LIV Golf merger may face challenge from US authorities

LIV Golf

• Saudi Arabia plans to merge LIV Golf, the PGA and DP World Tour
• ‘50% chance’ US Justice Department will sue to stop the deal
• Saudi PIF would be sole investor in the new entity

US competition authorities may intervene to prevent Saudi Arabia’s plans for a merger of two golf bodies and its own LIV Golf, under its own direction, industry experts have warned.

Saudi Arabia’s LIV Golf series, backed by millions of dollars from the kingdom’s Public Investment Fund, announced on Tuesday plans to merge with the traditional PGA and DP World Tours.

The breakaway tournament, launched in June 2022, caused a bitter fight within professional golf.

Players participating in the LIV series were forced to surrender memberships of the PGA Tour and DP World Tour – formerly the European Tour – amid increasing threats of litigation from both sides.

• LIV Golf brokers peace deal with global rivals
• LIV Golf players ineligible for PGA Tour membership renewal
• Mickelson and others sue PGA Tour in LIV fight

Experts believe the merger faces plenty of potential challenges. Primarily, these are from US regulatory agencies such as the Justice Department and the Federal Trade Commission.

Tim Wu, President Joe Biden’s former special assistant for competition policy, said that there was a 50 percent chance the Justice Department would sue to stop the deal, Reuters reported on Thursday.

The department was already investigating the PGA Tour over legal action to prevent players making the switch to the $225 million LIV series.

Precedent exists in the shape of publishers Penguin Random House and rival Simon & Schuster, which set off a challenge from the Justice Department over their proposed merger.

“Anything that happened before this announcement is still actionable,” Henry Hauser, a former FTC lawyer and currently an antitrust attorney at Perkins Coie, told CNBC. “You can’t use a settlement as a masquerade.”

There are also issues over sponsorship and advertising deals around the new entity.

Omar Obeidat, partner and head of intellectual property at Dubai-based Al Tamimi & Co, who advised on Uber’s $3.2 billion acquisition of Careem in 2019, told AGBI that the final deal must address “monopolistic concerns over professional golf events”.

“Ultimately, being dominant in a market is not illegal,” Obeidat said. “But abusing that market dominance to place barriers to new entrants is certainly anticompetitive.”

PIF governor Yasir Al-Rumayyan said he expected the deal to be finalised in a matter of weeks

Under the agreement the PIF will make a capital investment and be the sole investor in the new entity.

Financial details were not revealed and the name of the new body is to be confirmed.

The board of directors of the new commercial entity will include Al-Rumayyan as chairman and Jay Monahan, currently the commissioner of the PGA Tour, as CEO.

According to a statement, the PGA Tour will appoint a majority of the board and hold a majority voting interest in the combined entity.

US senator Ron Wyden, chair of the Senate Finance Committee, tweeted that he would “dive into every piece” of the merger. As chairman of the committee he has the power to call a hearing into the move.