greg Norman-backed LIV Tour. The main attraction of going to the LIV is the dramatic difference in pay between it and the PGA. The LIV’s most recent winner was Charl Schwartzel who earned over $4 million out of the total $25 million purse. There is no cut in the LIV tour’s events meaning every player is guaranteed at least $120,000. In comparison, at the PGA’s most recent event, the Barbasol Championship, only the top 7 players out of 150+ earned over this amount with half of them taking home no money at all.
Since Garrigus, many popular players have switched over. Phil Mickelson, a household name to anyone who has tuned into any major in the past 20 years, was on the forefront of the player movement when he announced his decision to join the LIV tour on April 25th. Other players include the likes of Phil Mickelson, Kevin Na, Dustin Johnson, Pat Perez, and Patrick Reed. Noted rivals Bryson Dechambeau and Brooks Koepka are the most recent to make the switch, announcing their decisions on June 21st and June 30th. In total there have been 55 former or current PGA players who have signed up for the LIV tour since April. Others including fan favorites Bubba Watson and Ricky Fowler are rumored to be following suit in the near future.
On June 9th, the PGA Tour responded by indefinitely suspending 17 of its players for participating in the inaugural LIV event. The LIV Tour called this move “vindicative” stating:
“It’s troubling that the Tour, an organization dedicated to creating opportunities for golfers to play the game, is the entity blocking golfers from playing. This certainly is not the last word on this topic. The era of free agency is beginning as we are proud to have a full field of players joining us in London and beyond.”
Similarly, in recent news, the DP World Tour suspended Ian Poulter from playing in its upcoming Scottish Open for violations relating to the LIV tour. The DP World Tour lost a suit in a British Court, where the court granted an injunction allowing Ian Poulter to play in the DP World Tour’s Scottish Open.
There is little doubt the PGA’s suspension of its players is not only about wanting to set an example, but is also a reaction to fear that the rest of its players will join its only true competitor since its inception in 1929. On June 22nd, Jay Monahan, Commissioner of the PGA, stated “I am not naïve. If this is an arms race and if the only weapons here are dollar bills, the PGA Tour can't compete”. In the same press conference, conceivably to counter this fear of competition, Monahan announced dramatic changes to the PGA schedule including raising the purse $5 million or more for eight tournaments and making the Genesis, Memorial, and Arnold Palmer Invitational no-cut events with guaranteed money for all players.
Monahan’s fears may not be justified after all, however. The 2022 U.S. Open was the most-watched final round from an east coast U.S. Open since 2013 and was the most-watched sporting event on television. While the LIV, during its first event streamed on YouTube, had 94,000 viewers tune in to the first round and 54,000 to the final round.
What Happens Next
The perception of a monopoly or anyone attempting to create a monopoly does not sit well with the DOJ. Just look to the recent probe into big tech culminating in a lawsuit filed against Google for its attempts to maintain monopolization on the search and search advertising market. The DOJ’s commitment to actions like these can be shown in Deputy Attorney General Jeffrey Rosen’s comment in the DOJ’s press release regarding the Google lawsuit:
“As with its historic antitrust actions against AT&T in 1974 and Microsoft in 1998, the Department is again enforcing the Sherman Act to restore the role of competition and open the door to the next wave of innovation…”
Moving forward, expect to see suits similar to Ian Poulter’s against the DP World Tour. Some players have fully resigned from the PGA and will not try to use the court system to enter any PGA tournaments. However, some players will likely file for preliminary injunctions to gain entry to certain PGA events. Preliminary injunctions are only issued under extraordinary circumstances so it is unclear who will prevail in these actions. What is known is that all eyes are on the PGA. This is an unprecedented time in professional golf, and one thing is for certain, the PGA’s legacy and viability is on the line.
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Dan Lust is Co-Host of Conduct Detrimental Sports Law Podcast and the Sports Law Professor at New York Law School. Robert Alston is a 3rd Year Law Student at Tulane concentrating in Sports Law, Articles Editor for Volume 30 of the Sports Lawyer’s Journal, and a Contributor to ConductDetrimental.com – THE Intersection of Sports & Law. Be sure to follow Conduct Detrimental for all things Sports & Law!
Can anyone explain how LIV is sustainable financially beyond a couple years? At what point do the Saudi's get tired of bleeding cash?
I would love Joe to give an analysis on the chance LIV highjacks professional golf from the PGA.