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As LIV Golf and PGA Tour attempt to finalise a merger, the impact on sports entertainment and conditions for players will raise regulatory questions on both side of the Atlantic – but the outcome of US and EU merger scrutiny may differ.
ADVERTISEMENTA landmark tie-up between the world’s largest golf competitions could prove an early test for different handling of merger control between the new regime of President-elect Donald Trump and the European Commission.In June 2023, PGA Tour, the largest golf tour in the world, and LIV Golf, which entered the market in 2022 and is financed by Public Investment Fund of Saudi Arabia (PIF), announced an agreement to combine their assets through a new entity that will “unify the game of golf, on a global basis”.At the time the announcement came as a surprise, since both professional golf tours had been battling, with 11 LIV Golf players challenging their suspensions by the PGA Tour for defecting to the Saudi-backed circuit with an antitrust suit. The agreement saw the rivals bury the hatchet with a plan to grow their “combined commercial businesses” and “drive greater fan engagement.”Discussions remain ongoing and the parties need to find a formula for compensating the players who stayed loyal to the PGA, though an investment deal appears to be nearing completion.If the parties get the deal over the line financially, the tie-up would come onto the radar of competition enforcers on both side of the Atlantic given the impact such a merger might have on the golf tour market.“It would reduce an already concentrated space from being dominated by two firms to just one. And LIV Golf is known as a disruptive competitor,” Asfand Gulzar, a Senior Associate at Fieldfisher law firm, told Euronews, adding that “if the merger is confirmed, the European Commission [the EU antitrust enforcer] will look at the market power of the new entity, innovation being probably one of the key factors that it will look at.”LIV Golf is known as a disruptive competitor on the golf tour market and has introduced shorter 54 hole-competitions instead of 72 holes, in an attempt to broaden the game’s fan base, as well as shotgun starts during which players tee off simultaneously from different holes.The competitive dynamic between the rival organisations has also benefited players. LIV introduced retainers for elite players ensuring upfront payments for tournaments whether they win or lose. Traditionally players, who must pay high entry fees to the major tournaments, rely on sponsorship.Tournament prize pots have also been raised. “LIV Golf put on several different tournaments, each with a $25 million prize pool. This rivalry appears to have encouraged the PGA Tour to raise its own prize money,” according to Gulzar.Broadcasters are also key market stakeholders. “The Commission will likely examine whether the merger could result in higher costs for broadcasters, which might then lead to increased prices for fans to access events and content,” Gulzar said.All this could weigh heavily in any Commission consideration of the deal, which would focus on consumer impact.Whether US authorities would take a similar approach remains to be seen. Last year the Wall Street Journal reported that the US Justice Department would review the PGA Tour’s plan to merge LIV Golf to determine if it violates antitrust law, citing people familiar with the matter. “We are confident that once all stakeholders learn more about how the PGA Tour will lead this new venture, they will understand how it benefits our players, fans, and sport while protecting the American institution of golf,” the US-based circuit said in a statement at the time.Recently, Trump appointed Gail Slater, an economic adviser to US vice president-elect JD Vance, to lead the Department of Justice’s antitrust division, opening a new era for US competition authorities under Republican leadership.Trump also has a close relationship with LIV Golf, with several of the group’s 54-hole events being staged at Trump-owned courses. On the eve of the US presidential election, he came out in favour of the merger. “It would take me the better part of 15 minutes to get that deal done,” Trump said in a Podcast, adding: “I do think we should have one tour, and they should have the best players in that tour.” “If they want to clear the deal, US enforcers can adopt a broad definition of the relevant market, on the basis of which competition is assessed,” one lawyer told Euronews on condition of anonymity, adding that “there is no basis for subdividing market by type of sport, either in relation to broadcasting, or any other relevant parameter”.ADVERTISEMENTIf the market assessed were to include all sports, the combined entity of LIV Golf and the PGA Tour would compete not only within golf, but also with other organisations of football, basketball or for instance tennis. The negative effect of the merged entity on competition would be less pronounced.Another lawyer speaking on condition of anonymity deems that “even with a broader market definition, factors like the uniqueness of golf sponsorships, media rights, and athlete opportunities could justify a more nuanced analysis by the European Commission” based on narrower sub-markets.If the golf merger progresses this year, it could be a key early test for how a Trump administration might adopt a different approach to mergers from the Commission.
