What does the PGA Tour and SSG investment mean for golf fans?

Virtually all of the best players in the world will be competing this weekend, including Scottie Scheffler, Jon Rahm, Rory McIlroy, Viktor Hovland and Brooks Koepka. The problem for golf fans is that they aren’t near each other. The PGA Tour will be held at the AT&T Pebble Beach Pro-Am in California, while the LIV Golf, a Saudi-funded breakaway tour that includes Rahm and Koepka, will be held in Mayakoba, Mexico. And thanks to the Justice Department’s continued interest in professional golf, the tour could remain divided until 2026.

As it stands, the entire collection of the world’s greatest players only come together four times a year at major tournaments, assuming the LIV’s best players qualify. The PGA Tour also announced Wednesday an outside investment from a consortium of professional sports team owners. sports groups) will do nothing to change that.

Broadly speaking, SSG’s investment in the PGA Tour means players who remain loyal to the tour will become even richer. The tour itself has been given an injection of cash to support a significant increase in funding since Saudi-funded LIV Golf entered the scene two years ago.

But SSG’s investment won’t bridge the gap between the two tours. The release promoting SSG’s investment does not mention the status of negotiations between the PGA Tour and LIV’s financial backer, the Saudi Public Investment Fund, except for one cryptic sentence. [Wednesday] Co-investments from public investment funds will be possible in the future, subject to all necessary regulatory approvals. ”

It is this issue of “all regulatory approvals” that prevents the PGA Tour and PIF’s agreement, announced in June, from becoming a reality any time soon. The Justice Department’s Antitrust Division has been keeping an eye on the world of professional golf for several years, ever since LIV players filed a lawsuit alleging the tour has a monopoly, and has been keeping tabs on a potential agreement between the two organizations. The news didn’t dampen that interest.

“The PGA must demonstrate that there are greater promotional benefits for professional golf than would have been obtained without this merger.” [of Tour and PIF interests]” said Henry Hauser, an antitrust attorney at Perkins Coy in Denver and a former trial attorney in the Justice Department’s Antitrust Division. “They have to prove that the good things that come out of this merger can only come from this merger.”

This new PGA Tour and SSG investment involves two aspects: business concerns and regulatory concerns, Hauser said. From a business perspective, SSG’s investment will allow the PGA Tour to reduce its potential dependence on Saudi funding for future contracts.

“With the cash injection, the PGA [Tour] “This is a viable alternative in the event that the LIV transaction does not receive approval or fails,” Hauser said. “It also gives LIV leverage in any conditions. [The PIF] You either have less control over the combined company, or you get the same control but have to pay more. ”

The regulatory aspects of the SSG investment and the future of the PGA Tour are a bit murky, primarily because the Tour’s agreement with PIF has not yet been finalized. When the two organizations announced in June their intention to form a new body to regulate men’s professional golf, they set themselves a deadline of Dec. 31, 2023, but only acknowledged that negotiations are still ongoing. And that passed quickly. in progress. No timetable has been set for the agreement at this time.

The announcement of the agreement and the regulatory filing “starts various statutory clocks,” Hauser said. “The Department of Justice requests information, the parties provide information, and the Department of Justice requests information. [then] It takes 60 to 90 days to clear the transaction or block the transaction. ”

Hauser believes it is unlikely that the Justice Department will simply deny approval of the merger without further scrutiny. “Agencies are reluctant to object.” [controversial] “Even if there is a guarantee from the parties, this administration will agree to it,” he added. “It’s not impossible, but I would be pretty surprised if something worked out with the parties without some safeguards in place.”

How long will the investigation take? Long enough that players may not share non-major fairways and greens until the 2026 season.

“In the case of a merger, you can reasonably expect to get an answer within 18 months,” Hauser said. “Mergers tend to happen most quickly.” [investigations]. Courts and government agencies recognize that if a merger stalls, it can negatively impact both parties. It depends on when the Justice Department files the case, but once it’s filed, we don’t expect it to take more than a year. ”

Hauser noted that the Biden administration has taken an “aggressive approach, especially when it comes to harm to the labor market.” Hauser acknowledged that professional golfers are not vulnerable workers like, say, “steelworkers or nurses,” but the relative economic status of the workers (which obviously includes millionaire golfers) Even with this in mind, the Justice Department’s actions were not stopped.