PGA Tour, LIV Golf merger creates confusion
watch now
The proposed merger between the PGA Tour and its Saudi-funded rival LIV Golf stunned everyone from golfers to Wall Street bankers this week – leaving many with questions about what the merger could mean. The deal was announced following months of feuding and antitrust lawsuits between the two leagues. The agreement would end all pending litigation. related investing news PGA-LIV merger to lift golf to 'new heights,' benefiting these two stocks, Jefferies says PGA Tour Commissioner Jay Monahan told CNBC's "Squawk on the Street" on Tuesday that while there has been a lot of "tensions" between the two organizations, the deal was a benefit to the game of golf. Despite those tensions being settled between the tour and LIV, they could be relevant when regulators comb over the deal. "The commissioner's statement that this is necessary to end all this tension leaves the question of what do we mean when we say tension? That could be from a competition angle, which is a good thing for pricing and consumers," said Henry Hauser, a former FTC lawyer and currently an antitrust attorney at Perkins Coie. "It can also mean tension in the sense of a distraction." While the two organizations were feuding, golfers were divided between the PGA Tour and LIV. Some left for the hefty paychecks being doled out by LIV, even as they lost their endorsements. Others turned down big paydays to stay with the tour. Monahan has been outspoken in the past, saying he believed players would face "significant implications" for going to LIV. On Tuesday, he said he expected to be called a hypocrite and accepts the criticism. Since the announcement, several players have voiced their frustration with the deal. Sponsors, likewise, have been slow to make statements or decisions, likely waiting to see how the deal is structured and the regulatory process goes, according to two sponsors close to the tour. Aside from the lawsuits, LIV Golf has been surrounded by controversy and criticism since its launch in 2022. Backed by the Saudi Arabia Public Investment Fund – an entity controlled by the Saudi crown prince – critics have accused the sovereign wealth fund of "sportswashing" by using LIV Golf to distract from the kingdom's history of human rights violations.
Antitrust concerns
Lawsuits rolled out from both sides last year as LIV aggressively lured high profile players, including Phil Mickelson and Bryson DeChambeau, away from the tour for big paychecks. In response the tour had increased its prizes and player benefits, as well as secured loyalty agreements from its top players as it tried to prevent further poaching. Both leagues had claimed that the other's contracts and policies restricted golf talent and stifled proper competition. LIV Golf sued the tour, also citing anti-competitive practices for banning its players. The PGA Tour countersued. The proposed deal, which includes Europe's DP World Tour, puts an end to all of the fighting – in and out of court. While Public Investment Fund Governor Yasir Al-Rumayyan said he expected the deal to be finalized in a matter of weeks, some question how quickly it'll bypass U.S. regulatory agencies like the Federal Trade Commission and the Justice Department.
watch now
"Anything that happened before this announcement is still actionable," said Hauser, noting the DOJ could still look into these claims outside of the merger process. "You can't use a settlement as a masquerade." Hauser noted that while it's always preferred to keep matters out of the courtroom, settlements themselves are bound by antitrust laws – "especially if there's a legitimate legal dispute between the entities." Although the deal could close relatively quickly without requiring regulatory approval, lawmakers could raise issues afterward. This happened recently when the Justice Department ordered the end of American Airlines and JetBlue Airways alliance, saying the merger would hurt consumers by driving up fares. American Airlines plans to appeal the ruling. The new entities need to show that the merger is to the benefit of consumers, especially on a global basis, by bringing the best talent together under one umbrella and expanding the reach of the game, said Timothy Derdenger, an assistant professor of marketing and strategy at Carnegie Mellon University's Tepper School of Business. "If the deal will be able to show it supports the growing purses for the golfers, and lead to more engagement and innovation to golf, which adds value to viewers, I don't see much of a fight coming from the U.S. government," Derdenger said.
Sponsorships and the Saudis
Source: CNBC
