This is Bloomberg Law with June Brusso from Bloomberg Radio. In terms of how did we get to this point and how did we go from a confrontation to now being partners, We just realized that we were better off together than we were fighting or apart.
It was an announcement that shocked and bewildered PGA players and fans alike. After a nearly year long, acrimonious legal battle with Saudi Arabia's Live Golf, seemingly out of the blue, the PGA Tour agreed to merge with Live, combining their golf related business and rights into a new commercial entity, with perhaps a key factor Saudi Arabia's public investment fund investing billions into the new venture. Rory, who's been the loudest critic of Live, said he feels like a sacrificial lamb.
I still hit Live like I hit Live like I. I hope it goes away, and I would fully expect that it does. The PIF were going to keep spending money in golf, at least the PGA turnoy controls how that money is spent, you know, so i'd you know, if you're thinking about some you know, one of the biggest sovereign wealth funds in the world. Would you rather have them as a partner or an enemy? At the end of the day, money talks, and you'd rather have them as a partner.
But a lot of players didn't understand, and after the stunning reversal of positions, PGA Tour Commissioner j Monaghan was called a hypocrite to his face by players in a heated meeting. Monahan told The Golf Channel he understood the criticism.
I understand the criticism I'm receiving around the hypocrisy and me being hypocritical given my commentary and my actions over the last couple of years.
The agreement will resolve the ongoing anti trust litigation between the PGA and Live, but that may not matter to the Justice Department, which has already been investigating the anti trust issues. Joining me is litigator Patrick Louff, founding partner of Luff Law. Patrick. Commissioner Monaghan, in the three M Open last year in Minnesota said, as long as I'm commissioner of the PGA Tour, no player that took live
money will ever play the PGA Tour again. Now, he said, after this announcement, I recognize that people are going to call me a hypocrite, But circumstances do change. What changed?
That is the big question. Certainly, the allegations of the Live Tour and some of the golfers who joined that tour are fairly damning and fairly strong in terms of what the PGA tur is alleged to have done. And so what changed. Perhaps the PGA Tour saw the writing on the wall with respect to the likelihood of success in this antitrust litigation that had been brought by the Live Tour. But then the second question becomes, if that's correct, how does this new entity also avoid scrutiny.
Yeah, so in this announcement with PGA and Live avoided calling their proposed partnership or merger. They called it a joint venture. But Live has spent a year litigating and claiming PGA is a monopoly and use the word monopoly more than forty times in the complaint. So this combination would create an even larger monopoly with more money and more power. So how can they get around that?
Well, it's a very fascinating question. I think that's a question on a lot of attorney's minds right now. One of the things that I find particularly surprising is with two entities with this amount of money power and sophistication. It's certainly been reported that there were no Anti Trust council who were actively involved in the negotiation of this joint venture. More to the point, though, I think the law is fairly clear that it's not going to matter
what they actually call it. For example, if you look at the recent decision in the American Airlines and Jet Blue case, they didn't call their agreement a merger. They called it the Northeast Alliance, in which they had agreed to operate as one fleet in the New York City
and Boston area for most flies. But of course the federal court that was asked to review the Department of Justice's complaint certainly didn't care whether it was called a merger, whether it was called an alliance, or whether it was called a joint venture. The proof is in the putting in terms of what are the actual facts and what of the legal standards that are applied to those facts.
Live Golf has been surrounded by controversy since its launch in twenty twenty eight. Two critics have accused the Sovereign Wealth fun of sportswashing, using live golf to distract from the kingdom's history of human rights violations, and the nine to eleven Families group has slammed the merger. Should those things play any part in or can they play any part in whether the merger goes.
Through in terms of the legal effect, I think the answer is pretty clearly no. But certainly one of the things that renders this particularly fascinating is that it's not simply a run of the mill corporate merger. It's not
simply a run of the mill antitrust case. It is a number of those things, all intertwined with these very large, substantial geopolitical problems or questions I say, that have been going on since the beginning of the strategic alliance between the United States and the Kingdom of Saudi Arabia, going back to eighty years.
What do we know about? What do we know about? What the structure will be? What do we know about this agreement? So far?
We don't know a lot about, at least the granular details, but we do have some interesting insights into the broad structure. It appears as though, in very broad strokes, the PGA Tour will essentially be running the new entity, and the public investment sign of Saudi Arabia is essentially the financial backer, and so there will be this new organization that includes
both PGA Tour Live Tour and the European Professional Golf Association. Now, what's I think very interesting about what has been reported is that the PIF appears to have a forty nine percent interest in this broader entity that has been created, and yet at the same time, the head of the PIF is the chairman of the board of directors this organization. It also appears that the PIF has essentially a right
of first refusal on future investment into this entity. And what that means is that the PIF has a very very very strong role in this future organization, even if the PGA Tour can ultimately say that the PIF is a minority shareholder or a minority interest holder.
I mean, what happens when there are tournaments in Saudi Arabia? Can women attend without having hajiebs on? I mean, has anyone said anything about that.
I'm not sure how that has played out with respect to any events that the Live Tour has hosted, but I think certainly we can look at what happened with the recent World Cup in Qatar, as well as how things would be handled in a potential World Cup in twenty thirty in Saudi Arabia. I think one of the l lessons from the World Cup in Qatar was that despite very vehement promises that were made, at least some
of them appear to have not been upheld. And at the point when the tournament was about to be put on, I think in some sense you could say it became a FATA complete between the International Soccer governing buddy and Qatar, because at that point there was very little strategic ability for FIFA to simply withdraw and choose not to hold
the tournament. And I wonder what sort of mechanisms you can have, or even could ask for that would ensure these sorts of things that Western countries I think are very cognizant of and have criticized Saudi Arabia, Qatar and other Middle Eastern countries for at large.
Let's tie up the antitrust angle. The Justice Department for a year has been investigating possible anti competitive practices of the PGA. So what do you think the chances are that the Justice Department will oppose this on antitrust grounds.
I think it's quite likely it will be a pose. The question is going to be what is the likelihood of success? And I think others have rightly pointed out the devil really will be in the detail. What I can say, though, is that recent successes by the Justice Department in other areas show us that this may be a very very difficult proposition to sell under anti trust law. You have the failure of the American Airlines and Jet
Blue agreement. You have the failure of the Penguin and Simon and Schuster agreement that related only to the market for top selling bestseller books. And I think the Penguin and Simon and Schuster litigation is going to be particularly instructive because you've got a very parallel situation with sort of the top of the pyramid producers and a very
very limited demand from the industry for these services. You've got things like very difficult market entry for other booksellers, for example, to compete for these services of these authors, and ultimately that merger was unsuccessful.
And also the UK's Competition and Market Authority and the EU's Competition Authority will be looking into this, and the EUS is known to be tougher in many circumstances than the.
US unquestionably, and I couldn't agree more. The fact that this appears to be difficult from a US antitrust law perspective suggests to me that it is even less likely to be approved by European competition reviewers.
Let's talk about sponsorships. You know, we haven't heard that much from sponsors. I mean, will sponsors stay with this?
I think they likely will. Again, this is the very interesting question that's swirling around in what I mentioned of the geopolitical question, the legal questions, potentially the ethical questions that are involved. Certainly, what comes to mind is the advertiser's flight from Twitter over the last however many months since Elon Musk took over. And again, what I would really look to as precedent is what did advertisers do
with the World Cup in Qatar? I think ultimately the World Cup had no difficulties finding willing sponsors, and I think here too, you're going to find willing sponsors, particularly because I think it's fair to say the sponsorship generally of professional golf has always been a a more niche
type of sponsorship market. I mean the biggest advertisers in PGA that you see are Rolex and net Jets, So I think it's likely that you won't see any difficult these in finding willing sponsors, and frankly to the extent that you would, my understanding is that the PIF is going to shore up any shortcomings. In fact, I believe it's been reported that the PIF is is going to be the premier sponsor of the new organization.
So then looking at it from that point of view, does it seem like this whole thing came down to money and the vast amounts of money that Saudi Arabia has to pour into things like boff and soccer.
That's exactly right. In fact, I think there's no better proof that that is the case than Rory McElroy's comments yesterday.
And of course Rory McElroy has been very very outspoken, really I say, the poster child of the opposition of the PGA tour against live golf and the quote unquote affection to live golf, and so everyone, I think was rightfully curious to hear what Rory's reaction is going to be when this came out, and what he said was, you know, despite his frankly close to outright hatred of
Live Golf. He thinks that this agreement ultimately is better for the future of golf because of the influx of capital that it brings to the game.
There seems to be hostility between the players who went to Live and the players who stayed with the PGA. Here's what Rory McElroy said.
There still has to be consequences to actions. You know, the people that left the PGA tour rapidly harmed this tour started litigation against it, like we can't just welcome them back in, like that's not going to happen. And I think that was the one thing that Jay was trying to get across yesterdays, like, guys, we're not just going to bring these guys back in and pretend like nothing's happened.
We'll have to wait to see what happens there. But Bloomberg columnist Stephen Carter raised the possibility that there might be lost suits by golfers who believe that they were, you know, hoodwinked by the PGA. They left millions of dollars on the table and didn't join Live Golf because of what the PGA had said.
I think the lawsuits themselves are very likely the probability of success, it's a more difficult case. But what I will say is one of the things that's going to be very important for this new entity, even in order to bolster its anti trust defense, is going to be
that this is better for individual golfers. And this is why it's so important to see how the ultimate agreement look in the future, both with respect to how the entity will relate to sponsors, how the entity will relate to host golf courses, and of course, how the entity is going to relate to these golfers themselves, because if it turns out that Tiger Woods, being a very good example, Rory Nakelroy or any others are not significantly improved in
terms of their earnings, that's problematic both individually and it's problematic from an anti trust perspective.
I know that you thought this was the likely endgame for live golf from the beginning. Tell us why.
I don't think that the LED Tour ultimately thought that they were going to have a free standing golf tour. I think it's probable that it would work for a time, but I really do think that they saw they had a very strong claim against a PGA tour for the
anti trust allegations that they've made. In fact, if you actually look at their complaints, one of the things that they used in support of their claims is that they didn't frankly see that the entity was sustainable long term, and that was precisely why this antitrust scrutiny was important. And so really I think it was leveraging the strengths of the anti trust plans that they had, along with the financial wherewithal that they could bring to the table that really resulted in this agreement.
And now we'll wait to see if any regulatory authorities in the US, the UK, or the EU try to stop the merger. Thanks so much, Patrick. That's Patrick Luff, founding partner of Luff Law. And that's it for this edition of The Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify and at www dot Bloomberg dot com, slash podcast Slash Law, and remember to tune into The Bloomberg Law Show every weeknight
at ten pm Wall Street Time. I'm June Grosso and you're listening to Bloomberg,