Antitrust Laws and Competition Issues

Subterms

    More stories

    • 150 Shares119 Views

      in Golf

      Our Golf Reporter Didn’t See the PGA Tour-LIV Golf Deal Coming, Either

      by

      The announced deal to drastically change golf took nearly everyone by surprise.Times Insider explains who we are and what we do and delivers behind-the-scenes insights into how our journalism comes together.Alan Blinder’s plans blew up around 10 a.m. last Tuesday.Mr. Blinder, who covers golf for The New York Times, had just settled in at his home office when he received a heads-up from a source with some gobsmacking news: The PGA Tour and LIV Golf, the insurgent league bankrolled by billions of dollars from Saudi Arabia’s sovereign wealth fund, had agreed to a partnership, suspending a bitter and costly struggle for supremacy of men’s professional golf.“I shouted down the hall to my wife that LIV and the PGA Tour were joining forces, and that I probably wouldn’t be around for dinner,” Mr. Blinder said in an interview. “And then I got to work.” He barely left his desk for the next 13 hours.Below, Mr. Blinder shares how he pivoted from shock to covering the news, the implications of the deal beyond sports and the questions he still has heading in to the U.S. Open, which begins today at the Los Angeles Country Club. These are edited excerpts from the conversation.How surprised were you?It was one of those things that people thought was a distinct possibility at some point in the future, but all the reporting we had done, all the signals were that the tour and LIV were preparing to fight each other in court for the foreseeable future. There was a monstrous case in a federal court in California involving contract interference and antitrust law. And suddenly that was all set to vanish.Who was the first person you called?My editors, to tell them that their day was about to get blown up, too. We published an article reporting the news less than 10 minutes after I told my editors, and that soon grew into live coverage. Once the news was published, I tried to figure out, in detail, what on earth had happened and what it meant. Because the announcement was steeped in legalese and jargon, I spent the rest of the day on the phone with sources and experts both inside and outside of golf just trying to understand what this framework agreement meant.Why is this happening now?The most significant factor is that the PGA Tour was under increasing financial strain. I’m not saying the tour was going to go broke tomorrow, but I think the tour realized it was in an exceptionally expensive fight that was not going to get any easier. Saudi Arabia’s sovereign wealth fund has gobs of money, but it wasn’t entirely smooth sailing from its perspective, either. LIV had faced some pretty significant setbacks in court.Who stands to benefit the most from the deal?It depends on your perspective. The PGA Tour is arguing that it’s going to have a majority of the board seats and its commissioner, Jay Monahan, as the new company’s C.E.O. Its supporters are insistent that they still control the game of golf, that they are the majority stakeholder in this endeavor. But the Saudis have significant influence. The governor of Saudi Arabia’s wealth fund, Yasir al-Rumayyan, is going to be this new entity’s chairman, and the Saudis have extensive rights to invest in this partnership. How this actually looks going forward remains to be seen.Will we see a loosening of PGA Tour standards to align more with the LIV Golf version of the game, which includes music at events, looser dress codes and no cuts of golfers?The PGA Tour is saying that it still has control over all the competition and play. We’re not expecting the overarching rules of golf to change, in part because the tour doesn’t control them. Could you see some elements of LIV borrowed and integrated into the PGA Tour? Perhaps. The PGA Tour is trying to appeal to a younger audience and broaden the appeal of the game.There have been vows from Washington to slow or stop the deal — or, at least, make it very uncomfortable for golf executives. What are the odds that lawmakers will succeed in blocking the deal?A lot of experts expect the Justice Department to go to court to try to either block the deal or insist upon changes. This is also somewhat unusual because it’s not like this deal was announced last week and suddenly the Justice Department was intrigued by pro golf. Their antitrust folks had already spent months and months and months looking at professional golf. So they have a bit of a head start if they really want to scrutinize this deal.Why should people who don’t follow golf care?This is a golf story, but it’s a story that could play out in other sports going forward. Is it possible that we will see Saudi Arabia or other wealthy states try to make their mark on other sports?This is not just a story of sports, or business, or geopolitics. It’s a story that includes all of those different threads and more. We had a big article in Monday’s paper that had four bylines on it, and only two of them were the bylines of sportswriters.What are the biggest questions you have going forward?Beyond tour memberships and where you play, how does golf kind of take a breath after all this tumult? The golf industry is a pretty small world. A lot of people know one another well and have known one another for a long time, so they’ve really been shaken up over the last year. So one of the big questions is, when do all these wounds get patched up? More

    • 150 Shares189 Views

      in Golf

      The Titanic PGA and LIV Golf Deal Stokes Anger on Capitol Hill

      by

      American lawmakers and officials are studying the pact between the PGA Tour and Saudi Arabia’s sovereign wealth fund.One of golf’s greatest tests will unfold starting on Thursday, when the U.S. Open begins at the Los Angeles Country Club. It might be an easier lift — it will assuredly be a shorter one — than the test that is emerging in Washington.The abrupt announcement last week that the PGA Tour will tie itself to Saudi Arabia’s sovereign wealth fund and its LIV Golf league is provoking American officials in ways as predictable as they might be persistent in the months ahead.Antitrust experts are insisting that the Justice Department should consider suing to stop the agreement, which calls for the business operations of LIV and the PGA Tour to be brought into one new company, if the deal closes in the coming months. Lawmakers are complaining that the Florida-based PGA Tour is lurching into business with an arm of the Saudi state that it roundly condemned until last week. Political strategists are scrambling to shape perceptions of an agreement that was forged in secret and, upon its release, promptly criticized as a well-heeled exercise in hypocrisy and whitewashing.Whether the commotion will amount to anything beyond a few news cycles of fussing — a successful assault on the PGA Tour’s tax-exempt status comes to mind — may not be clear for months. But a week into golf’s latest maelstrom, a deal that could eventually prove lucrative for players and executives is already promising a booming era for lawyers, lobbyists and political sound bites, too.Although golf had been under pressure inside the Justice Department, where antitrust regulators were looking at the PGA Tour, the announcement last week brought the tumult to Capitol Hill.In the House, Representative John Garamendi, Democrat of California, swiftly introduced a bill to revoke the PGA Tour’s tax-exempt status. And in the Senate, Senator Richard Blumenthal, Democrat of Connecticut, announced on Monday that a subcommittee he chairs would conduct an inquiry into a deal that he said “raises concerns about the Saudi government’s role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution.”At the U.S. Open in Los Angeles this week, PGA Tour golfers like Jon Rahm will be playing with men like Sergio Garcia, who defected to LIV last year.Richard Heathcote/Getty ImagesThat there would be a battle was never much in question. The principal short-term matter to resolve was who, exactly, would be picking which fights.The golf side of the battle features two forces with formidable records across decades in Washington. Even though Saudi Arabia has had plenty of bipartisan tangles, the kingdom’s officials and allies have often enjoyed an uncommon rapport with their American counterparts, as was on display during a visit from Secretary of State Antony J. Blinken last week. And the PGA Tour has usually found the capital to be a wellspring of courtesy, especially when its supporters helped short-circuit a Federal Trade Commission inquiry in the 1990s.The trouble for the wealth fund and the tour is that Washington also has a bipartisan affection for lawmakers imitating sports executives, and browbeating actual ones, in public and in private. It can be good politics to glower at the commissioners who draw more jeers than many elected officials, and headline-making hostility from Congress could complicate the golf industry’s quest to sell the deal to the public — and then move past it.The tour and the wealth fund can take some comfort in history, which suggests a successful congressional effort to thwart the deal directly is unlikely. The Hill, though, could still seek to make the transaction painful beyond a feisty public hearing or two. A change to the tour’s tax status, like the one envisioned in the bill introduced in the House, could cost it millions of dollars a year because it has been structured as a “business league” that is exempt from taxes under section 501(c)(6) of the Internal Revenue Code.Groups like the PGA Tour have combated legislative headaches surrounding their tax-exempt status in the past, with one effort to end the practice for sports leagues vanishing from a 2017 tax bill at the last moment. In the past 18 months, years after the N.F.L. and Major League Baseball surrendered their exempt statuses, public records show that the tour has spent at least $640,000 on lobbying, with much of that work tied to “tax legislation affecting exempt organizations.”As a part of his inquiry, Blumenthal on Monday demanded documents related to the tour’s tax-exempt status and, in his letter to the tour, wondered whether the deal would allow a foreign government to “indirectly benefit from provisions in U.S. tax laws meant to promote not-for-profit business associations.”Senator Ron Wyden, Democrat of Oregon, who is chairman of the Senate Finance Committee, similarly seethed that the tour had “moved itself right to the top of the leaderboard in terms of most questionable tax exemptions in professional sports.”But Wyden has also suggested that the deal should run into resistance before the Committee on Foreign Investment in the United States, a Treasury Department-led committee that examines national security implications of foreign investments in real estate and American companies.Whether there are serious national security concerns about a deal involving golf tours, or whether the committee will even review the agreement at all, is unclear. Janet Yellen, the secretary of the Treasury, said last week that it was “not immediately obvious” to her that the agreement related to national security. But Wyden, who is planning a congressional investigation of his own, has signaled his interest in the department’s exploring whether the deal could give “the Saudi regime inappropriate control or access to U.S. real estate,” most likely through the tour’s Tournament Players Club collection of golf courses.And those are just the spats that have erupted since last Tuesday.The PGA Tour commissioner, Jay Monahan, left, and Jimmy Dunne, a board member, were closely involved in the merger negotiations.Getty ImagesUrged on by LIV’s lawyers, Justice Department regulators have spent months examining whether the PGA Tour’s tactics to discourage players from defecting to the Saudi-backed league were illegal, and whether the tour’s coziness with other leading golf organizations — like Augusta National Golf Club, the organizer of the Masters Tournament — violated federal law. Instead of quieting misgivings about golf, the deal has only intensified them and might have even armed the department with a new lever: suing to stop the pact, which the tour and wealth fund deny amounts to a merger.“Generally, we want to encourage parties to settle their disputes outside of the judicial process, but it doesn’t mean that settlements are immune from antitrust,” said Henry J. Hauser, a former antitrust lawyer at the Justice Department who now practices at Perkins Coie, one of the capital’s best-connected firms. “If companies try to resolve a legitimate dispute by agreeing to common conditions that stifle competition, that could be a problem.”The Justice Department has declined to comment.The tour is moving aggressively to curb Washington’s irritation, going as far to suggest that Congress and other parts of the federal government could have done more to help it rebuff a Saudi challenge.“While we are grateful for the written declarations of support we received from certain members, we were largely left on our own to fend off the attacks, ostensibly due to the United States’ complex geopolitical alliance with the Kingdom of Saudi Arabia,” the PGA Tour commissioner, Jay Monahan, wrote in a letter to lawmakers last week. “This left the very real prospect of another decade of expensive and distracting litigation and the PGA Tour’s long-term existence under threat.”In the penultimate sentence of his letter, Monahan described the tour as “an American institution,” just as Blumenthal would on Monday. But like many executives before him, Monahan is finding that Washington is forever eager to scrutinize American institutions, especially when sports are involved.He may ultimately find that the shouting has only just begun.Lauren Hirsch More

    • 100 Shares129 Views

      in Golf

      The PGA Tour and LIV Golf Merger, Explained

      by

      The announced deal to dramatically change golf is far from complete.The PGA Tour, the world’s pre-eminent professional golf league, and LIV Golf, a Saudi-funded upstart whose emergence over the past year and a half has cleaved the sport in two, have agreed to join forces.The pact is complicated and incomplete, and numerous golfers hate it. They are directing their wrath at the architects of the deal. Let’s start from the beginning.What are the PGA Tour and LIV Golf?The PGA Tour holds tournaments nearly every weekend, mostly in the United States but also in other countries in North America, Europe and Asia, with prize pools worth millions of dollars. The tour has been the home to practically every male golfer you can name: Jack Nicklaus, Tiger Woods, Arnold Palmer and so on.It has relationships with, but is separate from, the organizations that stage men’s golf’s four majors: the Masters Tournament, the P.G.A. Championship, the U.S. Open and the British Open. (The L.P.G.A., which runs the women’s tour, is separate.)LIV Golf began in late 2021 with the former PGA Tour player Greg Norman as its commissioner and billions of dollars in backing from the Saudi sovereign wealth fund, which is known as the Public Investment Fund. LIV lured several PGA Tour players, including the major champions Phil Mickelson and Brooks Koepka, with massive purses and guaranteed payouts that far surpassed what they could earn on the established circuit.LIV promised a sharp break from golf’s fusty traditionalism, starting with its name, which, when pronounced, rhymes with “give” but is actually the Roman numeral for 54, the number of holes played in each tournament. LIV had music blaring at its events, looser dress codes and team competitions — and tournaments that lasted three days instead of four. Further, and of particular appeal to potential players, while the PGA Tour tournaments cut golfers with the worst scores after two rounds, LIV did not cut anyone.What was the relationship between the leagues before the deal to align?Acrimonious, to put it lightly. Players who joined LIV were forced to resign from the PGA Tour — and its European equivalent, the DP World Tour — under the threat of suspension and fines. LIV sued the PGA Tour, and the PGA Tour countersued, litigation that is technically continuing (though the deal is supposed to resolve it).PGA Tour supporters and other critics of LIV said the venture was simply an attempt by the Saudi government to distract attention from its human rights record, while LIV supporters said the PGA Tour was a monopoly that used inappropriate strong-arm tactics to protect its position in big-time sports.And yet now they are combining?Yasir al-Rumayyan, left, who is the governor of the Public Investment Fund and who oversees LIV, would chair the board of the new entity. Former President Donald J. Trump, middle, has hosted LIV tournaments on his courses.Doug Mills/The New York TimesIt seems so. The PGA Tour and LIV announced on Tuesday the creation of a new entity that would combine their assets, as well as those of the DP World Tour, and radically change golf’s governance.The PGA Tour would remain a nonprofit organization and would retain full control over how its tournaments are played. But all of the PGA Tour’s commercial business and rights — such as the extremely lucrative rights to televise its tournaments — would be owned by a new, yet unnamed, for-profit entity that is currently called “NewCo.” NewCo will also own LIV as well as the commercial and business rights of the DP World Tour.The board of directors for the new for-profit entity would be led by Yasir al-Rumayyan, who is the governor of the Public Investment Fund and also oversees LIV. Three other members of the board’s executive committee would be current members of the PGA Tour’s board, and the tour would appoint the majority of the board and hold a majority voting interest, effectively controlling it.When does this take effect?Not yet.First, the idea also has to be approved by the PGA Tour’s policy board, what it calls its board of directors, which includes some people who were left out of the secret negotiations for this deal in the spring.The policy board is made up of five independent directors, including Ed Herlihy and Jimmy Dunne, who helped negotiate the deal. The board also includes five players: Patrick Cantlay, Charley Hoffman, Peter Malnati, Rory McIlroy and Webb Simpson.Jay Monahan, the commissioner of the PGA Tour, said Tuesday that there was only a “framework agreement” and not a “definitive agreement,” with many details still to be decided. The definitive agreement needs a vote before it can go forward.And for the rest of 2023, all the tours will remain separate, and all their tournaments will continue as scheduled.And after that?Who knows? This is how Monahan answered questions on Tuesday about what golf might look like in the future.Will LIV continue to exist as a separate golf league? “I don’t want to make any statements or make any predictions.”Will LIV golfers go back to the PGA Tour and DP World Tour? “We will work cooperatively to establish a fair and objective process for any players who desire to reapply for membership with the PGA Tour or the DP World Tour,” Monahan wrote in a letter to players.Will PGA Tour players, many of whom spurned LIV and its huge paydays, receive compensation? Will LIV players somehow be forced to give up the money they were guaranteed? “I think those are all the serious conversations that we’re going to have,” Monahan told reporters.How do players feel about all of this?LIV players like Brooks Koepka seemed to take a victory lap.Desiree Rios/The New York TimesBroadly, LIV players seem to think they have gained a major victory, and they are probably right. They got their cake (huge paydays) and can eat it (a pathway to returning to the PGA Tour), too.Mickelson, the first major player to leave for LIV, tweeted that it was an “awesome day today.” Koepka took a jab at Brandel Chamblee, a former professional golfer and current television commentator, who has been vocally anti-LIV.Many PGA Tour players were less jubilant. They were blindsided by the news, learning of the agreement when the public did, and they did not seem to understand why the tour waged a legal war against LIV and a war of morality against Saudi money, only to invite the wolf into the henhouse.Monahan met with a group of players on Tuesday in Toronto at the Canadian Open, which was set to start in two days, and afterward told reporters it was “intense, certainly heated.”Johnson Wagner, a PGA Tour player, said on the Golf Channel that some players at the meeting called for Monahan’s resignation.“There were many moments where certain players were calling for new leadership of the PGA Tour, and even got a couple standing ovations,” he said. “I think the most powerful moment was when a player quoted Commissioner Monahan from the 3M Open in Minnesota last year when he said, ‘As long as I’m commissioner of the PGA Tour, no player that took LIV money will ever play the PGA Tour again.’”Wagner estimated that 90 percent of the players in the meeting were against the merger.On Wednesday morning, however, McIlroy, perhaps the most influential PGA Tour player not named Tiger Woods, said he was reluctantly in favor of the agreement. McIlroy said he had “come to terms” with Saudi money in golf. “Honestly, I’ve just resigned myself to the fact that this is, you know, this is what’s going to happen,” he said.Rory McIlroy is a member of the PGA Tour’s policy board, which must vote to approve the definitive agreement. McIlroy has been one of the most outspoken players against LIV.Desiree Rios/The New York TimesI see a photo of former President Trump up there. Is he involved in this?Yes, though not directly. The Trump Organization owns golf courses around the world, and Donald J. Trump has for years sought to host major tournaments on its properties. Those efforts suffered a setback after the Jan. 6, 2021, attack on the Capitol by a pro-Trump mob, as the golf establishment distanced itself from the former president. Most significantly, the P.G.A. of America pulled the 2022 P.G.A. Championship from the Trump National Golf Club in Bedminster, N.J.But Trump had cultivated unusually close ties to Saudi Arabia while president, and Saudi-backed LIV had no problem embracing him. Last year, two LIV events were held at Trump courses, and this year it will be three.Trump’s son Eric said that the agreement between LIV and the PGA Tour was a “wonderful thing for the game of golf” and that he expected tournaments to continue to be held at Trump-owned courses. He declined to comment on whether the Trump family played any role in bringing the two parties together.If the PGA Tour was so against LIV and Saudi money, what changed?Jay Monahan, the PGA Tour commissioner, at the Players Championship in March. He said the ability to “take the competitor off of the board” while retaining control was a significant factor in the merger.Erik S Lesser/EPA, via Shutterstock“Listen, circumstances change, and they’ve been changing a lot over the last couple years,” Monahan said.Get it? No?“What changed? I looked at where we were at that point in time, and it was the right point in time to have a conversation,” Monahan said.Between the lines, Monahan made it sound like the agreement came down to money and competition, as it often does. To compete with LIV, the PGA Tour has enhanced purses, supported the DP World Tour financially and pursued extremely expensive litigation. “We’ve had to invest back in our business through our reserves,” Monahan said.He also said the ability to “take the competitor off of the board” while retaining control was significant.Can anybody else stop the deal from going through?The Justice Department, Federal Trade Commission or the European Commission could certainly try.For about a year, the Justice Department has been investigating the tight-knit relationship between the PGA Tour and other powerful entities in golf. Among its questions is whether the organizations have exerted improper influence over the Official World Golf Rankings, which determine players’ eligibility for certain events and can be an important factor in their success and income.As part of their deal, LIV and the PGA Tour agreed to drop their dueling lawsuits, but doing so would not necessarily change the Justice Department’s inquiry. If there were any illegal conduct by the PGA Tour, a merger would not prevent the PGA Tour from being punished for it.“The announcement of a merger doesn’t forgive past sins,” said Bill Baer, who led the Justice Department’s antitrust division during the Obama administration.The federal government, through the Justice Department and the F.T.C., also reviews more than 1,000 mergers for approval each year, and the European Commission reviews them for the European Union. Without a definitive agreement, it is not clear whether this might be the type of combination regulators could block or whether they would try to do so.Saudi Arabia seems to have grand sports ambitions. Will it always remain a junior partner to the PGA Tour in golf?As always, Saudi Arabia has the perfect vehicle to gain more control: money.The Public Investment Fund will invest “billions,” according to its governor, al-Rumayyan, into the new for-profit entity. It will also hold “the exclusive right to further invest in the new entity, including a right of first refusal on any capital that may be invested in the new entity, including into the PGA Tour, LIV Golf and DP World Tour,” according to the release announcing the agreement.If the Public Investment Fund invests more money, it will surely demand more board seats and greater voting rights, further tilting control of men’s professional golf toward the kingdom. More

    • 113 Shares99 Views

      in Golf

      Phil Mickelson Interviewed in Antitrust Inquiry Into Pro Golf

      by

      The Justice Department met with PGA Tour lawyers this week, but a timeline for the completion of its review is unclear.PITTSFORD, N.Y. — The Justice Department’s antitrust inquiry into men’s professional golf has included interviews with players, including the major tournament winners Phil Mickelson, Bryson DeChambeau and Sergio García, as the authorities examine whether the PGA Tour sought to manipulate the sport’s labor market.The department, which has been conducting its investigation since at least last summer, has also explored the specter of collusion in the Official World Golf Ranking and the tight-knit relationships between the leaders of the PGA Tour and the distinct organizations that stage the Masters, the P.G.A. Championship and the U.S. Open.Although lawyers for the PGA Tour met with Justice Department officials in Washington this week, a timeline for the review’s completion — much less whether the government will try to force any changes in golf — is not clear. But the inquiry’s scope and persistence has deepened the turbulence in the sport, which has been grappling with the recent rise of LIV Golf, a league that used money from Saudi Arabia’s sovereign wealth fund to lure top players away from the PGA Tour.Eight people with knowledge of the Justice Department’s inquiry described its breadth on the condition of anonymity because the investigation was pending. The department declined to comment.Unlike Major League Baseball, no golf organization has a blanket exemption from federal antitrust laws. A handful of organizations that have close ties to one another have run golf’s top echelon for generations but have withstood some scrutiny in the past.The PGA Tour, the dominant professional circuit in the United States and LIV’s opponent in a pending antitrust lawsuit that the rebel league brought last year, stages tournaments that have often made up the majority of golfers’ competition schedules. But the tour does not run the four so-called major tournaments, which are the sport’s most cherished events and important ways for players to earn prize money and sponsorship-sparking clout.This week’s P.G.A. Championship, for instance, is being overseen by the P.G.A. of America at Oak Hill Country Club, just outside Rochester, N.Y. The U.S. Open is organized by the United States Golf Association, and Augusta National Golf Club administers the Masters Tournament. (The R&A, which organizes the British Open, is based in Britain.)The groups have not moved in lock step since LIV debuted last year — the circuit’s players, for example, have not faced bans from the majors — but professional golf’s establishment has remained a focus of antitrust investigators. Lawyers for LIV have cheered the government’s scrutiny and have regularly communicated with Justice Department officials, who have taken no stance on the league’s lawsuit against the PGA Tour and have not intervened in the case.“If the system is rigged, then consumers are not getting the best product, and if that is the result of an agreement between two or more parties, then that becomes a violation,” said Stephen F. Ross, who teaches sports law at Penn State University and previously worked for the Justice Department and the Federal Trade Commission.The PGA Tour, which declined to comment on Wednesday but has aggressively denied wrongdoing and predicted that the department’s inquiry would fizzle, adopted a hard line last year when LIV emerged. It threatened, and then imposed, suspensions to discourage players from defecting to the Saudi-backed league, which has offered guaranteed contracts sometimes worth $100 million or more and provided some of the richest prizes in golf history.Tour executives have insisted that their strategy was rooted in membership rules designed to protect the collective market power of elite players in matters like television-rights negotiations and tournament sponsorships, and that golfers who breach rules they agreed to can be disciplined. But investigators have shown interest in the possibility that the tour’s punitive approach threatened the integrity of golf’s labor market, which now includes a LIV faction that vocally argues that players are independent contractors who should be free to compete on tours as they choose.The department’s inquiry swiftly moved beyond a superficial glance at LIV’s public complaints and came to include interviews with some of golf’s most recognizable figures.Mickelson, who has won six majors, including the 2021 P.G.A. Championship that at 50 made him the oldest major tournament winner in history, has been a fearsome public critic of the PGA Tour. He accepted a reported $200 million in guaranteed money to join LIV last year, provoked a firestorm when he played down Saudi Arabia’s record of human rights abuses and, last month, all but silenced people who doubted his remaining playing potential when he tied for second at the Masters.DeChambeau was a sensation when he captured the 2020 U.S. Open title, and García, a Masters winner, first starred at a major in the 1990s and has been among the most distinguished European golfers of his generation.LIV golfer Bryson DeChambeau signed autographs for spectators on Wednesday during a practice round ahead of the P.G.A. Championship.Desiree Rios/The New York TimesRepresentatives for Mickelson and DeChambeau declined to comment. A representative for Garcia did not respond to messages requesting comment.LIV declined to comment. But the league’s commissioner, Greg Norman, publicly hinted in March at the circuit’s cooperation with the Justice Department investigation.“The D.O.J. came, trying to understand the antitrust side of things,” Norman said during an appearance in Miami Beach. “So the PGA Tour created this other legal front that they have to fight.”The review of the tour’s labor practices could prove the most consequential element of the investigation, antitrust experts said, if the Justice Department finds fault with the circuit’s approach.“That one goes more to the sort of core of what the PGA is,” said Paul Denis, a retired Justice Department official who later worked on antitrust matters in private practice. “If that’s where they’re headed, that’s much more significant because that really does affect their business model in terms of their relationship with the players.”But American regulators have also become increasingly mindful of the close ties among golf’s most powerful organizations and their executives and administrators.That prong of the investigation is not unique to the golf inquiry. During the Biden administration, the Justice Department’s antitrust division has shown particular concern about people serving in multiple top roles for potential competitors, and its misgivings have sometimes led directors of public companies to surrender board seats.In October, Jonathan Kanter, the assistant attorney general for the antitrust division, said that the prohibition on overlapping service was “an important, but under-enforced, part” of federal law.Whether the Justice Department seeks to compel changes in executive or board leadership in golf may hinge on whether Kanter and his lieutenants believe they can prove that the PGA Tour is a competitor to a major tournament organizer, a notion that tour executives have privately scoffed at and used to cast doubt on the strength of the department’s potential case. The tour and the major tournaments jockey for television-rights fees and sponsorships, but they are far from head-to-head rivals in many senses.They do, however, cooperate.The tour has a stake in the world ranking system, which major tournaments use, in part, to determine their fields. Along with the tour, Augusta National, the P.G.A. of America and the U.S.G.A. also have seats on the ranking system’s governing board, and all of them supply personnel for its technical committee.Player rankings are based on a complex formula that considers performances in accredited tournaments, from PGA Tour events to competitions on circuits that draw little notice. Since administrators have not yet acted on LIV’s application to participate in the system — LIV executives have acknowledged that the league would require special dispensations to be accepted immediately — its golfers have slid downward in the ranking, threatening their future participation in the majors. (Jay Monahan, the tour’s commissioner, has recused himself from deliberations about LIV’s bid to join the system.)Jonathan Kanter, the assistant attorney general for the Justice Department’s antitrust division.Carolyn Kaster/Associated PressThe Justice Department’s inquiry is of substantial importance to LIV Golf, which has faced setbacks in its lawsuit against the PGA Tour. But the league has spent months stoking chatter about the federal investigation, its potential implications for the PGA Tour — and the potential benefits for LIV.The tour has countered that effort by citing its record: an F.T.C. inquiry that lasted years and ended in 1995 without any action against the tour.Shortly beforehand, Norman’s first quest to start a global circuit to rival the PGA Tour collapsed.David McCabe More

    • 125 Shares99 Views

      in Golf

      PGA Tour Can Depose Saudi Wealth Fund’s Leader, Judge Rules

      by

      The decision in a case involving the LIV Golf series could reveal details of the operations of Saudi Arabia’s Public Investment Fund.A federal magistrate judge has ruled that the leader of Saudi Arabia’s sovereign wealth fund, which has bankrolled the new LIV Golf series, must sit for a deposition by lawyers for the PGA Tour who sought his testimony as part of the tangle of litigation involving the sport-splitting circuit.The decision, released on Thursday night in California after an interim legal skirmish that dealt with questions of sovereign immunity and the reach of Saudi law, could reveal details of the wealth fund’s operations and the power of its governor, Yasir al-Rumayyan, over its investments abroad.The wealth fund is expected to ask a federal judge in San Jose, Calif., to review the decision by the magistrate judge, Susan van Keulen, who is helping oversee the bitter legal clash between the PGA Tour and LIV Golf.In her 58-page ruling, portions of which were redacted in the version that became public late Thursday as the sides jousted about its confidentiality, van Keulen wrote that it was “plain” that the wealth fund was “not a mere investor in LIV.”Instead, the judge wrote, the wealth fund was “the moving force behind the founding, funding, oversight and operation of LIV.” Al-Rumayyan, she wrote elsewhere in her order, “was personally involved in and himself carried out many” of the wealth fund’s activities to create and develop LIV.A Guide to the LIV Golf SeriesCard 1 of 7A new series. More

    • 138 Shares119 Views

      in Golf

      Power to Punish LIV Golfers Faces a Legal Test in Europe

      by

      An arbitration panel will meet next week to weigh whether the European Tour may penalize the men who played on the Saudi-backed circuit.DUBAI, United Arab Emirates — Many of the golfers had wandered away one afternoon last week, seeking lunch or refuge from the Emirati sun or something besides the monotony of a driving range.Ian Poulter, though, kept swinging, the consistency nearly enough to disguise that there is almost no professional golfer in greater limbo.Poulter, who has competed on the European Tour for more than two decades, is among the players who defiantly joined LIV Golf, the breakaway circuit bankrolled by Saudi Arabia’s sovereign wealth fund, and faced punishment from the tour. Next week, almost eight months after the first rebel tournament, arbitrators in London will weigh the tour’s choice to discipline defectors.The case is a test for the golf establishment’s response to LIV, which has guaranteed certain players tens of millions of dollars to compete in a league that insists it is looking to revive golf but that skeptics view as a front to rehabilitate Saudi Arabia’s reputation. Executives and legal experts say, though, that the arbitrators’ decision could also ripple more broadly across global sports as athletes increasingly resist longstanding restrictions on where they compete and as wealthy Persian Gulf states look to use the world’s courses, fields and racetracks as avenues for their political and public-relations ambitions.“The impacts of this case are potentially tremendous across all of international sport,” said Jeffrey G. Benz, a sports arbitrator in London who is not involved in the golf case and noted how other leagues and federations have faced opposition to their efforts to stymie potential rivals.Although the issue that next week’s panel will consider is formally a narrow one, dealing only with the European Tour’s conflicting event policy, a ruling in favor of the players could embolden like-minded but wary athletes to plunge into the universe of cash-flush start-ups. A victory for the tour, marketed as the DP World Tour, would reinforce the kind of rules that marquee sports organizers have harnessed for decades to preserve market power. And whichever side prevails will assuredly tout victory as vindication for its approach to professional sports.“There’s the public opinion part, there’s the influence it might have on other athletes, there’s the influence it might have on other rich people who might think, ‘Hey, I’d really love to get into sports. Let’s put a group together and go attack name-the-sport,’” said Jill Pilgrim, a former general counsel for the L.P.G.A. who now teaches sports arbitration at Columbia Law School.“They’re watching all of this,” she added.Poulter has argued that playing with the new circuit was not all that different from the rest of a storied career dotted with appearances across tours.Lynne Sladky/Associated PressThe golf case began last June, when Poulter was among the European Tour players who played in a LIV Golf tournament without the tour’s permission. The tour, wary of undermining the rules that fortify its sponsorship and television-rights deals, responded with short suspensions and fines, modest penalties compared to the indefinite suspensions that the United States-based PGA Tour meted out.The players insist, though, that they are independent contractors and should have greater freedom to pick when, where and for whom they compete. An arbitrator paused the tour’s punishments last summer but did not rule on the substantive arguments that will go before this month’s panel. The arbitrators could announce their decision within weeks of the five-day, closed-door hearing, which will begin Monday.A Guide to the LIV Golf SeriesCard 1 of 7A new series. More

    • 163 Shares149 Views

      in Golf

      PGA Tour Seeks to Add Saudi Wealth Fund to Lawsuit Over LIV Golf

      by

      A federal judge will decide whether one of the tour’s leading avenues to investigate and challenge a new rival can be expanded.The PGA Tour intensified its legal fight against LIV Golf on Tuesday, when it asked a federal judge in California to let it add Saudi Arabia’s sovereign wealth fund to a lawsuit that has become one of its principal ways to investigate — and try to undercut — the circuit that has assaulted the tour’s customary dominance.The request, filed in the Federal District Court in San Jose, Calif., where LIV and the PGA Tour have argued for months over matters like antitrust law and contract interference, came as the two sides braced for a ruling about whether tour lawyers might depose Yasir al-Rumayyan, the wealth fund’s governor. The fund, formally known as the Public Investment Fund, effectively owns most of LIV.But with a judge’s decision pending and potentially months of appeals ahead, the tour sought another way to examine and retaliate against Riyadh’s entry into men’s professional golf. In Tuesday’s filing, the tour also asked to add al-Rumayyan to its suit.“Documents produced by LIV reveal that P.I.F. and Mr. al-Rumayyan were instrumental in inducing players to breach their tour contracts,” the tour told the judge Tuesday, when it complained that the wealth fund and its leader had been “exercising near absolute authority” over the circuit.The wealth fund has previously rejected the tour’s accusations that it and al-Rumayyan dominate LIV, which has used condensed schedules and enormous contracts to entice players such as Bryson DeChambeau, Sergio García, Brooks Koepka, Phil Mickelson and Cameron Smith to leave the PGA Tour for the league. LIV, which announced a decidedly modest American television rights deal last week, is expected to begin its 14-stop 2023 season next month in Mexico.Phil Mickelson, left, with al-Rumayyan during LIV Golf’s inaugural tournament last year at Centurion Golf Club near London.Andy Rain/EPA, via ShutterstockJudge Beth Labson Freeman will consider the tour’s request and weigh factors such as whether the tour acted with sufficient haste to amend its lawsuit and whether its request is in good faith and not a mere stalling tactic.A Guide to the LIV Golf SeriesCard 1 of 6A new series. More

    • 125 Shares179 Views

      in Golf

      Masters Tournament Will Let LIV Golf Players Compete in 2023

      by

      The decision by Augusta National Golf Club is an interim victory for the upstart circuit, but other troubles loom.Augusta National Golf Club will allow members of the breakaway LIV Golf league to compete in the Masters Tournament, the first men’s golf major of 2023.The decision by the private club, which organizes the invitational tournament and has exclusive authority over who walks its hilly, pristine course each April, is an interim victory for LIV, the upstart operation bankrolled by Saudi Arabia’s sovereign wealth fund to much of the golf establishment’s fury.“Regrettably, recent actions have divided men’s professional golf by diminishing the virtues of the game and the meaningful legacies of those who built it,” Fred S. Ridley, Augusta National’s chairman, said in a Tuesday statement. “Although we are disappointed in these developments, our focus is to honor the tradition of bringing together a pre-eminent field of golfers this coming April.”But the approach announced by the club on Tuesday — continuing to rely on qualifying categories that often hinge on performances in PGA Tour competitions or other majors, or on certain thresholds in the Official World Golf Ranking — threatens to limit access for LIV players as more years pass, which could ultimately make it more difficult for LIV to attract new golfers.Ridley said Augusta National evaluates “every aspect of the tournament each year, and any modifications or changes to invitation criteria for future tournaments will be announced in April.”LIV declined to comment on Tuesday.The organizers of the British Open, the P.G.A. Championship and the U.S. Open have not said how or whether they will adjust their 2023 entry standards in the wake of LIV Golf’s emergence this year. Augusta National, though, has now offered what could be a template for LIV’s short-term relationships with the major tournaments.Augusta National, for instance, did not abandon its tradition of offering past winners lifetime entry into the tournament, a reprieve for the six LIV players who have already earned green jackets: Sergio Garcia, Dustin Johnson, Phil Mickelson, Patrick Reed, Charl Schwartzel and Bubba Watson. Recent winners of other majors will still qualify for the 2023 Masters, clearing the way, for at least a little longer, for players like Bryson DeChambeau, Brooks Koepka and Cameron Smith.And Augusta, which has become entangled in the Justice Department’s antitrust inquiry into men’s professional golf, will continue to admit players who are in the top 50 in the world rankings at certain times.The world ranking system is a weapon that is as subtle and technical (and disputed) as it is consequential and, for some golfers, determinative. LIV players do not currently earn ranking points for their 54-hole, no-cut events, and they have fallen in the rankings as other golfers have kept playing tournaments on eligible tours. In July, LIV applied to be included in the rankings, and more recently, it partnered with the MENA Tour, which is a part of the system, to try to keep its players in the mix.But the board that oversees the rankings includes golf executives whose reactions to the breakaway series have ranged from skeptical to hostile, and the group has not embraced LIV’s requests. If major tournaments like the Masters continue to use world ranking points as a qualifying method, at least some players will see their entry prospects evaporate. A sustained reliance on PGA Tour events as other qualifying avenues will also stanch access for LIV players.Whether LIV golfers can play the majors may be crucial to the upstart’s prospects in the years ahead. Beyond golfing glory, major championship winners earn heightened public profiles, and they are more likely to attract lucrative sponsorship arrangements. If LIV’s players face extraordinary constraints on their chances simply to reach a major tournament field, much less to win the competition, the league may have trouble recruiting new players.The possibility of exclusion from the majors was enough to warrant a brief legal spat over the summer, when the LIV players Talor Gooch, Matt Jones and Hudson Swafford asked a federal judge to order their participation in the PGA Tour’s FedEx Cup playoffs. Gooch, Jones and Swafford had all failed to qualify for the 2023 majors through other means, and their lawyers warned that keeping them from the playoffs would probably end their chances at doing so. Heeding the arguments of the PGA Tour, which said that “antitrust laws do not allow plaintiffs to have their cake and eat it too,” the judge turned back their request.Augusta National’s decision on Tuesday, fleeting as it might ultimately prove, is still a milestone for LIV, which has not signed a television contract or attracted marquee sponsors. Those symptoms of trouble have only deepened concerns about the long-term viability of the new tour, which many critics regard largely as a means for Saudi Arabia to sanitize its reputation as a human rights abuser. Last week, the circuit acknowledged that its chief operating officer, who was widely seen as integral to its business ambitions, had resigned.In recent months, Greg Norman, LIV’s chief executive, urged major tournaments to “stay Switzerland” and allow his circuit’s players to participate.“The majors need the strength of field,” Norman, a two-time British Open victor and three-time runner-up at the Masters, said last month. “They need the best players in the business. They want the best competition for their broadcasting, for their sponsors, all the other things that come with it.”But LIV stands to benefit, too. A victory in a major by one of its players, LIV supporters have said, would give the circuit greater legitimacy.“If it is a LIV player who wins a major next year,” Norman said, “that goes to show you how we work within the ecosystem.” More