So when the PGA Tour on Monday announced a, I guess it was originally talked about as a merger with the Public Investment Fund and DP World Tour, which PGA Tour is basically floating right now, I thought, hmm, too coincidental for me coming five days after a story was published in USA Today in which the PGA Tour was basically found to have discouraged a company called Endeavor from investing a billion dollars into Liv Golf. And I thought, well, that's not good with a antitrust lawsuit in the offing from Liv at the PGA Tour.
And now we find out that there's been discussions for like seven weeks or whatever. I don't know. But I still don't know if any of this is legal. Dan Lust, conduct detrimental to podcast, sports law attorney, professor at NYU, all things sports law. All right, Dan, is this even legal? We're in my wheelhouse at this point.
I'm so super appreciate the call. We got a couple questions of legality. So I guess let's start with the big one, right? Is this merger, I guess what we'll call it for now.
Is it legal? So let's let's start at square one, right? Liv's shoes, the Peter Liv tour sues the PGA Tour and alleges that the PGA Tour has too much power. So, you know, this is not really so unprecedented. Just go back to the NBA versus the ABA, the USFL versus the NFL.
You go back. It's happened before. And in most instances when it's a fairly well-known upstart, they end up merging in some sense with the incumbent league.
Now, this one is somewhat odd, right? Because this upstart has more money than the incumbent, but we'll talk about that in a minute. Now, once the smoke has cleared, what we see is not just the PGA Tour that allegedly has so much power and the DOJ was already investigating the PGA Tour in terms of their kind of anti-competitive practices. So we don't just emerge with one PGA Tour. We now have a PGA Tour that's essentially three times the size as it was when the DOJ initially investigated, right? Now we have Liv Tour merged in.
We have the European Tour, what is now known as the DP Tour. So this entity at the end of the day is now three times as large as the entity of the DOJ initially investigated. And I would think that's three times the problem. So yeah, I'm not sure that this is going to hold up.
That's definitely not confirmed. Dan Lust, Conduct Detrimental, the podcast. Again, if you are interested in sports and law and the convergence of those two things, it is a must. These guys handle all sorts of topics.
We talked to Daniel Wallach a lot. We had John Nucci on earlier this week, and this is his area of expertise, this dispute, if you will. I think the fascinating thing for me here is when you've got so much money involved and lawsuits already flying around, is there nobody around that says, hey, I'm not so sure that this arrangement is going to meet the smell test, according to the U.S. government?
Well, I guess, I mean, that's the obvious question, right? This, you know, at the end of the day, is this thing going to be legal? But then you have to ask yourself how this deal came to be and why it came to be when it did. So we're dealing with a very expensive lawsuit in the backdrop here, Liv versus PGA, which has been going on probably a separate story, but, you know, PGA has obviously increased their purses.
So PGA is spending a lot more money because of the existence of Liv. So I'm sure this is this is a big deal, a big kind of contemplated merger. I'm sure people are saying there's a risk here that this deal gets shut down. But what has ended right as part of this kind of contemplated merger, that lawsuit has ended, will stop being this level of competition between the two endeavors. So, you know, yeah, there's obviously risk that this thing is going to get shot down, you know, under the Biden administration. I think the DOJ has sued to break up contemplated mergers with like Simon & Schuster Publishing, Spirit Airlines, you know, much smaller entities have faced antitrust scrutiny.
But like you kind of caught between a rock and a hard place. Do you want to continue to litigate this thing, open up your books for everyone to see what's going on inside the PGA tour and spend money exorbitant enough to some legal fees while doing it? Or do you just want to get paid? I think the reported numbers were like three billion from the live end and the lawsuit. So you guys get money, you end the litigation like I think it was kind of a no brainer from from that perspective. Like obviously there's some issues in terms of morals and royalty and getting into bed with it with this. But from a business perspective, if you're going to get paid billions and the lawsuit goes away, that has to be on the table.
Well, it's obviously mutually beneficial. The Public Investment Fund was not getting the bang for their buck with the level of attention that live golf was getting. They were investing all of this money. And the whole reason they were doing it was to gain a foothold in the golf community. And they really weren't. They were still known as way outsiders. Tournaments weren't getting any attention.
And I get all that. So they were looking like, how can we direct all of this money elsewhere to where we do get some return on investment? The PGA Tour wanted the lawsuit to go away and probably both sides wanted the lawsuits to go away. Of course, the Saudis have a lot more money than the PGA Tour tour does. Here's my question, because if both sides want to drop the lawsuit, then they're not suing each other.
Does the U.S. government? So they haven't had a problem with the PGA Tour before. Why do they suddenly now?
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Subscribe to the Ponzi playbook wherever you get your podcasts. I mean, that's what the DOJ essentially exists for, right? They're trying to spot out monopolies. They're trying to protect people.
And I think, Adam, this is the larger point, right? We can talk about living PGA in a bubble, right? Why would the U.S. government want to go after a golf league? They have to protect the consumers.
They have to protect potential employees. So where we go from here type question is like, I don't know, let's say, and we haven't talked about this yet, and I'm sure you talked about it on the show, golfers that have been aggrieved throughout this process, guys like Colin Moore and Cal that were reportedly offered $300 million to Liv or O'Rourke, $500 million or Tiger, $800 million, these crazy numbers. They did not turn down this money in part probably because of Jay Monahan, the commissioner's message, like, we got to stay loyal. We got to survive this threat from Liv. We can't get into bed with the public investment fund. And then, oh, what do you know, Jay Monahan turns around and gets into bed with Liv and the PGA and the Liv tour.
So why are you bringing it up here? What recourse right now do those Colin Moore, cows of the world has agreed to PGA tour golf that didn't take the money? What can they do? There is no competitor for them to go to. It doesn't exist. The European tours now merge, Liv tour, PGA tour. There is no competition in the marketplace at all. So those kind of golfers are kind of just stuck with it, right? They don't really have that much recourse. And that's why the DOJ exists.
That's why the US government looks out for monopolies to protect obviously consumers, but to protect sponsors, employees, independent contractors from one entity having too much market share. So that's why the US government has to look into this. It doesn't matter how, you know, maybe how strong the PGA tours lobbying efforts are and stuff like that.
Like they have to look into this. I'm just not sure who the agreement parties are now, except for the players that could have gotten more money, but chose to be loyal to the PGA tour, but they're ultimately going to make out on the end because the Saudis are investing about $3 billion into professional golf in the United States and in Europe. So I, again, I don't even know who the agreed parties are, but all I know is professional golfers are going to be making no offense, but a lot more money than they deserve because it's clear. It's clear to me anyway, that the PGA tour really couldn't fund what they had set up in response to the Saudis.
The sponsors could not fund what the PGA tour wanted. And so the Saudis who have unlimited money, they're going to help professional golf fund all of it. And you know what?
That might be gross to a lot of people, but I think that's what's about to happen. Is there a better way of looking at it than that, Dan? No, I think you just, you kind of hit the nail on the head. Like we're talking and we spent a lot of time in our show the last couple of weeks and months talking about the Washington commanders NFL sale. And that's, you know, there's a handful of people in the United States and you talk about the Phoenix Sun sale or the Denver Bronco sale, a handful of people that have $4 billion or $6 billion, like it's, it's huge money. Then we're talking about like the live tour and we're talking about like tens of billions of dollars. And we're talking about tens of billions of dollars. And we're talking about like tens of billions of dollars that were invested into this league that had no chance of success just to get into the United States market in terms of sports. Now, now the live money controls the PGA, right? Controls the PGA tour. So, you know, I think where we go from here again, like, is this a sign of things to come? Like obviously the soccer world, um, is, is rife with kind of, uh, you know, tip money. Um, do we have the public investment fund that tries to buy an NFL team? Like, you know, what, what is next? Right.
PIF has some level of involvement with WWE, you know, formula one. Um, but let's see, right. I don't think we can rule it out with respect to our four major pro sports, the NFL, major league baseball, NHL, it's all an arms race.
So you can have the most money. And, you know, I think this is kind of the Pandora's box. So yeah, it's, whether it's good or bad, it's, it's here. Yeah.
I mean, everybody's complicit in it. And I know, I think in the NBA, the rules have changed to allow for like 30%, up to 30% ownership by wealth funds. So, uh, coming to a, an NBA or an NHL event down the road franchise near you, Dan lust conduct, detrimental the podcast. You can follow him on Twitter at sports law lust. That's a great Twitter handle by the way, Dan, I appreciate your time. Uh, have a good one. I'll talk to you soon. Appreciate it anytime.
Whisper: medium.en / 2023-06-09 17:45:38 / 2023-06-09 17:50:39 / 5