With President Joe Biden arriving in Saudi Arabia on Friday for sensitive discussions with Saudi leaders, his Justice Department is taking aim at the uneasy relationship between Saudi-backed LIV Golf and the PGA Tour. The move could make it easier for golfers to sue the tour and potentially smooth discussions between the countries’ leaders.
As reported by The Wall Street Journal, the Justice Department is reviewing whether tour policies run afoul of antitrust law by preventing golfers from playing for LIV. Last month, the tour suspended 17 golfers who, by playing in LIV’s debut event, breached their membership obligations. The DOJ has questioned players’ agents as it studies the controversy.
In May, Sportico raised the possibility of the DOJ examining the antitrust implications of tour moves—especially as the DOJ has become more scrutinizing of employers that constrain workers’ economic opportunities.
The potential antitrust problem is one of monopsony, namely, whether the PGA Tour enjoys excessive control over the buying of elite golfers’ services. Antitrust law is primarily guided by consumer interests. Consumers, especially golf fans, might prove better off if they can watch the world’s best golfers compete freely on the tour, LIV and other leagues.
Politically, the timing is hard to ignore. The public learned of the DOJ’s probe just days before Biden was set to meet with Saudi King Salman bin Abdulaziz and his leadership team—including Crown Prince Mohammed bin Salman, whom Biden denounced for the murder of Washington Post writer Jamal Khashoggi. The leaders’ agenda is expected to include human rights, oil, national security and other thorny topics. The DOJ’s golf probe, meanwhile, is a decidedly positive development for LIV’s Saudi backers.
The DOJ probe could have significant legal implications.
First, the DOJ could uncover evidence and advance findings that enhance a golfer’s chances in court. So far, no golfer has sued the PGA Tour. That could change. The tour, a golfer could argue, has violated antitrust law or, by denying releases, misapplied its own rules.
Second, the probe could unnerve the tour, causing it to make strategic errors. The sports world has seen this before. Last year, the NCAA punted on adopting NIL rules after receiving a threatening letter from the DOJ. The agency was concerned about the relationship between antitrust law and NCAA plans to restrict NIL. The development disrupted the NCAA’s NIL playbook. It pivoted to lobbying—unsuccessfully—Congress for a federal NIL statute with an antitrust exemption. As Congress declined and as state NIL statutes neared, the NCAA hastily adopted an interim NIL policy that critics regard as ineffectual.
Third, the DOJ could sue the tour or, upon threat of litigation, force changes. The agency doesn’t shy away from suing businesses over antitrust claims. It sometimes picks high-profile targets, such as Google or Facebook, knowing it will attract public notice. Antitrust cases can take years, generate sizable legal fees and necessitate the hiring of pricey experts. Antitrust violations can trigger “treble” damages, meaning actual damages automatically multiplied by three.
While the DOJ’s probe is notable, it’s not necessarily consequential.
The PGA Tour faced a Federal Trade Commission investigation in the 1990s regarding rules limiting player competition—a probe that came and went with no action. The tour is also armed with a bevy of defenses against assertions of antitrust wrongdoing. They include: golfers voluntarily agreed to follow tour rules; courts granting private membership associations latitude in applying rules; and the argument that the tour’s system of competition is arguably pro-consumer and pro-golfer, since it is popular with fans and lucrative for golfers.