The lawyer in me has two questions about this week’s stunning announcement that the PGA Tour and LIV Golf are merging. The ethicist in me has one.
I wonder, first, what is going to happen to the players who rejected the Saudi-backed LIV tour and stayed loyal to the PGA. After all, many of them left millions — in some cases tens of millions — on the table. Now they are being told that the rivals are creating what the parties themselves call “a new, collectively owned, for-profit entity.”
Maybe the umbrella organization that is now going to govern the sport should prioritize making up for some of the largesse the players missed because of their loyalty. Otherwise, the new entity might face lawsuits by golfers who believe they were hoodwinked by the PGA and left millions of dollars on the table. Maybe the merger deal would turn out to include a clause setting aside a big pot of money — that formerly tainted and untouchable Saudi cash — for distribution to those who refused to switch.
Illustration: Tania Chou
I know, I know: Typically the economic cost of bad predictions about the future lie quite properly on those who made them. Here, however, the players who rebuffed LIV’s advances have a reasonable case that they were misled.
Second lawyerly thought: Remember that pesky antitrust lawsuit filed in September last year by Phil Mickelson and other pros who had defected to LIV? The complaint alleged that the PGA Tour’s restrictions on play in unsanctioned events was an illegal use of monopsony power, and that its punishment of players who signed with LIV was forbidden “anticompetitive conduct.”
At the time, I wrote that the lawsuit, together with scrutiny by federal regulators, would force the PGA to cave on the effort to ban players who had signed with LIV. However, like everyone else, I never imagined that we would get the O. Henry ending of a merger.
Why not?
Because the merger, too, raises antitrust questions. For instance, would LIV and PGA remain competitors? Or might they come up with some rule that spells out how many tournaments players may (must?) compete in for each? Because if they do not bid against each other, player incomes might actually tumble. After all, the only reason LIV has had to offer so much money is that it is trying to pry pros away from the PGA.
Small wonder that federal authorities reportedly plan to scrutinize the merger. Until about five minutes ago, the feds were investigating the PGA for — well, pretty much the same stuff that Mickelson and his fellow plaintiffs alleged in their suit. Now that the PGA has waved the white flag and agreed to create an umbrella group alongside LIV, authorities are going to look into that too.
True, professional golf has survived antitrust examination before, going all the way back to the 1930s. The last serious threat — an investigation by the Federal Trade Commission during the administration of then-US president Bill Clinton that led to a staff recommendation to take action — died in 1995 under intense pressure from Capitol Hill.
Things are different now. As one observer has said, should Pepsi and Coke undertake a joint venture, we would expect the antitrust folks to be interested. If that sentence makes you wonder how the National Football League and the American Football League got away with their 1966 merger, Congress passed a special antitrust exemption. That is not likely to happen this time around, and not only because we are a long way from the Clinton era. The other reason is the Saudi money in the picture, which is the cause of this week’s outraged commentary suggesting that the PGA has sold whatever is left of its soul.
Which leads to my ethical question: Why is anybody surprised that the PGA decided to go for the money? It is a business, and the televised events are marketed to a small but, ahem, rather exclusive clientele. It is no accident that two of the three companies with the greatest number of sponsorship deals with individual golfers are Rolex and NetJets.
The PGA wants to maximize profit, and it is betting that the outrage will fade and the fans will stay.
Do not get me wrong. I am not saying a company cannot draw any ethical lines. Moreover, I have long taken the view that those in the public eye — including professional athletes — carry a special responsibility to comport themselves in ways we would want others to emulate.
However, the PGA is not irrational to bet that golf fans would keep watching. After all, on the very day the merger was announced, the US Department of State was busy trumpeting “eight decades of partnership” with Saudi Arabia and billions in technology, energy and defense deals.
So when the Los Angeles Times denounced the deal as “a stunning act of hypocrisy unmatched even in the mercenary world of professional sports,” I find myself constrained to disagree. Admitting that they are in it for the money is not hypocrisy. It is the truth.
Stephen Carter, a professor of law at Yale University, is a Bloomberg Opinion columnist. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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