This week, the proposed merger between the PGA Tour and its Saudi-funded rival LIV Golf stunned everyone from golfers to Wall Street bankers — leaving many questioning what a merger might mean.
The deal was announced after months of feud and antitrust litigation between the two alliances. The agreement will end all pending litigation.
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While there is a lot of “tension” between the two organizations, PGA Tour President Jay Monahan said in an interview on CNBC’s “Hustle in the Streets” on Tuesday that the deal is a big deal. A plus for golf.
While tensions between the Tour and LIV are resolved, they could have repercussions as regulators sort out the deal.
“The committee’s statement that this is necessary to end all this tension leaves the question of what do we mean when we say tension? This may be from a competitive standpoint, which has implications for pricing and consumption. It’s a good thing for those who want to buy it,” said Henry Hauser, a former FTC attorney who is now an antitrust attorney at Perkins Coie. “It can also mean tension in the sense of distraction.”
As the two organizations feud, golfers are divided between the PGA Tour and LIV. Some people leave because of the high salaries that LIV pays out, even if they lose the endorsement. Others turned down big paydays to keep touring. Monaghan has been outspoken in the past, saying he believes players face “significant repercussions” for going to LIV. On Tuesday, he said he expected to be called a hypocrite and accepted the criticism.
Since the announcement, several players have expressed their displeasure with the deal. Likewise, sponsors have been slow to make statements or make decisions, possibly waiting to see how deals are structured and the regulatory process progresses, two sponsors close to the tour said.
Lawsuits aside, LIV Golf has been the subject of controversy and criticism since its launch in 2022. Backed by Saudi Arabia’s Public Investment Fund, an entity controlled by the Saudi crown prince, critics accused the sovereign wealth fund of “shuffling” the use of LIV Golf to divert attention from the country’s history of human rights abuses.
antitrust issues
Both parties filed lawsuits last year over LIV’s aggressive efforts to lure high-profile players, including Phil Mickelson and Bryson DeChambeau, off the Tour for high salaries.
In response, the PGA Tour increased bonuses and player benefits and secured loyalty deals from top players to prevent further poaching.
Both leagues claim the other’s contracts and policies limit golf talent and stifle proper competition. LIV Golf sued the PGA Tour and also banned its players for anti-competitive behavior. The PGA Tour countersued.
The proposed deal includes the DP World Tour in Europe, ending all battles – on and off the field.
While Public Investment Fund President Yasir Al-Rumayyan said he expected the deal to close within weeks, there were questions about how quickly it could bypass U.S. regulators such as the Federal Trade Commission and the Justice Department.
“Anything that happened before this announcement could still be actionable,” Hauser said, noting that the Justice Department could still investigate the claims outside of the merger process. “You can’t treat a settlement like a masquerade.”
Hauser noted that while there is always a tendency to keep things out of court, the settlement itself is subject to antitrust laws — “especially when there is a legitimate legal dispute between the entities.”
While the deal could close relatively quickly without requiring regulatory approval, lawmakers could raise questions after the fact.This happened recently at the Department of Justice Ordered the termination of the alliance between American Airlines and JetBlue Airways, saying the merger would hurt consumers by raising fares. American Airlines plans to appeal the ruling.
Timothy Derdenger, an assistant professor of marketing and strategy, said the new entity needs to show that mergers benefit consumers, especially globally, by bringing the best minds under one umbrella and broadening the reach of the game. The sphere of influence is at Carnegie Mellon University’s Tepper School of Business.
“If this deal can show that it supports growing income for golfers and leads to more golf participation and innovation that adds value to the audience, I don’t think the U.S. government will fight much,” said Dedenger. explain.
sponsors and saudis
The deal also raises questions about how it might affect PGA Tour sponsors and their player endorsements.
Many were outspoken about LIV’s financial backer, PIF, and even protested at the event.
Families of those killed in the September 11, 2001 terrorist attacks protested the LIV event because of its ties to Saudi Arabia. U.S. officials have concluded that Saudi nationals helped finance Al Qaeda, the terrorist group linked to the Sept. 11 attacks, although the investigation has not found Saudi officials complicit in the attacks.
On Tuesday, the 9/11 Family Federation lashed out at the merger, especially after PGA Tour Commissioner Monaghan publicly raised the issue in an interview last summer. “I would ask any player who has left or is thinking about leaving, ‘Have you ever apologized for being a member of the PGA Tour?'” Monahan said in an interview with CBS Sports last year.
The tour’s main sponsor has yet to take a position or make a decision. At least one sponsor is waiting to see how the regulatory process will affect the deal before making a decision, according to a person familiar with the matter, who asked not to be named. The other sponsors have not publicly commented on the matter.
Marketers, advertisers and sponsors pulled out of other partnerships as the controversy gained traction.
“The fundamental reason why the brands we work with decide to invest in a campaign is to leverage the power of that asset to connect with their customers,” said Sampson Yimer, senior vice president of sponsorship consulting at Momentum Worldwide. When it falls, these brands may reconsider their investments or hit the pause button.”
Shortly after joining LIV, Mickelson made disparaging comments about the Tour and expressed support for the Saudis. The top golfer has lost recognition from KPMG and others, some of which are more than a decade old.
“If it’s something to consider, we’ll advise our clients on that,” Yimer said. “I think this deal could have a chilling effect.”
However, the merger of the leagues could also lead to more endorsements, at least in the long run.
“The players who go away and lose endorsements, they’ll be able to get sponsorships and endorsements back because that will bring them back,” Derdenger said.