Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: In terms of how did we get to this point
Speaker 1: and how did we go from a confrontation to now
Speaker 1: being partners, We just realized that we were better off
Speaker 1: together than we were fighting or apart.
Speaker 2: It was an announcement that shocked and bewildered PGA players
Speaker 2: and fans alike. After a nearly year long, acrimonious legal
Speaker 2: battle with Saudi Arabia's Live Golf, seemingly out of the blue,
Speaker 2: the PGA Tour agreed to merge with Live, combining their
Speaker 2: golf related business and rights into a new commercial entity,
Speaker 2: with perhaps a key factor Saudi Arabia's public investment fund
Speaker 2: investing billions into the new venture. Rory, who's been the
Speaker 2: loudest critic of Live, said he feels like a sacrificial lamb.
Speaker 3: I still hit Live like I hit Live like I.
Speaker 3: I hope it goes away, and I would fully expect
Speaker 3: that it does. The PIF were going to keep spending
Speaker 3: money in golf, at least the PGA turnoy controls how
Speaker 3: that money is spent, you know, so i'd you know,
Speaker 3: if you're thinking about some you know, one of the
Speaker 3: biggest sovereign wealth funds in the world. Would you rather
Speaker 3: have them as a partner or an enemy? At the
Speaker 3: end of the day, money talks, and you'd rather have
Speaker 3: them as a partner.
Speaker 2: But a lot of players didn't understand, and after the
Speaker 2: stunning reversal of positions, PGA Tour Commissioner j Monaghan was
Speaker 2: called a hypocrite to his face by players in a
Speaker 2: heated meeting. Monahan told The Golf Channel he understood the criticism.
Speaker 1: I understand the criticism I'm receiving around the hypocrisy and
Speaker 1: me being hypocritical given my commentary and my actions over
Speaker 1: the last couple of years.
Speaker 2: The agreement will resolve the ongoing anti trust litigation between
Speaker 2: the PGA and Live, but that may not matter to
Speaker 2: the Justice Department, which has already been investigating the anti
Speaker 2: trust issues. Joining me is litigator Patrick Louff, founding partner
Speaker 2: of Luff Law. Patrick. Commissioner Monaghan, in the three M
Speaker 2: Open last year in Minnesota said, as long as I'm
Speaker 2: commissioner of the PGA Tour, no player that took live
Speaker 2: money will ever play the PGA Tour again. Now, he said,
Speaker 2: after this announcement, I recognize that people are going to
Speaker 2: call me a hypocrite, But circumstances do change. What changed?
Speaker 4: That is the big question. Certainly, the allegations of the
Speaker 4: Live Tour and some of the golfers who joined that
Speaker 4: tour are fairly damning and fairly strong in terms of
Speaker 4: what the PGA tur is alleged to have done. And
Speaker 4: so what changed. Perhaps the PGA Tour saw the writing
Speaker 4: on the wall with respect to the likelihood of success
Speaker 4: in this antitrust litigation that had been brought by the
Speaker 4: Live Tour. But then the second question becomes, if that's correct,
Speaker 4: how does this new entity also avoid scrutiny.
Speaker 2: Yeah, so in this announcement with PGA and Live avoided
Speaker 2: calling their proposed partnership or merger. They called it a
Speaker 2: joint venture. But Live has spent a year litigating and
Speaker 2: claiming PGA is a monopoly and use the word monopoly
Speaker 2: more than forty times in the complaint. So this combination
Speaker 2: would create an even larger monopoly with more money and
Speaker 2: more power. So how can they get around that?
Speaker 4: Well, it's a very fascinating question. I think that's a
Speaker 4: question on a lot of attorney's minds right now. One
Speaker 4: of the things that I find particularly surprising is with
Speaker 4: two entities with this amount of money power and sophistication.
Speaker 4: It's certainly been reported that there were no Anti Trust
Speaker 4: council who were actively involved in the negotiation of this
Speaker 4: joint venture. More to the point, though, I think the
Speaker 4: law is fairly clear that it's not going to matter
Speaker 4: what they actually call it. For example, if you look
Speaker 4: at the recent decision in the American Airlines and Jet
Speaker 4: Blue case, they didn't call their agreement a merger. They
Speaker 4: called it the Northeast Alliance, in which they had agreed
Speaker 4: to operate as one fleet in the New York City
Speaker 4: and Boston area for most flies. But of course the
Speaker 4: federal court that was asked to review the Department of
Speaker 4: Justice's complaint certainly didn't care whether it was called a merger,
Speaker 4: whether it was called an alliance, or whether it was
Speaker 4: called a joint venture. The proof is in the putting
Speaker 4: in terms of what are the actual facts and what
Speaker 4: of the legal standards that are applied to those facts.
Speaker 2: Live Golf has been surrounded by controversy since its launch
Speaker 2: in twenty twenty eight. Two critics have accused the Sovereign
Speaker 2: Wealth fun of sportswashing, using live golf to distract from
Speaker 2: the kingdom's history of human rights violations, and the nine
Speaker 2: to eleven Families group has slammed the merger. Should those
Speaker 2: things play any part in or can they play any
Speaker 2: part in whether the merger goes.
Speaker 4: Through in terms of the legal effect, I think the
Speaker 4: answer is pretty clearly no. But certainly one of the
Speaker 4: things that renders this particularly fascinating is that it's not
Speaker 4: simply a run of the mill corporate merger. It's not
Speaker 4: simply a run of the mill antitrust case. It is
Speaker 4: a number of those things, all intertwined with these very large,
Speaker 4: substantial geopolitical problems or questions I say, that have been
Speaker 4: going on since the beginning of the strategic alliance between
Speaker 4: the United States and the Kingdom of Saudi Arabia, going
Speaker 4: back to eighty years.
Speaker 2: What do we know about? What do we know about?
Speaker 2: What the structure will be? What do we know about
Speaker 2: this agreement? So far?
Speaker 4: We don't know a lot about, at least the granular details,
Speaker 4: but we do have some interesting insights into the broad structure.
Speaker 4: It appears as though, in very broad strokes, the PGA
Speaker 4: Tour will essentially be running the new entity, and the
Speaker 4: public investment sign of Saudi Arabia is essentially the financial backer,
Speaker 4: and so there will be this new organization that includes
Speaker 4: both PGA Tour Live Tour and the European Professional Golf Association. Now,
Speaker 4: what's I think very interesting about what has been reported
Speaker 4: is that the PIF appears to have a forty nine
Speaker 4: percent interest in this broader entity that has been created,
Speaker 4: and yet at the same time, the head of the
Speaker 4: PIF is the chairman of the board of directors this organization.
Speaker 4: It also appears that the PIF has essentially a right
Speaker 4: of first refusal on future investment into this entity. And
Speaker 4: what that means is that the PIF has a very
Speaker 4: very very strong role in this future organization, even if
Speaker 4: the PGA Tour can ultimately say that the PIF is
Speaker 4: a minority shareholder or a minority interest holder.
Speaker 2: I mean, what happens when there are tournaments in Saudi Arabia?
Speaker 2: Can women attend without having hajiebs on? I mean, has
Speaker 2: anyone said anything about that.
Speaker 4: I'm not sure how that has played out with respect
Speaker 4: to any events that the Live Tour has hosted, but
Speaker 4: I think certainly we can look at what happened with
Speaker 4: the recent World Cup in Qatar, as well as how
Speaker 4: things would be handled in a potential World Cup in
Speaker 4: twenty thirty in Saudi Arabia. I think one of the
Speaker 4: l lessons from the World Cup in Qatar was that
Speaker 4: despite very vehement promises that were made, at least some
Speaker 4: of them appear to have not been upheld. And at
Speaker 4: the point when the tournament was about to be put on,
Speaker 4: I think in some sense you could say it became
Speaker 4: a FATA complete between the International Soccer governing buddy and Qatar,
Speaker 4: because at that point there was very little strategic ability
Speaker 4: for FIFA to simply withdraw and choose not to hold
Speaker 4: the tournament. And I wonder what sort of mechanisms you
Speaker 4: can have, or even could ask for that would ensure
Speaker 4: these sorts of things that Western countries I think are
Speaker 4: very cognizant of and have criticized Saudi Arabia, Qatar and
Speaker 4: other Middle Eastern countries for at large.
Speaker 2: Let's tie up the antitrust angle. The Justice Department for
Speaker 2: a year has been investigating possible anti competitive practices of
Speaker 2: the PGA. So what do you think the chances are
Speaker 2: that the Justice Department will oppose this on antitrust grounds.
Speaker 4: I think it's quite likely it will be a pose.
Speaker 4: The question is going to be what is the likelihood
Speaker 4: of success? And I think others have rightly pointed out
Speaker 4: the devil really will be in the detail. What I
Speaker 4: can say, though, is that recent successes by the Justice
Speaker 4: Department in other areas show us that this may be
Speaker 4: a very very difficult proposition to sell under anti trust law.
Speaker 4: You have the failure of the American Airlines and Jet
Speaker 4: Blue agreement. You have the failure of the Penguin and
Speaker 4: Simon and Schuster agreement that related only to the market
Speaker 4: for top selling bestseller books. And I think the Penguin
Speaker 4: and Simon and Schuster litigation is going to be particularly
Speaker 4: instructive because you've got a very parallel situation with sort
Speaker 4: of the top of the pyramid producers and a very
Speaker 4: very limited demand from the industry for these services. You've
Speaker 4: got things like very difficult market entry for other booksellers,
Speaker 4: for example, to compete for these services of these authors,
Speaker 4: and ultimately that merger was unsuccessful.
Speaker 2: And also the UK's Competition and Market Authority and the
Speaker 2: EU's Competition Authority will be looking into this, and the
Speaker 2: EUS is known to be tougher in many circumstances than the.
Speaker 4: US unquestionably, and I couldn't agree more. The fact that
Speaker 4: this appears to be difficult from a US antitrust law
Speaker 4: perspective suggests to me that it is even less likely
Speaker 4: to be approved by European competition reviewers.
Speaker 2: Let's talk about sponsorships. You know, we haven't heard that
Speaker 2: much from sponsors. I mean, will sponsors stay with this?
Speaker 4: I think they likely will. Again, this is the very
Speaker 4: interesting question that's swirling around in what I mentioned of
Speaker 4: the geopolitical question, the legal questions, potentially the ethical questions
Speaker 4: that are involved. Certainly, what comes to mind is the
Speaker 4: advertiser's flight from Twitter over the last however many months
Speaker 4: since Elon Musk took over. And again, what I would
Speaker 4: really look to as precedent is what did advertisers do
Speaker 4: with the World Cup in Qatar? I think ultimately the
Speaker 4: World Cup had no difficulties finding willing sponsors, and I
Speaker 4: think here too, you're going to find willing sponsors, particularly
Speaker 4: because I think it's fair to say the sponsorship generally
Speaker 4: of professional golf has always been a a more niche
Speaker 4: type of sponsorship market. I mean the biggest advertisers in
Speaker 4: PGA that you see are Rolex and net Jets, So
Speaker 4: I think it's likely that you won't see any difficult
Speaker 4: these in finding willing sponsors, and frankly to the extent
Speaker 4: that you would, my understanding is that the PIF is
Speaker 4: going to shore up any shortcomings. In fact, I believe
Speaker 4: it's been reported that the PIF is is going to
Speaker 4: be the premier sponsor of the new organization.
Speaker 2: So then looking at it from that point of view,
Speaker 2: does it seem like this whole thing came down to
Speaker 2: money and the vast amounts of money that Saudi Arabia
Speaker 2: has to pour into things like boff and soccer.
Speaker 4: That's exactly right. In fact, I think there's no better
Speaker 4: proof that that is the case than Rory McElroy's comments yesterday.
Speaker 4: And of course Rory McElroy has been very very outspoken,
Speaker 4: really I say, the poster child of the opposition of
Speaker 4: the PGA tour against live golf and the quote unquote
Speaker 4: affection to live golf, and so everyone, I think was
Speaker 4: rightfully curious to hear what Rory's reaction is going to
Speaker 4: be when this came out, and what he said was,
Speaker 4: you know, despite his frankly close to outright hatred of
Speaker 4: Live Golf. He thinks that this agreement ultimately is better
Speaker 4: for the future of golf because of the influx of
Speaker 4: capital that it brings to the game.
Speaker 2: There seems to be hostility between the players who went
Speaker 2: to Live and the players who stayed with the PGA.
Speaker 2: Here's what Rory McElroy said.
Speaker 3: There still has to be consequences to actions. You know,
Speaker 3: the people that left the PGA tour rapidly harmed this
Speaker 3: tour started litigation against it, like we can't just welcome
Speaker 3: them back in, like that's not going to happen. And
Speaker 3: I think that was the one thing that Jay was
Speaker 3: trying to get across yesterdays, like, guys, we're not just
Speaker 3: going to bring these guys back in and pretend like
Speaker 3: nothing's happened.
Speaker 2: We'll have to wait to see what happens there. But
Speaker 2: Bloomberg columnist Stephen Carter raised the possibility that there might
Speaker 2: be lost suits by golfers who believe that they were,
Speaker 2: you know, hoodwinked by the PGA. They left millions of
Speaker 2: dollars on the table and didn't join Live Golf because
Speaker 2: of what the PGA had said.
Speaker 4: I think the lawsuits themselves are very likely the probability
Speaker 4: of success, it's a more difficult case. But what I
Speaker 4: will say is one of the things that's going to
Speaker 4: be very important for this new entity, even in order
Speaker 4: to bolster its anti trust defense, is going to be
Speaker 4: that this is better for individual golfers. And this is
Speaker 4: why it's so important to see how the ultimate agreement
Speaker 4: look in the future, both with respect to how the
Speaker 4: entity will relate to sponsors, how the entity will relate
Speaker 4: to host golf courses, and of course, how the entity
Speaker 4: is going to relate to these golfers themselves, because if
Speaker 4: it turns out that Tiger Woods, being a very good example,
Speaker 4: Rory Nakelroy or any others are not significantly improved in
Speaker 4: terms of their earnings, that's problematic both individually and it's
Speaker 4: problematic from an anti trust perspective.
Speaker 2: I know that you thought this was the likely endgame
Speaker 2: for live golf from the beginning. Tell us why.
Speaker 4: I don't think that the LED Tour ultimately thought that
Speaker 4: they were going to have a free standing golf tour.
Speaker 4: I think it's probable that it would work for a time,
Speaker 4: but I really do think that they saw they had
Speaker 4: a very strong claim against a PGA tour for the
Speaker 4: anti trust allegations that they've made. In fact, if you
Speaker 4: actually look at their complaints, one of the things that
Speaker 4: they used in support of their claims is that they
Speaker 4: didn't frankly see that the entity was sustainable long term,
Speaker 4: and that was precisely why this antitrust scrutiny was important.
Speaker 4: And so really I think it was leveraging the strengths
Speaker 4: of the anti trust plans that they had, along with
Speaker 4: the financial wherewithal that they could bring to the table
Speaker 4: that really resulted in this agreement.
Speaker 2: And now we'll wait to see if any regulatory authorities
Speaker 2: in the US, the UK, or the EU try to
Speaker 2: stop the merger. Thanks so much, Patrick. That's Patrick Luff,
Speaker 2: founding partner of Luff Law. And that's it for this
Speaker 2: edition of The Bloomberg Law Show. Remember you can always
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