An Ace or a Flop? Phil Mickelson and Others Take an Antitrust Swing at PGA Tour
The Phil Mickelson v. PGA Tour feud is no longer confined to the media, as the embattled lefty now heads a group of ten other golfers – including Bryson DeChambeau and Talor Gooch – in suing the Tour for alleged violations of antitrust law. The 105-page complaint includes several allegations, including (1) unlawful “monopsonization” of the market for elite golf event services; (2) unlawful agreement to restrain trade (with the European Tour); (3) unlawful restraint of trade; (4) breach of contract; and (5) a declaratory judgment that the Tour’s suspensions of the plaintiffs violated their right to a fair procedure. Below are key takeaways from the complaint.
Unlawful Monopsonization of the Market
The first count of the complaint alleges that the Tour is behaving as an illegal monopsony, which occurs when a single buyer substantially controls a market because they are the exclusive purchaser of services in that market. In this case, the market is the competition and play of elite professional golf. The count alleges that the Tour has abused its monopsony power through anticompetitive conduct including the threat of lifetime bans, restrictions on players competing in conflicting events, and suspending players who defected to the Saudi-backed LIV Golf. These actions, the complaint alleges, harm the plaintiffs by preventing competition for their services, preventing sponsors from working with them, and “depress[ing] compensation for the services of elite professional golfers below competitive levels.” In short, the argument is that the Tour has excessive control over where golfers can play and sell their services, and that control has an anti-competitive effect on the market.
Some of these arguments are a symphony of inconsistency. To begin with, many of the plaintiffs received jaw-dropping money – in some cases more than their entire career earnings – just as a sign-on bonus for joining LIV. While it’s true that some plaintiffs may not have received bonuses exceeding their career earnings, LIV is shelling out $255 million in purses over its eight events this year, with the last place finisher in each event earning $120,000. By comparison, the purse for the Master’s tournament – golf’s crown jewel – was $15 million last year, the most in the history of the event. Massive sign-on bonuses, record-breaking tournament purses, private jets, and guaranteed six-figure payouts for last-place finishers do not exactly scream “depressed compensation below competitive levels.”
Additionally, although many sponsors have dumped golfers who have defected to LIV, there is no indication that such actions were the result of direct or even indirect pressure from the PGA Tour. It is far more likely that these sponsors simply do not wish to be associated with LIV due to the source of its funding – the Saudi Public Investment Fund – which has been accused of spending billions of dollars to “sports wash” its long track record of human rights abuse. For instance, UPS severed its 14-year relationship with Lee Westwood following his request for a release to play in LIV’s first event. Notably, UPS is not even an official sponsor of the PGA Tour. Far from attributing their decision to any alleged pressure exerted by the PGA Tour, UPS instead pointed to the fact that continued sponsorship of Westwood would be “inconsistent with their business priorities.”
The PGA Tour will argue that they are not telling the plaintiffs that they cannot play on the LIV Tour, but simply telling them to pick a side and that doing so is not illegal. In that respect, the plaintiffs are not precluded from playing golf on any other Tour. Additionally, since the Tour is a membership organization, its members agree to abide by certain rules and conditions, and the plaintiffs have chosen not to do so and were well-aware of the repercussions. Moreover, LIV has poached several big names and has drawn vast media attention over the last several months. Although LIV itself is not a plaintiff, this early success is starkly inconsistent with claims of anti-competitive effect. Finally, the plaintiffs here will be hard-pressed to show the actual injuries they claim given their significant sign-on bonuses, collateral benefits, and the guaranteed prize money in their new league.
Unlawful Restraint of Trade and Unlawful Agreement to Restraint Trade
Under these counts, the complaint alleges that the PGA Tour and DP World Tour (formerly European Tour) have unlawfully reached agreements with the purpose of eliminating competition by way of a group boycott of the plaintiff’s services. The complaint makes an interesting revelation that Saudi Golf representatives met with European Tour officials about a potential partnership in July 2021. At this meeting, European Tour officials allegedly expressed interest and acknowledged LIV’s appeal but stated that their main concerns were the PGA Tour’s “mighty power” and the need to avoid a “collision course” between the two tours. These statements, the complaint alleges, prove that the PGA Tour’s influence prevented the European Tour-LIV partnership from ever taking shape and instead led to an unlawful strategic alliance between the European Tour and the PGA Tour.
However, reports of a strategic alliance between the two tours stretch as far back as November 2020, more than eight months before this alleged meeting. In turn, it is far more likely that the European Tour made a business decision to maintain its existing partnership with an established and respected organization rather than sever ties in favor of an unproven, upstart venture.
These counts repeatedly refer to a memo written by PGA Tour Commissioner Jay Monahan, which outlined the strategic alliance plans, as a “Monopoly Manifesto,” and claims that after the agreement was reached, the two tours enforced their regulations in a manner that had not been previously seen. The regulations the complaint refers to are conflicting-event releases, which have previously been granted to golfers seeking to compete in non-Tour affiliated tournaments. The complaint alleges that the two tours departed from their “longstanding practice” of granting such releases when they denied all requests from golfers to play in the LIV series.
However, Jay Monahan has repeatedly distinguished the historical practice of granting such releases with the requests made by those seeking to play in LIV. In short, the Tour has freely permitted its members to play in one-off events that happen to conflict with a PGA Tour-sanctioned tournament. These one-off events pale in comparison, however, to an eight-event series where many of the events directly conflict with its existing tournament schedule.
The complaint further alleges that the PGA Tour has “leaned on” the Major governing bodies, including the Royal & Ancient Golf Club of St. Andrews, Augusta National, and the PGA of America, to “do its bidding” by maximizing the threat to defectors that they may be excluded from playing in Major tournaments. These allegations are inconsistent with the fact that each of these governing bodies have permitted LIV players to play in their respective Major tournaments despite the PGA Tour’s imposition of suspensions. Additionally, the complaint does not appear to reference any specific instances of conduct by the PGA Tour with respect to these governing bodies and simply makes blanket statements alleging threats and coercion. It remains to be seen whether the governing bodies will change their criteria for tournament entry moving forward.
Mickelson Suspension. One notable takeaway from the complaint is that Phil Mickelson was suspended by the PGA Tour in March for attempting to recruit players to LIV. His request for reinstatement was then denied in June after he played in the first LIV event in London, and his suspension was extended again into March 2024 after he played in the second LIV event. After Mickelson’s controversial comments early this year about joining LIV despite their “horrible record on human rights,” Mickelson suggested that he was voluntarily stepping away from the game of golf to focus on himself. The substance of this complaint, however, suggests that this decision may not have been entirely voluntary.
DeChambeau Signing. According to reports, Bryson DeChambeau initially signed on with LIV on June 10, 2022. The signing came as a surprise to many since Bryson made a public statement that he was staying on the PGA Tour just a few months prior. However, according to the lawsuit, Bryson was actually under contract with LIV at the time he made this public statement. Bryson has never been very popular among PGA Tour members or fans. Although his talent is unquestionable, he has often been criticized for being a “phony” by PGA Tour members who claim that his public persona is inconsistent with who he actually is. Making public statements of loyalty to the PGA while under contract with a competing entity would seem to validate those criticisms.
Jury Trial. In addition to a temporary restraining order, the plaintiffs are also seeking a jury trial to recover monetary damages. Such damages would amount to the loss of career opportunities, reputation harm, and loss of income-earning opportunities as a result of being unable to play in the FedEx Cup Playoffs As mentioned above, it seems like an uphill battle at best for many of these plaintiffs who are making more money than at any point in their careers to prove loss of income-earning potential.
Timing of Filing. The plaintiffs, in this case, were notified of potential consequences of defection to LIV, including exclusion from the FedEx Cup Playoffs, as far back as early 2021. Additionally, the plaintiffs were actually suspended on June 9, nearly two months ago. Despite these warnings, three players (Talor Gooch, Matt Jones, and Hudson Swafford) are now seeking a temporary restraining order stressing the urgency of the matter and the threat of immediate harm since the Playoffs are set to begin on August 8th. This delay will likely be featured heavily in the Tour’s response, as reflected by Monahan’s letter to members after the filing stating that the lawsuit came this week “despite knowing they would be ineligible for tournament play as early as June, and of course, the years’ worth of communication in advance of their decision to join the Saudi Golf League.”
Although the complaint alleges dozens of anti-competitive practices, the PGA Tour has successfully defended against similar allegations in the past. In response to the onslaught of allegations, the Tour will assert that they are not restraining competition, but merely protecting their own business interests by telling golfers to pick a side. The golfers who have chosen the side of LIV golf will be hard-pressed to show any actual injury since they are flaunting their newfound riches all over social media. In my opinion, being unable to play in a couple of FedEx Playoff events with purses far less than each individual LIV event despite months of notice that they would be excluded from doing so does not rise to the level of irreparable harm the complaint posits. The source of LIV’s funding – the Saudi Public Investment Fund – is a double-edged sword. Although it provides LIV with seemingly endless amounts of money, it also presents a key vulnerability in their unlawful group boycott claims. Namely, sponsors and Major governing bodies have plenty of independent justifications for refusing to align themselves with the Saudi-backed league separate from any anti-competitive motivation.
With the FedEx Cup Playoffs just around the corner, we can expect the PGA Tour’s response in the coming days. Expect the Tour to lean heavily on the fact that the plaintiffs agreed to be subject to the PGA Tour’s policies and conditions, that they are not restraining competition by telling the plaintiffs to choose a side, and that their actions are necessary to protect their own business model, and that the plaintiffs should not be rewarded by the delayed filing. For its part, the PGA Tour has assured members that they should be confident in the legal merits of its position. Ultimately, this case will take quite a while to resolve and will have massive consequences for both the PGA Tour and the game of golf.
John Nucci is a recent graduate of Penn State Law where he served as President of the Sports and Entertainment Law Society. He can be found on Twitter at @JNucci23 or reached via email at [email protected].