Updated: Jul 20, 2022
The Commissioner of the PGA Tour, Jay Monahan, has the power via the PGA Tour Handbook to utilize four factors to grant a player a conditional release for a non-PGA Tour sanctioned event:
The overall makeup of the field from which the member seeks to be released;
The member’s standing on the current and previous season’s FedExCup Points List;
The number of tournaments that the member has played in, or committed to play in, for the current season;
The member’s record of participation in the tournament from which he seeks to be released.
Commissioner Monahan used these factors to grant releases to PGA Tour players for the Saudi International, an Asian Tour event backed by the same group as the new LIV Tour. The talk of the golf industry in terms of the new LIV tour seemed to focus on the implications of the upcoming July 1st LIV tournament in Oregon because of a specific rule in the PGA Tour Handbook stating that no conflicting event releases will be approved for tournaments held in North America. There is no rule for the equivalent events in the rest of the world. It was assumed the LIV’s Centurion first tournament in London would not be an issue because it was not being held in North America and would be similar to the Asian Tour’s Saudi Invitational tournament. Commissioner Monahan, however, announced on May 10th that out of the 15 players that applied, 0 would be granted the release to play in the Centurion tournament in London. The former European Tour, now the DP World Tour followed suit stating its members were also not allowed to play in the Centurion event. Both events bring out new information that needs to be analyzed relevant to the inevitable antitrust legislation.
Sherman Act Section 1 Claims
First, Section 1 of the Sherman Act prevents collective action deemed to be an unreasonable restraint on trade. An important defense to Section 1 liability is the single entity defense meaning the PGA would argue they are one entity, and thus could not have possibly conspired to restraint trade with itself. Now, there is evidence this might not be the case. The DP World Tour announced its decision to bar its players from the upcoming event immediately after the PGA Tour did. At the least, this is possible evidence of a conspiracy to restrain trade that could amount to a group boycott against the players restraining their ability to market their services and restricting the worldwide golf market.
The Court would then go to a rule of reason analysis to determine the effects of both tours restricting its players where the relevant market would be expanded to global professional golf This would allow the DP World Tour players to have standing and bring claims against the PGA Tour. There are obvious anticompetitive restraints in both the product and labor market. The restraint directly restricts a player’s ability to use their services and thus, limits the global golf market available to consumers. The PGA and DP Would Tour would first argue they are restricting players to participate in the LIV tour because of the questionable finances of its backing group, LIV Investments. The PGA and DP Tours would argue their product would be hurt because consumer interest would deter if the players in its tour were allowed to play in events backed by this group. The LIV would counter stating that both leagues granted all exemptions to its players for the Saudi Invitational, and consumer interest has not been deterred because of this.
Next, the PGA and DP World Tour would argue they are restricting their players to maintain their product and without the restriction their product would not be able to survive. This argument is null. Under National Society of Professional Engineers v. United States, antitrust law exists to protect competition, not competitors, so it is illegal to restrict competition to enable the league or leagues to compete. If the Court found the pro-competitive benefit of maintaining its product image and survival is reasonably related to the restraint on the players and there are no less restrictive alternatives available to achieve the benefit, then the restraint will be deemed legal under the Section 1 of the Sherman Act. At the least, the actions of the PGA Tour and DP World Tour open the door to new claims of anticompetitive practices between them.
Sherman Act Section 2 Claims
Section 2 of the Sherman Act provides it is illegal to monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nation. The requirements for monopolization are (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. Previously, the PGA Tour dealt with a lawsuit similar to facts present today. In Toscano, the court ruled against the player because of the lack of market and the speculative nature of the claim. The player argued he would not be able to join a league if a new one emerged. However, there must actually be an anticompetitive harm and when a new league had not been formed there is no injury.
A Section 2 claim could be brought against the PGA Tour and the DP World Tour or either individually. Previously in Toscano, there was an issue defining the market. Now the market is clear, global professional golf services. The PGA would argue that it does not have complete market power because there are reasonable substitutes the players could go play in, such as the DP World Tour. However, the Court may determine that one substitute is not enough to rule out the PGA having market power. Further, the LIV’s purse for the upcoming Centurion tournament is $20,000,000 with first place guaranteed $4,000,000 and last place guaranteed to make $120,000. This is different from the cutthroat nature of the PGA and DP World Tour where players have to make the cut to win any money at all. The LIV is a substitute that allows guaranteed money for players who can still provide value in terms of consumer interest. For example, Martin Kaymer and Robert Garrigus are two of many that were denied conditional release to play in the Centurion tournament. In the last three seasons combined, a former world number 1, Kaymer has earned around $100,000 playing on the DP World Tour and PGA Tour while Garrigus has earned $250,000. One tournament in the LIV would be more earnings than Kaymer made in all of the last three seasons. It would take Garrgius a whopping three tournaments to reach this feat.
If the court determines the PGA does in fact have market power, they will then analyze if the PGA used that power to maintain their superior product or business acumen. Here, the LIV has a strong case that the PGA and DP World Tours are denying access to their league to prevent its entry to the market and to force its product from competing against there’s. The LIV will argue the tour’s together and individually are conspiring and attempting to monopolize the world professional golf player services market to hurt the LIV’s brand not to help the PGA or DP World Tour’s brand. There is evidence of this preferential treatment when the DP World Tour and Commissioner Monahan of the PGA Tour as well allowed their players to play in an Asian Tour event backed by the same group as the new LIV league. This shows the PGA is blackballing the LIV not because of the ethical issues surrounding the financing, rather they are afraid of the competition to their monopoly on golf. As the Sherman Act is designed to protect competition, direct restriction of competition to maintain power or promote a product is generally illegal, especially when the restriction harms the worker’s monetary ability concurrently with harming the consumer interest.
The first LIV tournament scheduled for North America is July 1st at Pumpkin Ridge Golf Club in North Plains, Oregon. The Tour players must apply for a conditional release by May 15th and the Commissioner will notify those players by June 1st of his decision. The Commissioner is likely to deny these releases based on the denial of releases for the Centurion Tournament and the direct rule restricting players from playing in a different tour event in North America while a PGA Tour event is occurring at the same time. Time will duly tell, but this gives the player’s a perfect opportunity to bring suit and potentially win a challenge the PGA’s rule restricting their services.