Chipping away at the competition: LIV Golf presents an alternative to the PGA Tour

The PGA Tour (“the Tour”) has a rich history and its evolution is universally admired. The Tour, which was formally founded in 1916 as the PGA of America, has showcased the best golfers in history, from Bobby Jones, Walter Hagan and Ben Hogan, to, of course, Tiger Woods and Jack Nicklaus. However, the introduction of LIV Golf (“LIV”) has forced professional golfers and fans to commit to an unwavering loyalty to the organization which has been a staple of the sport for decades, or choose LIV in hopes that it delivers a more lucrative, engaging, and “louder” brand of golf.

LIV Golf, which was founded in 2021, is funded by Saudi Arabia’s Public Investment Fund (“the PIF”). It is one of the largest sovereign wealth funds in the world with a vast investment portfolio, but it is controversial for many reasons. Mohammad bin Salman, the Crown Prince of Saudi Arabia, who has been accused of ordering the assassination of U.S. journalist Jamaal Khashoggi, is the Chairman of the PIF. While this is the most recent atrocity involving the country and its leader, Americans will never forget Saudi Arabia’s connection with 9/11. There are organizations and groups actively protesting LIV, such as 9/11 Justice, an organization comprised of first responders, families of victims and survivors. At a LIV Golf event at Bedminster, a Trump golf course, over one hundred people, including the families of the victims of 9/11 protested LIV and the new golfers for accepting, as they see it, “blood money” from the Saudis.1 While there is not much pushback from the players that the foregoing is true, some players have accepted the reality that the decision to join LIV Golf was not easy, but the best choice for their career.

After making its grand entrance into golf with a massive investment from Saudi Arabia’s PIF, LIV Golf has now Secured an additional $2 billion in funding.2 The PIF’s efforts to become a major player in the world of sports and entertainment does not stop at just LIV. There have been investments in the WWE, Formula One, esports and even soccer, with the new purchase of Newcastle United F.C.

With money as the motor powering the perceived takeover of golf, a few of LIV’s star golfers have reportedly signed contracts worth in the hundreds of millions of dollars. The winnings from its eight tournaments in 2022 will total over $255 million with a $30 million bonus split among the top three golfers throughout the events.3 From the PGA Tour’s perspective, what LIV has done was essentially bribed its top players with massive amounts of money. Tiger Woods is just one example of a golf legend who was recently offered a contract by LIV worth an estimated $600-800 million. Although it is a staggering number, he turned down an offer most golfers would take without hesitation. Phil Mickelson, a player and advocate for LIV, has inked a contract with LIV for over $200 million.

1 Mcgraw, M. (2022, July 24). Trump World Reaches Out to 9/11 families on Eve of their LIV Golf Protest. Politico. https://www.politico.com/news/2022/07/24/trump-9-11-liv-golf-protest-00047655 2 Baldwin, A. (2022, May 10). Norman says LIV secured $2 bln of extra Saudi funding. Reuters. https://www.reuters.com/lifestyle/sports/norman-says-liv-has-secured-2-bln-extra-saudi-funding-2022-05-10/ 3 Beall, J. and Rapaport, D. (2022, March 16). Saudi-backed LIV Golf announces eight-event, $255 million series that will visit United States. Golf Digest. https://www.golfdigest.com/story/liv-golf-announce-schedule-2022

Jay Monahan, the Commissioner of the PGA, has been against the idea of LIV from the very beginning. He does not want to see the Tour’s best golfers disappear from the coveted and well-known tournaments which have been a staple of the sport. In response, he has suspended and may ban many members of the Tour who have left for LIV. This has resulted in a rift in the golf community and a fight for popularity between the PGA Tour and LIV Golf that is certainly only in the beginning stages. With the penalties instituted by the Commissioner as the result of the continued defection of high profile golfers to LIV, the Saudi backed organization has taken its battle to the U.S District Court for the Northern District of California.

There are many current and potential legal issues and lawsuits that will loom over the PGA and LIV Golf for the foreseeable future. On August 3rd, 2022, ten LIV Golf players, along with Phil Mickleson, filed a lawsuit against the PGA for antitrust violations stemming from the suspension and ban of Tour golfers for participating in LIV events and other non-PGA tournaments.4

On August 26th, 2022, LIV Golf joined the lawsuit, filing an amended complaint. The parties to the amended complaint include Matt Jones, Bryson DeChambeau, and Peter Uihlein. Phil Mickelson, Taylor Gooch, Hudson Swafford, and Ian Poulter dropped their claims out of confidence that LIV Golf will adequately represent their interests and those of their fellow LIV golfers.

In the original complaint, LIV Golf primarily claims that the Tour’s actions and threats against its golfers constitute a violation of the Sherman Act and are”patently exclusionary, anticompetitive, and unlawful.”5 The Sherman Act makes it unlawful to monopolize or conspire to monopolize any part of trade or commerce or unreasonably inhibit competition. The relief requested by LIV includes preliminary injunctive relief against the PGA Tour, permanent injunctive relief against the PGA Tour, as well as monetary damages, treble damages, economic damages and punitive damages for the Tour’s “bad faith and egregious interference with LIV Golf’s contractual and prospective business relationships.”6

The issue largely rests on whether the PGA’s tactics and actions were for the sole purpose of harming LIV Golf’s ventures or if they were justified to ensure the survival of the PGA and protection of its product. The trial is set for January of 2024.

Meanwhile, on August 9th, the Tour notched its first legal victory over LIV. Three former Tour golfers, Swafford, Jones and Gooch, sued the Tour for a Temporary Restraining Order, allowing them to participate in the FedEx Cup Playoffs. The professionals claimed that the PGA had caused harm to their careers by banning them from the FedEx Cup Playoffs as punishment for playing in LIV tournaments. While this could be the case if involved with an organization which has relatively shallow pockets, the Judge ruled against the golfers, stating that they have

4 Maese, R. (2022, August 28). LIV Golf joins its players in lawsuit, intensifying feud with PGA Tour. The Washington Post. https://www.washingtonpost.com/sports/2022/08/28/liv-golf-antitrust-lawsuit/
5 Amended Complaint at 6, Mickleson et al. v. PGA Tour, Inc. No. 22-cv-04486-BLF, (N.D. Cal. Aug. 28, 2022). 6 Id. at 97, 99, 103, 106, 108, 114

suffered no irreparable harm by being denied a spot in the FedEx Cup because of the lucrative arrangements they currently have with LIV Golf.7

As document production takes place and the legal battle continues, audiences are shifting their eyes from court to the course. The impact LIV has made to the game of golf and its economics cannot not be overlooked. It is forcing the Tour to review its economic structure, its relationship with its golfers and the blueprint for how the game is played. This may seem like a win-win for the golfers, as the threat of new competition has pushed the Tour to be more pro- active about restructuring its product and taking preventative measures aimed at keeping the best proffesionals in the world under one umbrella. In November of 2021, Monahan sent PGA Tour members a memo detailing purse increases and a season long purse total increased from $367 million to $427 million in 2022 (a 16% increase and the result of new 9-year TV rights deal) in an effort to combat the looming threat of newly appointed CEO of LIV Golf Greg Norman. In June and August of 2022, Monahan released letters to PGA members outlining the Tour’s changes for the 2022-2023 FedEx Cup Season. Some of these changes encompass $5 million increases in purse prizes for eight events in 2023 (for example, the BMW Championship increases from $15 million to $20 million)8, expansion of the Player Impact Program, which will reward 20 players (up from 10 players) a total of $100 million (up from $50 million), the launch of a Travel Stipend Program and an Earnings Assurance Program.9

For better or worse, the atmosphere at LIV tournaments and the style of golf played at these events has distinguished them from the classic style fans have been accustomed to for decades. LIV Golf’s 54-hole shot gun starts and rapid style of play, which lends itself to a younger audience, is taking professional golf to a place previously unexplored. Shotgun starts mean that all golfers in a given tournament tee off of at different holes simultaneously so that they finish their rounds around the same time. The result is shorter days, less fans standing motionless in one large group, and an environment where the audience has the ability to observe more of the golfers and not a select few. This style is suitable for LIV because it has 48 Golfers (about half the size as the Tour). It is a method that has been criticized as unprofessional, untraditional and messy. Furthermore, there are performers on unicycles, jugglers and pre-round and post-round concerts and live music by famous artists and DJs which has garnered widespread criticism and fascination alike.

Arguably, the most polarizing modification LIV has made to the sport is the introduction of team competition. Golf has always been a highly individual sport littered with mental hurdles, where golfers, especially at the professional level, feel that they themselves can be their toughest competition. Now, with the introduction of team play, traditionalists will say that a crucial aspect

7 Konnath, H. (2022 September 27). Phil Mickelson, Other Golfers Exit LIV Suit Against PGA Tour. Law 360. https://www.law360.com/articles/1534376/phil-mickelson-other-golfers-exit-liv-suit-against-pga-tour.
8 PGA Tour Announces Significant Changes. (2022 June 2022). PGA Tour.com https://www.pgatour.com/news/2022/06/22/pga-tour-commissioner-jay-monahan-returns-to- calendar-year-schedule-sizable-purse-increases-reimagines-fall-revises-field-fedexcup- playoffs.html/?utm_source=pgatour&utm_medium=email&utm_campaign=2022_content_travelers& utm_placement=wiretowire_organic&utm_content=monahan_textlink 9 Golf’s top players make ‘unprecedented commitment’ to Tour, future schedule. (2022 August 28). PGA Tour.com. https://www.pgatour.com/news/2022/08/24/pga-tour-top-players-make-unprecedented-commitment-to-pga-tour- future-schedule.html

of the sport has been diminished. The LIV Golf Miami Team Championship will be the final tournament of the season, taking place on October 28th through the October 30th. It will be a team knockout tournament, featuring the twelve teams who are seeded based on the number of total points accumulated throughout the seven event season. The teams (consisting of four players each), will be competing against each other for a stunning $50 million purse, with the winning team splitting $16 million (and the rest of the teams receiving a part of the total purse). That would be about $4 million to each player on the winning team and would account for money than some very good golfers, such as Peter Uiehlen, have made on the PGA Tour since joining in 2011. 10

Whatever opinion one may have about LIV, there are two undeniable facts: it has shaken up professional golf as we know it in the short-term and it is here to stay for the foreseeable future. There is little confidence that any agreement will be reached between the PGA and LIV. Jay Monahan has stated that there is little desire to cooperate with the Saudi-backed league and Greg Norman (CEO of LIV) has expressed similar sentiments. While this may be a long, drawn- out battle in court, the product on the course and the popularity amongst the fans will certainly determine not only the fate of the two organizations, but the fate of Golf.

10 D’Angelo, T. (2022, October 24). Here’s how LIV Golf’s $50 million season-ending team event at Miami’s Trump National Doral will work. Yahoo Sports. https://sports.yahoo.com/liv-golf-50-million-season- 222219731.html