Steve Helber/AP Photo
PGA Tour Commissioner Jay Monahan listens to a question during a press conference at East Lake Golf Club, August 24, 2022, in Atlanta.
This story is part of a Prospect series called Rollups, looking at obscure markets that have been rolled up by under-the-radar monopolies. If you know of a rollup like this, contact us at rollups(at)prospect.org.
“Have you ever had to apologize for being a member of the PGA Tour?” asked the league’s commissioner Jay Monahan last summer, referring to golfers who left for the LIV Golf tour, backed with Saudi money and endlessly criticized by 9/11 families as a “sportswashing” disgrace. Monahan referred to members of 9/11 families whom he knew, framing any golfer who would even consider taking Saudi cash as a terrorist sympathizer.
Only a few high-profile golfers (Phil Mickelson; this year’s PGA Championship winner Brooks Koepka) ever took the nine-figure deals to join the LIV tour. The ratings were so bad for LIV they stopped reporting them, and the tour’s bleak future was simply a matter of how much of the kingdom’s oil fortune was willing to be burned for the privilege. But the PGA, it turned out, didn’t want to fend off a competitor if it meant losing out on some of those millions.
Monahan’s PGA merged with LIV this week. The Saudi Public Investment Fund “will make a capital investment” into the merged organization; that was probably all it took. Yasir Al-Rumayyan, the governor of the Public Investment Fund and the chair of state-run oil company Aramco, will become the PGA’s chairman. Monahan gets to stay as CEO.
The announcement ends antitrust litigation that both leagues had been carrying against one another, but the merger (which also incorporates the DP World Tour, the PGA’s European counterpart) clearly creates a monopoly on major golf tournaments, after a modicum of competition.
On a broader level, this move highlights the rollup of sports leagues, which have gone fairly unchallenged since a flurry of competition in the 1960s and ’70s, until the AFL merged with the NFL, the NBA swallowed up the ABA, and the NHL took over the World Hockey Association. The upstart USFL won an antitrust case in the early 1980s against the NFL but received just $3 in compensation and quickly folded. One of that league’s high-profile owners, a real estate developer named Donald Trump, is just about the only person in America who’s happy about the PGA/LIV deal. (LIV events were held at Trump properties.)
The USFL returned last year to nearly no fanfare. If you play sports at a high level, there’s usually only one place for you to go for fair compensation and top-level competition. Maybe that makes sense; maybe sports leagues are natural monopolies, preferable to fractured leagues where the best don’t play the best. But this dynamic routinely facilitates numerous forms of abuse, of athletes, of fans, and of taxpayers. The PGA/LIV merger, which is so particularly brazen, could be a case of sports monopolies going too far.
THE IDEA OF A SINGLE LEAGUE for individual sports is so ingrained that Major League Baseball actually has held an antitrust exemption since 1922. That ruling held players in a state of practical indentured servitude until free agency finally broke through in the 1970s, and the exemption is still challenged today. Conservative lawmakers threatened it after the league pulled the All-Star Game from Georgia in 2021 in response to a state voting rights law, and more recently Rep. Barbara Lee (D-CA) questioned it after her hometown of Oakland risked losing the A’s to Las Vegas.
A sports franchise is seen as bestowing world-class status on cities, and because the leagues are effective monopolies, wealthy team owners can easily dangle relocation in what can become an extortion attempt. Though MLB Commissioner Rob Manfred told the Senate Judiciary Committee last year that the antitrust exemption prevents relocation by maintaining tight connections to communities, the Las Vegas scenario, where the A’s are asking for $380 million in public funding to build a stadium after Oakland rejected a proposal for a new stadium that would have emptied its coffers, makes a mockery of that claim.
Other leagues don’t have specific antitrust waivers, but similar dynamics of sticking up cities for stadium construction persist, often pitting them against one another. The minor league systems in baseball have seen chaos lately, with MLB eliminating 40 franchises in 2020 and subjecting minor-league players to poverty-level wages. This led to a successful unionization effort that did raise wages for minor leaguers.
Steven Paston/Press Association via AP Images
Phil Mickelson, who refused to confirm or deny if he had been banned or suspended by the PGA Tour for his involvement in the controversial Saudi-backed LIV Golf Invitational Series
The PGA/LIV situation is even more brazen, as the American Economic Liberties Project’s Katherine Van Dyck put it in a statement. The Saudi play for positive publicity created a small sliver of competition for top-level talent in the sport. Oil revenues gave the kingdom virtually unlimited prize money for its tournaments, which the PGA struggled to match. But the PGA threatened any golfer who joined LIV with a ban from its events (that didn’t really hold, with Koepka winning the PGA Championship last month).
With the merger, that prize money could plummet back to Earth if there’s less need to entice golfers away from one tour or another. Meanwhile, corporate sponsorships and broadcast rights could increase in price with a monopoly provider of golf tournaments. That could filter to fans, if tournaments were relegated to pay-for-play streaming services. Players who try to compete on a different tour could be locked out of top events. Monahan wasn’t shy about the implications of combining with LIV; he said specifically that the merger would “take the competitor off the board.”
You would think that someone would have explained to Monahan that such statements were unwise for a deal that needs to survive merger review. But Bloomberg has reported that the PGA and LIV had no antitrust lawyers consult on the deal, and that they don’t expect their “joint venture” to provoke antitrust scrutiny.
Meanwhile, the PGA, which in its new form clearly exists for the benefit of Saudi Arabia’s efforts to deflect attention from its ghastly human rights record, is actually tax-exempt, something that Congress has begun to attack. The Senate Finance Committee has also announced an investigation of the merger, and the Justice Department is conducting an investigation, which could lead to a lawsuit blocking the deal.
“Unless Congress grants this new venture some sort of antitrust exemption, there is no way this deal would survive legal scrutiny,” Van Dyck said in her statement. “Antitrust enforcers in the United States, Europe, and the UK have a clear path to block it.”
BUT THE MONOPOLY PROBLEM DOESN’T END with a few golf executives bending the knee to the Saudis. The pattern of sports leagues and organizations using their dominance to suppress wages and destroy rivals is becoming too big to ignore. The Ultimate Fighting Championship has been sued by a group of mixed martial arts fighters for this kind of conduct after merging with its chief rival; a similar complaint against World Wrestling Entertainment alleges that the wrestling giant sought to block cable and streaming deals for a competing league.
Competitive swimmers have brought a lawsuit against the sport’s governing body over their being blocked from participating in a new swim league. That case was dismissed in January, but a case against the International Skating Union, which threatened to suppress participation for speed skaters, led to a judgment against the union by the European Commission’s competition agency. There have been perpetual cases against the governing bodies for world soccer.
This is pretty endless. Sports leagues have leveraged their monopoly power to both maintain their dominant position and ensure that owners maximize their share of the profits. The PGA/LIV case is somewhat unusual given that it involves a nation trying to whitewash its image, but in general this is how sports monopolists operate. The outrage over Saudi involvement in the PGA situation, however, could make the contradictions of tolerating monopoly elsewhere in the sports world harder to reconcile.
