PART 2: Analysis of the LIV Golf & LIV players Anti-Trust Suit Against the PGA
In the first article about this suit we discussed the part of the filing that was related to monopolies and the anti-trust claim. Below are some restated facts, then we legally analyze more of the PGA’s influence on other entities to shut LIV Golf out of the marketplace. The word ecosystem is also used in the suit, meaning the total business of golf and the ecosystem that exists worldwide for doing that business.
On August 3, 2022, a complaint was filed against the PGA by Phil Mickelson, Talor Gooch, Hudson Swafford, Matt Jones, Bryson Dechambeau, Abraham Ancer, Carlos Ortiz, Ian Poulter, Pat Perez, Jason Kokrak and Peter Uihlein in The United States District Court For the Northern District of California San Francisco Division. It is case # 3:22-cv-04486. The suit is 106 pages.
Since the original filing LIV Golf has entered the suit. Due to the size and complexity of this filing, the Tee Box Times legal team will begin with this first segment concerning proposed violations of The Sherman Act by the PGA and continue segments over the next several weeks dissecting the suit and keeping the public abreast of other filings, decisions, etc…
The Plaintiffs begin their allegations discussing how the PGA Tour began when Jack Nicklaus, Arnold Palmer and other elite golfers in the 1960’s determined the PGA of America was not compensating them their market value and they split off the Players Tournament Division and formed the PGA Tour, which was to be a tax exempt entity presented to promote the common interests of professional tournament golfers.
Let’s begin part 2 with the PGA’s relationship with the European Tour. The lawsuit is claiming that the PGA formed an illegal alliance with the European Tour. Here is a direct quote from the filing: “Before the PGA Tour formed an illegal alliance with the European Tour, the European Tour was a willing partner for prospective innovators and entrants into the global golf ecosystem. This included Golf Saudi and the Saudi investors who ultimately sponsored LIV Golf. For example, in a panel discussion in 2019, European Tour CEO Keith Pelley asserted that Saudi Arabia “are at the forefront of helping us develop the game.” In fact, the European Tour partnered with Golf Saudi in launching the Saudi International, co-sanctioning the tournament for three years from 2019 to 2021.”
The suit goes on to say: “While the Tour and those it has leaned on now use the Saudi sponsorship of LIV Golf as a weapon to smear golfers (including the Plaintiffs) who play in LIV Golf events and justify their attacks on the golfers, Mr. Pelley’s statements reveal that attacks on the Saudi sponsorship of LIV Golf are pure pretext. The Tour had no problem entering into a partnership with the European Tour at the same time that the European Tour co-sanctioned the Saudi International and while Mr. Pelley gushed about the prospect of partnering with Golf Saudi to grow the sport. And the Tour has no problem accepting its own sponsorship money from companies that do billions of dollars in business with Saudi Arabia each year. An estimated 23 PGA Tour sponsors conduct regular business with Saudi Arabia each year—an estimated $40 billion dollars of business with Saudi Arabia. That the PGA Tour eagerly does business with these companies while criticizing golfers for playing on a tour primarily sponsored by the Public Investment Fund of Saudi Arabia is the height of hypocrisy. And it exposes as pure pretext any notion that the Tour is orchestrating an attack on the players because the Tour is somehow unable to do business with anyone who has business connections to Saudi Arabia. The Tour’s campaign to destroy these players is purely about defeating competition.”
This also leads to the PGA’s actions when the European Tour was establishing a co-partnership with the PGL. The partnership would have allowed the PGL players to earned points on the OWGR System. The OWGR, where Monahan sits on the board, states that no player on a new tour can earn OWGR points for at least 3 years. Even accepting that, there is an alternative. The alternative is that if the PGL were to be sponsored by the European Tour the 3 year time could be waived and players could start and/or continue earning points on the OWGR.
The filing is clear on how Monahan and the PGA handled this situation. “Recognizing the PGL’s need for a partnership with the European Tour, the PGA Tour forged an alliance with the European Tour through threats and financial incentives to put a bearhug around the European Tour and cut off a potential partner of the PGL. To obtain this agreement, the Tour threatened rule changes that would have made it more difficult for top European players who participate on the PGA Tour to play in European Tour events.”
“The PGA Tour’s approach proved highly effective. In November 2020, the European Tour announced that it would not partner with the PGL, but instead it would enter into an alliance with the PGA Tour. One condition of the agreement was that the European Tour not partner with or sponsor the PGL, thereby removing a key partner for the PGL’s planned entry. Additionally, through the alliance with the European Tour, PGA Tour Commissioner Monahan secured a seat on the Board of Directors of the European Tour and the PGA Tour made a massive investment in the European Tour and its subsidiaries. The Tour’s illegal alliance with the European Tour enabled it to require the European Tour to work in concert with the PGA Tour to prevent competitive entry. The Tour used its strategic alliance with the European Tour throughout the next two years to carry out its anticompetitive scheme to thwart LIV Golf’s entry. The Tour entered into the illegal agreement with the illegal purpose to eliminate a competitor and future potential entrants.”
In our prior article, we established that the PGA could be construed as a monopoly under The Sherman Act and this part of the suit appears to be more evidence that the PGA and Monahan individually are utilizing that monopolistic power to not only eliminate competition but to destroy them.
We must consider that this suit will take time to play out, but with discovery comes more evidence to substantiate the claims in the suit.
Upcoming discovery will consist of depositions, Request for Admissions, Request for Production, Interrogatories and much more. In part 3 next week, Tee Box Times will delve into what some of the discovery could uncover that may be very hurtful to the PGA and Monahan individually.
Stay tuned. And keep in mind, Monahan secured a seat on the European Tour’s Board of Directors and the PGA started making investments into the European Tour. It’s apparent that Monahan is consolidating his individual power into the monopolistic mold.
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