When Greg Norman LIV Golf Investments—finally—announced its long-rumored LIV Invitational Series, a circuit of eight tournaments around the world, the stated goal was to offer golfers “more opportunities” and offer fans “more passion, more impact, more fun and more viewership,” but it’s also likely that the aim of the new events is to spark a legal showdown with the PGA Tour.
That potential legal strategy was hinted at in a previous Norman missive, an open letter to PGA Tour commissioner Jay Monahan last month. “Surely you jest. And surely, your lawyers at the PGA Tour must be holding their breath,” Norman’s letter began.
Norman is the CEO of LIV, which is largely funded by the Public Investment Fund of Saudi Arabia. Norman and friends believe that the Tour’s alleged threat to ban players who join what has been dubbed the Super Golf League and its regulation that prevents members from playing in any event in North America that coincides with a Tour event runs afoul of U.S. antitrust law.
Monahan disagrees. “The specifics of our regs say that a player that causes financial and reputational harm to the PGA Tour faces fine, suspension or disbarment,” Monahan said in a sit-down with NBC prior to the Players. “That’s clear. It’s in black and white. Those have been the rules for as long as the Tour has been in existence.”
So who’s right?
For starters, the LIV plan will run from June to October with 12 four-man teams competing through seven 54-hole, no-cut events for both individual and team prizes, followed by a team championship finale. The first seven events will offer a purse of $20 million split among individuals and another $5 million going to the top three teams. After those seven events, the top three players will receive payouts from another $30 million pool, and in the final event the teams will split a $50 million purse. (The $20 million purse at last week’s Players was the largest ever on the PGA Tour.) LIV emphasized that the schedule doesn’t conflict with golf’s majors, but the first event, June 6-9, takes place in London a week before the U.S. Open in Boston, and the second tournament is set for July 1-3 in Portland, nine days before the start of the British Open.
Regardless of the format, a player excluded from the Tour on account of playing in a rival league could sue the Tour, as well as local sponsors, alleging an illegal restraint of trade in violation of the Sherman Antitrust Act. The player could further insist that the Tour’s exclusionary language is unenforceable.
The gist of the argument would be that the Tour and its affiliated businesses enjoy monopoly control over the market for elite golfers. These businesses would be depicted as unlawfully conspiring to prevent competition. Analogously, the Tour might possess “monopsony” control, in that elite golfers are selling their services to only one buyer, i.e., the Tour. Without competition, the Tour can conceivably act in anti-competitive ways, including by rendering ineligible golfers who play outside the Tour.
A group of former UFC fighters have leveled this argument against the UFC in an ongoing federal lawsuit. But with MMA there are several “major” leagues, which hinders the fighters’ case. Golf? it’s the Tour and not much else.
Antitrust cases that show how limiting competition harms consumers are more likely to advance. Here, an excluded golfer would insist that multiple leagues benefit consumers. Businesses that face competition are more likely to innovate and respond to consumer needs. Golfers, meanwhile, would have guaranteed payments and additional opportunities to earn prizes. Golf fans would be able to watch more tournaments and, perhaps, higher quality play.
Also relevant is that golfers are independent contractors, rather than employees of the Tour. Courts are often skeptical of non-competes in the context of independent contractors when those clauses unreasonably interfere with the worker’s ability to ply his or her trade. In addition, golfers are not in a union. Tour eligibility rules are thus not exempt from antitrust scrutiny as are rules bargained by players’ associations with the NFL, NBA, MLB and NHL.
The PGA Tour would offer a range of defenses.
For starters, as Monahan’s quote indicated, the Tour would stress that players contractually assent to the commissioner possessing sweeping authority to regulate eligibility.
“Each PGA Tour member,” the player handbook stresses, “by participating in cosponsored, coordinated or approved golf tournaments, acknowledges the right and authority of the PGA Tour Policy Board [and] the Commissioner to (i) fine and suspend the member from tournament play, and/ or (ii) fine and permanently bar the member from play in PGA Tour cosponsored, approved or coordinated tournaments for violation of the tournament regulations.”
Likewise, players are forbidden from speech and other conduct detrimental to the Tour’s interests. Monahan enjoys substantial control over membership rights. A court would likely grant him substantial deference in enforcing membership rules. If players are unwilling to assent to these terms, arguably they shouldn’t play on the Tour. Players are adults, after all, and own the consequences of their professional choices—there are tours in Europe, South Africa, Asia and Japan they could seek to join.
Second, golf consumers might be harmed, not enhanced, by a less decentralized system should LIV’s moves impair the Tour. The sport could become more chaotic and less predictable. Fans who have long relied on the Tour’s system of order might suffer. Some individual PGA Tour tournaments may cease to exist.
Third, the SGL would not appear to create much more opportunity for elite golfers or, in turn, spark significant competition. Relatively few players, it appears, would be involved, and they would likely be obligated to compete in all SGL events, many of which might not be shown live to American television viewers.
Fourth, the Tour is a private sports league. Leagues can generally determine eligibility as they wish, so long as they don’t discriminate on the basis of race, ethnicity, age and other protected demographic status—none of which would be implicated in a ban for playing in a rival league.
Fifth, non-competes are common in the U.S. economy. In many states, non-competes are ordinarily deemed lawful, provided they are reasonable and transparent at the start of the employment relationship.
Lastly, the Tour can cite favorable precedent.
In 1973, the U.S. Tennis Association prevailed in a federal antitrust lawsuit brought by Gladys Heldman and Billie Jean King. Heldman and King had formed a competing tennis tour and sued the USTA for excluding players who played in the rival league. The court deemed the eligibility restriction “sensible” for purposes of achieving an “orderly schedule of tournaments” and promoting a logical system of player rankings. The ban was thus lawful under antitrust law. The PGA Tour could similarly argue its eligibility rules facilitate “orderly scheduling” and a reasonable system of player rankings.
The Tour’s own eligibility rules have also withstood legal scrutiny. In Toscano v. PGA Tour, the Tour defeated a $9 million antitrust lawsuit brought by a golfer who insisted the senior tournament cut was too restrictive. A court noted that changing the Tour’s rules “might well deter Tour sponsors causing the number of events and prize money to decline.”
—With assistance from Jim Gorant.
(This story was updated to add details about the LIV Series in paragraphs one and five.)