Battle for the Players: Golf’s Complex Antitrust Case

Professional golf is experiencing the most dramatic period of its long history. While this may appear to be a hyperbolic statement, an alternative professional golf league, once thought to be a fleeting idea in the 90s, became a reality last year. The presence of this alternative league is forcing players to take sides, state allegiances, and force the PGA Tour (“TOUR”) to re-evaluate its payment and employment structure. 

 On August 3^rd, 2022, eleven professional golfers, including well-known players Phil Mickelson and Bryson Dechambeau, filed an antitrust lawsuit in the U.S. District Court in the Northern District of California against the TOUR. The lawsuit came after the TOUR suspended several players due to their involvement with LIV Golf (“LIV”), a Saudi-backed league created in October 2021 that has gained significant momentum over the past year.

 The players allege five claims for relief in the complaint, including: unlawful monopolization of the market for ELITE GOLF EVENT SERVICES in violation of Sherman Act § 2 (15 U.S.C. § 2), unlawful restraint of trade in violation of Sherman Act § 1 (15 U.S.C. § 1) [Group Boycott], unlawful agreement to restrain trade in violation of the Cartwright Act (Cal. Bus. & Prof. Code §§ 16720(a), 16726) [Group Boycott], and breach of contract. The Plaintiffs sought a declaratory judgment that the Tour’s suspensions of the players violated their right to fair procedure.

 The players also alleged in the complaint that the TOUR’s restrictive policies attempt to “choke” the supply of professional golfers to LIV, thus limiting LIV’s ability to compete with the TOUR. Additionally, LIV Golf alleges that the TOUR’s regulations and “unilateral and conspiratorial threats of punishment have scared off a large majority of elite players as well as the pipeline of future elite players” and that the TOUR’s tactics forced LIV Golf to “offer supra competitive compensation well above the levels that would prevail in a market not polluted by the TOUR’s anticompetitive conduct.” Moreover, the players allege that the TOUR ceased competing with the European Tour for players’ services and instead formed an “illegal” alliance to engage in a group boycott in an effort to eliminate new competition for players’ services.

 For context, a player who has full status (eligibility to play in tournaments) remains at liberty to choose the tournaments in which they play. Historically, the TOUR and European Tour schedules conflicted, causing players who have status on both to choose between tournaments. The TOUR maintained strict rules against playing in other events that occur during the season. Allowing only three exemptions a year, the TOUR commissioner maintained complete discretion to decide whether players may forego a certain event. However, Jay Monahan, current TOUR Commissioner, used a different approach to restrict players from competing in LIV Golf events.

 In May 2021, more than ten TOUR pros received offers between $30M and $50M to join LIV Golf. In response to LIV Golf league’s momentous gain, the PGA TOUR announced a 16 percent increase in the 2022 season-long purse from $367 million to $427 million. Additionally, Commissioner Monahan provided a stern response that defectors might face lifetime expulsion from the TOUR.

 The parties have since amended their initial complaint to add LIV Golf as a plaintiff; however, the majority of players, including Phil Mickelson, dropped out of the lawsuit. At this point, only three players remain, Bryson DeChambeau, Matt Jones, and Peter Uihlein. The amended complaint states that the TOUR is “an entrenched monopolist with a vice-grip on professional golf,” and that it violated federal antitrust laws in its efforts, “to crush nascent competition before it threatens the Tour’s monopoly.” LIV contends the court must intervene and address the TOUR’s alleged actions and its regulations because “facing headwinds of this nature is not sustainable.”

On September 28^th, the PGA TOUR filed a single count counterclaim denying violating federal antitrust laws and stated that LIV Golf officials persuaded players to violate their contracts with the TOUR, dangling lucrative offers and then imposing “onerous” restrictions on players who decided to join the LIV Golf tour.

The PGA TOUR continues to argue its rules are not anti-competitive, arguing that its limitations on participating in unsanctioned tournaments and obligations to safeguard the TOUR's image “provide substantial benefits to tournament sponsors, title sponsors, broadcasters, local host organizers, and ultimately, the players." Additionally, the TOUR argues that its actions provide no injury to LIV or the players because LIV, "succeeded in attracting numerous elite professional golfers," with a full season planned for 2023 and the costs of PGA Tour suspensions baked into "LIV's exorbitant signing bonuses, making the Player Plaintiffs whole."

The TOUR scored an early victory in the case when U.S. District Judge Beth Labson Freeman denied a bid by three golfers seeking to compete in the FedEx Cup playoffs. Taylor Gooch, Matt Jones, and Hudson Swafford sought a temporary restraining order from the court, but the judge denied the request on August 9^th, stating the golfers had not suffered “irreparable harm” by joining LIV and that they stand to earn more money by competing in the LIV Golf Series.

Simultaneously, the Department of Justice is executing a separate antitrust investigation into whether the TOUR engaged in anticompetitive behavior towards LIV Golf. It was reported in July that players’ agents received inquiries from the DOJ, and on October 26^th, famed golf course Augusta National, the USGA, and PGA of America were added to the investigation.   

The TOUR remains confident they will be triumphant. Legal analysts theorize that the case promises to be long and nuanced and that LIV Golf and its players may face an uphill battle to prove claims that the PGA TOUR’s actions were intentionally harmful to LIV Golf and not simply supporting the TOUR’s own interests.

The question remains unanswered as the summary judgment hearing is set for July 2023, and the trial is scheduled to begin in January 2024. Until then, new developments are reported regularly.

This article was last updated on October 27^th, 2022, new updates may have occurred.

Mariana Sims is a 2L at Wake Forest School of Law, a staff member of the Journal of Business and Intellectual Property, and Vice President of Wake Forest’s Black Law Student’s Association. Prior to law school, Mariana worked for five years in sports marketing in New York City, consulting clients on various sports partnerships including the NFL, USGA, and PGA TOUR.  Additionally, Mariana played Division I Golf at Wake Forest University.