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“LIV” and Let Live

The first major collision between the Professional Golf Association (“PGA”) and Saudi – owned LIV Golf (“LIV”) is unfolding in Augusta as we are graced by a trifecta of Easter Weekend, commercial – free Masters’ coverage and a full moon in Georgia. Eighteen of the LIV faithful including Phil Mickelson, Brooks Koepka, Sergio Garcia, Dustin Johnson and Bryson DeChambeau  are all invited to play even though they may not be eligible next year.

In a recent April 4 Wall Street Journal article, “The Masters Is Feeling The Shockwaves of LIV Golf” by Andrew Beaton and Louise Radnofsky, the authors explore how the PGA is handling the slow elimination of former marquee players like Paul Casey who was 25th ranked in 2022 but has fallen to 108 and will not attend the Masters. The rules for getting a chance at a Green Jacket in 2023 are meant to turn down the volume on the competition between the leagues. For example, former winners like Mickelson, Sergio and Dustin Johnson got invited. Other LIV players like DeChambeau qualified due to a US Open win in the last 5 years. Other players like Cam Smith are just so good the new rules could not keep them out. Here is a chart from the Wall Street Journal article showing the changes in world rankings:

It turns out that performance on the LIV Golf Tour does not count under the world ranking system employed by the PGA. The Official World Golf Ranking (“OWGR”) is a ranking system for male professional golfers that is sanctioned by four major golfing organizations: the European Tour, the Japan Golf Tour Organization, the PGA Tour, and the PGA Tour of Australasia. Their rankings are calculated weekly based on a golfer’s performance in events over the previous two years, with more recent results weighted more heavily.

PGA Needs an Anti-Trust Exemption Like MLB

The real story here is one that Major League Baseball anticipated when it lobbied Congress in 1922 to give its League an exemption from compliance with US antitrust laws, especially those aimed at breaking up monopolies. If MLB had not seen the future clearly there could be highly competitive Dominican, Cuban, Venezuelan, Japanese and Puerto Rican offshoots. The recent Baseball Classic was a reminder of the universality of baseball talent with the competition resembling an off-year Olympiad more than a spring training diversion.

Lawsuit in California

According to the WSJ article there is litigation by LIV pending in the Northern District of California challenging the monopolization of US markets by The Professional Golf Association. I decided to ask ChatGPT if it could predict the outcome and I learned that it is not in the prediction business. So, I then asked if the MLB antitrust exemption applies to professional golf? Here was the ChatGPT answer:

“No, the antitrust exemption enjoyed by Major League Baseball (MLB) does not apply to professional golf or any other sport outside of MLB. The antitrust exemption that MLB has stems from a series of court rulings and legislation, which created an exception to federal antitrust laws for baseball. This exemption does not extend to other sports leagues, including professional golf. As a result, professional golf is subject to the same antitrust laws and regulations as any other industry in the United States. Any legal claims or antitrust issues related to professional golf will be evaluated based on the specific facts and circumstances of the case, and the relevant antitrust laws that apply.”

The Masters is a showcase for the question of whether The Professional Golf Association through its controlled ranking system is exercising illegal monopoly power by excluding players like Paul Casey who was ranked 25th in the world last year before he defected to LIV Golf.  The case in the federal courts challenging the PGA’s exclusion of LIV Golf players from the PGA Tour is named the “LIV Golf Investments LLC v. PGA Tour Inc.” case. The case was filed in the United States District Court for the Central District of California in February 2021. LIV Golf is alleging that the PGA Tour’s eligibility criteria, which require players to have PGA Tour membership as a condition for participation in certain tournaments, is an unlawful restraint of trade and a violation of federal antitrust laws.

My speculation about the likely progression of that litigation is best served up as a Masters dinner on Tuesday night as the small, but popular, cohort of LIV defectors sit down with PGA loyalists. Scottie Sheffler who won the Masters in 2022 a has the privilege of selecting the meal. It would be quite telling and clear evidence in that pending lawsuit if Scottie ordered Texas barbecue for the PGA regulars but asked  for dietary reasons the LIV Group receive a middle eastern dish like Baba Ganoush.

Maybe at next year’s dinner as the antitrust litigation grinds to a probable settlement the winner will be a LIV GROUP player like Cam Smith and as his Tuesday dinner selection he might demand that all the PGA players will be served a large helping of crow?

The above commentary is for informational purposes only. Not intended as legal or investment advice or a recommendation of any particular security or strategy. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in this commentary reflect subjective judgments based on conditions at the time of writing and are subject to change without notice.


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Rob McCreary

Rob McCreary has more than 40 years of transactional experience as an attorney, investment banker and private equity fund manager, and has spent his career in building entrepreneurial organizations with successful track records. Founder and chairman of CW Industrial Partners (originally CapitalWorks, LLC), he is responsible for developing and maintaining senior relationships with investors and portfolio governance.

This blog represents the views of Rob McCreary and do not reflect those of CW Industrial Partners or its employees. This blog is not intended as investment advice. Any discussion of a specific security is for illustrative purposes only and should not be relied upon as indicative of such security’s current or future value. Readers should consult with their own financial advisors before making an investment decision.