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Human Rights, Antitrust Behavior And The PGA-LIV Showdown

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With the first LIV Golf Tournament teeing off in London June 9-11th, and PGA Tour Commissioner Jay Moynihan threatening to penalize golfers who participate in the Saudi-backed tour, this sports business drama may not draw as many eyeballs as the Johnny Depp v Amber Heard trial, but this golf industry showdown begs many questions – both legal and moral.

It’s a contrast in personal right versus human rights.

Does one side with the golfers’ right to choose where they can play?

Or does one chastise and ostracize golfers for selling out to a tour where the financial backing for their events comes from a country with an abysmal human rights record?

Personal Right: The Antitrust Argument

On the one hand, there is the issue of labor mobility and freedom of choice for these independent contractors.

Historically, golfers have had the freedom to play in the tournaments they wish to play in. Golfers from America, Europe, South Africa, Asia, Australia, and all over the world have had the right to choose which global tournaments they wish to compete in.

Historically, most of the world’s best golfers chose to play the majority of their golf on the PGA Tour, because the tournaments on the PGA Tour had the highest purses and greatest prestige.

And most germane for this discussion, the PGA Tour has not prevented players from playing select events in Saudi Arabia in the past…despite the appalling human rights abuse record of the Saudi government. To this point, linked below are the final standings of the Saudi International tournament from 20222021, and 2020. The leaderboards reflect the top names in global golf, including many PGA Tour members.

Where was the PGA Tour’s outrage and suspension threats then?

Their lack of outrage or attempts to prevent Tour members from competing in past Saudi-backed tournaments is evidence that Commissioner Moynihan’s current sanctioning threats are more about turf-protection and attempts to nix competition from a rival tour than anything else.

With the LIV defections we’ve already seen – Dustin Johnson, Bryson DeChambeau, Patrick Reed, Phil Mickelson and more – one can understand why Moynihan is worried.

Then there are the legal questions. Can the PGA Tour even legally suspend players? Antitrust lawsuits will almost certainly be filed by golfers who feel their personal right to choose where to play is being unfairly and unlawfully infringed upon.

Intuitively, it appears that blocking independent contractors – who have historically been allowed to play anywhere in the world – from playing in events seems ripe for antitrust litigation.

Human Rights: Economic Ramifications of the Social Conscience Component

While confident none of the golfers or golf executives who are affiliated with LIV Golf condone or excuse the past human rights abuses of the Saudi government, the golfers must realize the potential for long-term reputational effects on their personal brand.

The perception they were lured by so-called “blood money.”

Megastars like Dustin Johnson and Phil Mickelson – who have reportedly received $125 million and $200 million respectively to simply be a part of LIV golf – have already lost endorsement partners due to their decision to compete in LIV events.

Can the PGA Tour and LIV Golf Co-exist?

As a mere practical and logistical matter, the answer is absolutely yes.

None of the LIV Golf events will ever have the legacy cache of the majors, the PGA Tour’s other marquee events (like last weekend’s Memorial Tournament hosted by legendary Jack Nicklaus), the Players Championship, and a handful of other top tier events throughout the year.

Why not? No history. No storied past of the game’s past greats conquering on that track.

But as a means of exposing the viewing public to a different style of golf – the team game – and by scheduling events to avoid conflicts with the marquee events referenced above, it certainly is feasible for golfers as independent contractors to pick-and-choose which events they play.

Also, we have sadly been reminded this year and even more recently with his announcement to skip the U.S. Open, Tiger Woods will not be around the PGA Tour forever. The game and tour have enjoyed riding on the coattails of Tiger’s massive appeal and presence for decades, and all golfers and the tour of appreciative of the financial largesse Tiger’s greatness has created for all involved.

But as we witness the beginning of the end of Tiger’s regular competitive presence at tour events, competition from a rival tour in terms of event presentation and competition format could be healthy for the overall demand for the sport.

In a world where the average consumer enjoys Top Golf more than an afternoon on the sofa watching a regular PGA Tour event, perhaps this rivalry from LIV introduces both media production and competitive elements which appeal to younger generations of sports consumers.

Will more competition for their services improve the economics for players on the PGA Tour?

As a mere matter of historical precedent across other sports leagues, the answer is absolutely yes.

We as employees, if we have two or more companies bidding on our services, this will raise your wage.

When the upstart USFL started vying for professional football players like Steve Young and Jim Kelly, this forced the NFL to raise salaries.

When the reserve clause was removed from players’ contracts across various sports leagues which gave rise to free agency (nod to Marvin Miller and Curt Flood here), players’ salaries exploded.

In short, this financial pressure from LIV Golf will ultimately have a favorable impact on PGA Tour purses.

What’s the endgame?

While it is possible that the social corporate outcry from doing business with the Saudis could reach decibel levels which could squash LIV Golf, I wouldn’t bet on that outcome.

Rather, I believe it is more likely that the PGA Tour, to avoid both expensive lawsuits and the appearance of behaving in an anti-competitive and draconian fashion, will ultimately relent and allow players to compete in both their events and LIV Golf. That may not happen right away, but I believe that’s where this drama is ultimately headed.

On this last point, I’m reminded of what the NCAA’s preliminary threat was to any state that approved name, image, and likeness statutes. As California did in Fall 2019.

  • The NCAA threatened to ban all schools from states that approve NIL legislation from competing in NCAA championships.
  • But then after California passed their legislation, so did several other states.
  • And thus, the NCAA had to back off their threats…for fear of losing numerous marquee schools from their athletic competitions.
  • And now, student-athletes at all schools have the right to pursue NIL opportunities.

Analogously, the PGA Tour has talked tough in the build-up to this first LIV event. But as more stars of the game decide to dip their toes in the LIV waters, the tour must realize that if they ban all of these golfers, they won’t have enough star power at their own events to attract fans, sponsors, and future media rights.

Source : Forbes