US antitrust authorities are investigating the PGA Tour over the elite golf circuit’s response to the emergence of LIV Golf, a new rival bankrolled by Saudi Arabia’s sovereign wealth fund.
The Department of Justice’s inquiries into whether the PGA Tour has flouted competition law are a sign of how high the stakes are as Saudi’s Public Investment Fund invests in its challenger circuit.
The battle between the PGA Tour, which organises tournaments in the US and North America, and LIV has divided the sport, with some of the game’s biggest stars shifting their allegiances to play for the start-up series with its team-based format. Lured by hefty fees and lucrative prize money, some of the world’s top-ranked players and winners of the sport’s “major” tournaments have joined it.
The PGA Tour has suspended members who have joined LIV, including stars Phil Mickelson and Dustin Johnson. Activists have criticised players joining LIV because of Saudi Arabia’s record on human rights and the murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul.
In response to the threat posed by LIV, the PGA Tour has increased its own prize purse and strengthened its alliance with the European Tour, a former rival. Last month, the PGA Tour agreed to increase its stake in the European circuit’s media production company from the 15 per cent holding it acquired for $85mn in 2020 to 40 per cent.
PGA Tour commissioner Jay Monahan has warned that LIV was the result of a “foreign monarchy spending billions of dollars trying to buy the game of golf”. People close to the PIF say that the upfront investment is designed to generate returns in future.
Although golfers are independent contractors, they agree to a number of conditions and rules in order to become members of the PGA Tour, where the top players can make millions of dollars a year.
The PIF, the $620bn fund chaired by Saudi Crown Prince Mohammed bin Salman, is investing at least $2bn to realise its vision for the future of golf. LIV chief executive Greg Norman, a former world number one, had attempted to form a challenger to the PGA Tour in his playing days.
“This was not unexpected,” the PGA Tour said in a statement in response to a request for comment about the inquiry. “We went through this in 1994 and we are confident in a similar outcome.”
The Wall Street Journal first reported the DoJ investigation. The DoJ declined to comment.
The probe comes as the DoJ’s antitrust unit pledges tougher enforcement against anti-competitive conduct under Jonathan Kanter, the head of the division and one of several progressive officials appointed by president Joe Biden in top US market competition roles.
The cohort — which also includes Lina Khan, chair of the US Federal Trade Commission and Tim Wu, White House adviser on competition policy — argues there have been decades of under-enforcement and too much focus on pricing power as the litmus test for industry concentration.
The PGA Tour faced an antitrust probe in the 1990s, when the FTC investigated the golf tournament for alleged anti-competitive behaviour, but ultimately took no action.
The DoJ antitrust unit’s recent activity in the sports sector includes a court filing submitted last month in relation to an antitrust suit against Major League Baseball. The DoJ, which is not a party in the case, argued a controversial rule giving baseball exemption from antitrust law was “aberrational”.
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