Summarizing the Impact of the PGA Tour versus LIV Golf on the Law World
The golf world has stirred one of the biggest controversies in sports this year and has had an impact in the legal world. For background, the controversy started when LIV Golf, a professional tour financed by Saudi Arabia’s sovereign wealth fund, began offering high profile professional golfers huge sums of money to play on their tour instead, and resign as members of the PGA Tour.[1] How much money does LIV offer? Not including signing bonuses, players compete for a purse of $20 million.[2] Specifically, the winner receives $4 million and the 48th place finisher receives $120,000.[3]
What role has this played in the legal world? First, and probably most significantly, as players started to resign their membership from the PGA Tour (the “Tour”), the Tour in turn banned the players who did so from coming back to the PGA Tour.[4] These bans subsequently triggered an investigation by the Department of Justice on antitrust violations. (the second antitrust investigation the PGA Tour has faced in recent decades).[5] Additionally, the bans have led some players to file a lawsuit in the U.S. District Court for the Northern District of California in Oakland alleging that the PGA Tour maintains a monopoly.[6] The players allege in their complaint that the PGA Tour has used its influence to “craft an arsenal of anticompetitive restraints to protect its long-standing monopoly” and has “ventured to harm the careers and livelihoods of any golfers… who have the temerity to defy the Tour and play in tournaments sponsored by the new entrant.”[7] The players also allege that the PGA Tour has “threatened sponsors, vendors, and agents to coerce players to abandon opportunities to play in LIV Golf events.”[8] The players face an uphill battle, however. To be successful, they need to prove they suffered actual harm, but that is a hard case to make given that the players are being paid more than they would be if they stayed on the PGA Tour.[9] Additionally, antitrust experts such as Professor Michael Carrier of Rutgers Law School have stated that “courts over the past 50 years have made it difficult for antitrust plaintiffs with sports cases.”[10]
Initially, these predictions seem to have rang true. In a short August decision partially addressing the antitrust claims, the California court ruled in favor of the PGA Tour.[11] Specifically, the court rejected the plaintiffs’ argument that the PGA Tour and its counterpart in Europe (the DP Tour) engaged in a group boycott thus violating Section 1 of the Sherman Antitrust Act.[12] Boycotts are only considered antitrust violations when the they involve horizontal competitors, which the plaintiffs admitted that the PGA Tour and DP Tour are not.[13] The court also concluded that the PGA Tour raised sufficient evidence pointing out fundamental flaws in the plaintiffs’ argument that the Tour unlawfully maintained a monopoly.[14] However, this decision does not seem to be the end of this litigation battle. Indeed, the court’s discussion of the antitrust claims was limited since those “complex issues are best resolved on a more developed record.”[15]
Along with fighting the litigation battles, law firms have gotten involved in other ways. For example, the PGA Tour has increased its congressional lobbying efforts through DLA Piper in response to the Justice Department’s investigation.[16] Specifically, the PGA Tour paid DLA Piper $70,000 in the first quarter of this year and another $120,000 in the second quarter.[17] Meanwhile, other firms have taken notice as to who decides to leave the PGA Tour. Recently, Cozen O’Connor ended its two-year sponsorship of PGA Tour player Jason Kokrak following his decision to join LIV.[18] This move is unsurprising as the firm has played a leading role in a lawsuit against Saudi Arabia filed by 9/11 victims.[19]
Defamation has also become an issue in the PGA Tour versus LIV Golf controversy. In August, nine time PGA Tour winner and 2018 Masters champion Patrick Reed filed suit against Golf Channel anchor Brandel Chamblee as well as the network itself.[20] In his complaint, Reed takes issue with Chamblee’s remark that because of LIV’s association with the Saudi Arabian wealth fund, Reed is aligning himself with “a tyrannical murderous leader.”[21] The complaint also notes Chamblee’s comments that “Reed would have no problem playing golf for Stalin, Hitler, Mao Zedong, Pol Pot, and Vladimir Putin.”[22] Since filing his initial suit in August, Reed has added other defendants and has moved the suit from Texas to Florida.[23]
In all, the battle between the PGA Tour and LIV Golf has made a splash in the law world with a far range of substantive issues. These court battles are, of course, ongoing and this is only the start of what could become prolonged litigation. The primary question raised will surround the scope of monopoly power in sports and whether Congress will respond. Meanwhile other issues, such as athlete representation and defamation, will likely pop up in the background.
Footnotes
