LIV Golf’s antitrust case against the PGA Tour is dubious. Boardroom examines the particulars of the lawsuit and what might happen next.
The battle over the future (and some would argue the soul) of mainstream professional golf is now being fought in a different arena: the courtroom.
In wake of the “tit for tat” between the PGA Tour and the Saudi-backed LIV Tour, which saw PGA defectors get slapped with indefinite bans from playing PGA Tour events, several prominent now-former members of the PGA Tour — including Phil Mickelson, Ian Poulter, and Bryson DeChambeau — filed suit against their former employer in August. The lawsuit alleged that the PGA Tour’s actions against the players who jumped to the LIV Tour represented a breach of federal antitrust laws and a breach of the players’ contracts with the Tour.
The players’ argument is that by suspending them, the PGA Tour is unlawfully exercising its power as the only buyer of services of elite professional golfers, otherwise known as “monopsony.”
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For context, antitrust laws are designed to prevent any one or a handful of market players from hindering competition in a given market such that it hurts consumers. For those who paid attention during US History in high school, you might remember that Teddy Roosevelt was known as the “Trust Buster.” He broke up the monopolies that certain companies had on industries like oil and the railroads because of the negative effects such market control was having on competition and consumers.
Unfortunately for the players and the LIV Tour itself, the argument is almost paradoxical. You can’t argue that the PGA Tour is leveraging its position as the only buyer of the services of elite professional golfers when the reason they are being banned is because a deep-pocketed competitor paid them vastly more guaranteed money.
In fact, the only reason this lawsuit came about in the first place is because the LIV Tour has been successful in competing as a buyer for the services of the world’s best golfers — which would mean they’re not the only buyer in the market. The existence of LIV has, without question, made the market for elite golfers as competitive as it has ever been.
PGA Tour players are not actually employees of the PGA Tour, but rather independent contractors who earn the right to participate in the events that the the Tour organizes. When players sign up to be members, they agree to the Tour’s rules, which include policies about which other professional golf activities they can participate in and what the punishment of violating such rules would be.
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Whether you agree with the PGA Tour here or not, legally speaking, they have every right to do what they’re doing. From a fairness perspective, asking to play on both the LIV and the PGA tours at the same time would be like asking Yankees players if they could also play for the Red Sox on off days.
Given the asymmetry in resources of the PGA Tour and the Saudi Royal Family, one could understand why the PGA Tour would resist playing nice. The goal of the lawsuit is about leverage in the players’ battle to get the PGA Tour to stand down as much as it is about any sort of money damages. Not only did the players listed on the complaint ask for money damages but they also asked for injunctive relief, which is basically a court order that would compel the PGA Tour to lift its suspensions and/or bans and allow these players to continue to play in Tour events.
Three players specifically — Talor Gooch, Hudson Swafford, and Matt Jones — asked the court to issue a temporary injunction that would have allowed them to play in the FedEx Cup Playoffs. In doing so, they argued that they would be irreparably harmed as a result of the lost opportunity to make additional income and for the resulting reputational harm of not being able to play. The federal district court judge who heard the motion was unmoved, reasoning that the money the players received from LIV, which to date is undisclosed but assumed to be substantial, was arguably more than they would have otherwise earned by participating in the FedEx Cup Playoffs.
In the ruling, Hon. Beth Labson Freeman also threw cold water on the players’ overall likelihood of success in the broader antitrust lawsuit.
Following their early defeats, virtually all of the players who were originally listed as plaintiffs in the lawsuit, including Mickelson, Poulter, Swafford, and Gooch, pulled out of the suit, leaving DeChambeau, Jones, and Peter Uihlein as the only remaining player plaintiffs in the case.
Ultimately, it is largely immaterial whether the players decide to pursue the lawsuit, as the real fight is between the PGA Tour and LIV. The merits of LIV’s case against the Tour are dubious, but it demonstrates the acrimony between the two entities, which is a signal that the fight will get uglier before it gets better. The worst situation to be in if you’re a defendant is being on the opposite side of an adversary with unlimited money, which is exactly the situation the PGA Tour finds itself in.
The reality is that from a competitive standpoint, it appears as though the two sides are headed towards an inevitable begrudging stalemate. Competition from LIV has prompted the PGA Tour to sweeten the financial pot for its members and adapt in ways that will likely result in a better product for players and fans alike. The irony is that the competition between the two tours is arguably putting golf in a better position than it’s ever been in, which isn’t great if you’re arguing that the PGA Tour is a monopsonist, but it ain’t half bad if you’re a fan of golf.
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