PGA Tour and LIV Golf Endure the Aftermath of Merger Announcement

Golfers, fans, and antitrust lawyers alike were on edge this week. All anxiously awaited Tuesday’s Senate hearing on the merger between the PGA Tour and LIV Golf. The two competitors have a history of fierce disagreement, drawing intense scrutiny to their surprising deal.

The PGA Tour

The PGA Tour, officially founded in 1968, is an American professional golf league that frequently hosts tournaments in the United States and abroad. The Tour for most of its history has faced relatively limited competition.

Such control over the golf market has not gone unnoticed. Antitrust concerns directed at the PGA Tour date back to the 1990s, when the Tour first faced investigations from the Federal Trade Commission. Even as recently as 2022, the Justice Department opened an antitrust investigation against the Tour’s attempts to fend off its rising competitor: LIV Golf.

LIV Golf

In 2021, LIV Golf sought to challenge the Tour and aspects of the game. The Saudi Arabian golf league is commissioned by Greg Norman, a former PGA Tour player. Norman received billions of dollars from the Public Investment Fund, a Saudi sovereign wealth fund, to take on the position and allocate throughout the league.

The culture at LIV Golf events abandons the traditional emphasis in PGA Tour, instead playing loud music and promoting lenient dress codes. The changes do not stop with the spectators, as golfers are expected to play three days instead of four and are allowed to compete in all rounds, no matter where they rank at the end of each day. Further, The players are members of teams who win and lose tournaments together, rather than the individual competition in the Tour. Even the league’s name, which signifies the Roman numerals for the 54 holes played at tournaments, differs from the 72 played in Tour events.

Hole in one celebration at LIV Golf event.

Legal Battles

The PGA Tour and LIV Golf struggled to share the stage from the outset of their coexistence. The Tour’s infamous rule that requires members to receive approval before participating in events with other organizations had immediate consequences for some of golf’s biggest names. Players who agreed to sign with LIV, including past major tournament winners Dustin Johnson and Phil Mickelson, were suspended from the PGA Tour. LIV Golf responded to the rule in a statement saying, “It’s troubling that the Tour, an organization dedicated to creating opportunities for golfers to play the game, is the entity blocking golfers from playing. This certainly is notthe lastword on this topic.”

The early conflicts over the rule quickly escalated into court: LIV golfers, then including Mickelson, filed an antitrust lawsuit against the Tour. The PGA Tour responded with a countersuit.

The Planned Deal

Such a complex history makes the merger even more surprising. On June 6, the two organizations announced they would combine their assets in an agreement submitted to the Senate Homeland Security’s Subcommittee on Investigations, which hosted Tuesday’s hearing investigating the deal.

The initial proposal only broadly outlines the anticipations for the merger. While the PGA Tour will continue with its traditional rules and remain a nonprofit organization, commercial business and rights for the company will fall under an unnamed, merged agent currently referred to as “NewCo.”

Jay Monahan, current PGA Tour commissioner.

NewCo, unlike the PGA Tour, is planned to be for-profit. As the current framework for the deal states, Jay Monahan, the PGA Tour’s current commissioner, is set to be the CEO of NewCo while its board of directors will be chaired by Yasir al-Rumayyan, the governor of the Public Investment Fund that oversees and finances LIV. Despite the board’s leadership, the deal states the majority of board members are to be current members of the PGA Tour’s board, allowing them to exert control over NewCo.

The agreement between the leagues to end their ongoing legal fights began within the weeks following the announcement of the merger. Such a quick turnaround from the competition the two leagues recently engaged in calls the motivations of the deal into question. Monahan claims the deal attempts “to take the competitor off of the board, to have them exist as a partner, not an owner,” which has specifically attracted concern from many angles.

PGA Player Backlash

PGA Tour players have proved to be among the merger’s loudest critics. Many who left the PGA Tour for LIV received millions of dollars. The players that turned down big payments and remained loyal to the Tour feel they were robbed of the hundred of millions of dollars they denied, a betrayal by the organization they committed their careers to.

Membership in the PGA Tour requires an accepted application, which is not yet a clear process for LIV players that may want to return in the future. This uncertainty has been a key question among current PGA Tour players, who remember Monahan’s earlier promise: ‘As long as I’m commissioner of the PGA Tour, no player that took LIV money will ever play the PGA Tour again.’

Legal Concerns

Another of the partnership’s motivations to ease competition has recently become a major obstacle, drawing intense scrutiny from antitrust lawyers. Claims from Monahan “to take the competitor off of the board, to have them exist as a partner, not an owner” have specifically attracted concern.

Much of the motivation for the deal appears to stem from financial difficulties in competing with LIV. While financial competition has driven past adversity, the Public Investment Fund has pledged billions into NewCo, but still reserves the right to withdraw such funds at any time.

While the deal may be drafted, it must pass several steps, including approval by the PGA Tour’s policy board that may have been excluded from the deal’s initial negotiations. Regulatory agencies have expressed skepticism that could further delay the deal. Bill Baer, the leader of the Justice Department’s antitrust division under Obama, responded to the news with, “The announcement of a merger doesn’t forgive past sins.” The statement references the numerous antitrust investigations into the PGA Tour.

The Senate Hearing

In Congress, there has been a range of reactions to the merger. A bill in the House of Representatives was swiftly reintroduced to remove the Tour’s current tax exemption. Following brief investigations, the Senate Homeland Security’s Subcommittee on Investigations announced it would hold a hearing on the matter. The goals of the hearing to learn more about the deal were expressed by Chairman Sen. Richard Blumenthal, D-Conn., and Ranking Member Sen. Ron Johnson, R-Wis., in a joint statement. While the requested Monahan and al-Rumayyan were unable to attend, the hearing featured testimony from Chief Operating Officer of the PGA Tour Ron Price and board member Jimmy Dunne.

Michael Jessie joins other 9/11 Families United members at LIV Golf tournament in protest.

Human Rights Issues

As the hearing proved, opposition to the deal extends well beyond antitrust concerns. Saudi Arabia has been at the heart of numerous human rights issues in recent years. Many scrutinize the efforts of the Saudi government as attempts to draw attention away from their past and instead to golf events, a tactic known as sportswashing, through the merger. Blumenthal asserted in a statement that by engaging in the deal, “The PGA Tour has placed a price on human rights and betrayed the long history of sports and athletes that advocate for social change and progress.”

In 2018, Washington Post journalist Jamal Khashoggi was assassinated, with support of one of the country’s princes. The murder was specifically identified as a reason for concern over the merger, along with the country’s increasing mass executions and attacks on peaceful expression, according to a joint statement by Senator Elizabeth Warren (D-Massachusetts) and Senator Ron Wyden (D-Oregon). Wyden, chairman of the Senate Finance Committee, opened an investigation into the deal’s potential national security implications.

9/11 Connection

One of the most vocal critics, who attended and participated in the hearing, is 9/11 Families United, an organization for those who lost loved ones in the terrorist attacks. 9/11 Families United Chairwoman Terry Strada responded to the announcement warning, “the world will forget how the Kingdom spent their billions of dollars before 9/11 to fund terrorism, spread their vitriolic hatred of Americans, and finance al Qaeda and the murder of our loved ones.” Dunne addressed their concerns in his testimony by committing to meeting with the families while working through the details of the deal.

Takeaways

Chairman Blumenthal proved to be most critical of the merger with Ranking Member Johnson and other Republicans more in favor of the deal. Blumenthal concluded with: “We have learned a lot. And we have also learned that we need to learn more. And so we’re going to continue this inquiry, we’re going to ask that the other potential witnesses that we’ve invited actually come and share their perspectives and information.”

Ultimately, Dunne emphasized in his testimony that the announcement did not reflect the realities of the deal. He asserted, “There is no merger; there is no deal. There is simply an agreement to try to get to an agreement.” Until more questions are asked and answered, the future of the deal remains uncertain.

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PGA Tour and LIV Golf Endure the Aftermath of Merger Announcement

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