The sports world woke up to an absolute bombshell this month when PGA Tour commissioner Jay Monahan and Saudi Public Investment Fund Governor Yasir Al-Rumayyan, speaking with CNBC’s David Faber, announced the Tour would merge with LIV Golf and “unify the game” under one umbrella.

It was as stunning a development as golf fans could imagine. And it proved equally puzzling to many antitrust experts, lawmakers, and regulators who’d been following the ongoing legal battle between the two former competitors. 

Details and plans for this new arrangement are almost non-existent. The Tour says it will remain a non-profit, but will create a for-profit LLC funded by PIF and chaired by Al-Rumayyan. 

There were a lot of questions  - what it means for LIV Golf, what it means for the players who stayed behind on Tour, what it means for an entire professional sport that would seemingly flip upside down as a result of the proposal. 

Those unknowns persist. But a probe launched by Homeland Security investigative subcommittee chair Richard Blumenthal, as well as a request from senators Elizabeth Warren and Rony Wyden for the justice department to determine whether the deal violates the Sherman Act have raised more pressing questions. 

Most notably – is this deal going to get squashed by the government? 

Will PGA Tour-LIV Golf Partnership Survive Scrutiny?

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While we give the deal about a 71% chance of going through, many prominent experts have expressed their doubts. 

Columbia law professor and former President Biden advisor Tim Wu tweeted the following the day after the partnership was announced: 

“Golf players antitrust complaint against the PGA gives a sense of why the merger with LIV is unlikely in my view to survive serious antitrust scrutiny.” 

Senator Blumenthal has expressed serious concerns and launched a probe seeking a number of different records by June 26 – most notably, all communication and records related to the formation of the deal. And Senators Warren and Wyden have asked the justice department to determine if violates Sections 1 or 2 of the Sherman act, as a collusive agreement among two parties or acting to preserve a monopoly. 

While these appear to be valid concerns across the board, it’s tricky considering the agreement – which the Tour has taken to calling a “partnership” rather than a merger – is just a few pieces of paper with no details, financial information, background or future intent. 

“Usually when antitrust watchdogs evoke their jurisdiction to review a proposed merger or acquisition, they’ve got a fully-formed vehicle to examine,” Brooklyn Law School Sports Law professor and former NFL Council for Operations and Litigations Jodi Balsam said. “They have deal documents, not two pages but hundreds or thousands of pages. There’s a concrete structure to what the merger business is and what the industry will look like post-merger. We don’t have that here. What we have is a paper tiger.”

The timing of the announcement was a head-scratcher for those reasons – it’s essentially a handshake agreement on paper, with PIF pledging to fund the new for-profit venture. There aren’t any logistical details or facts to object to at this time, aside from the overall implications.

So the mounting scrutiny over the deal isn’t necessarily valid considering there’s no actual proposal at this time. This gap has allowed the Tour and PIF to field all criticism and questions before they’ve had to put a real plan on paper and give the DOJ or other outlets a chance to kill it. 

“I think it’s an opening foray and whatever antitrust concerns emerge, the deal will adjust to those concerns,” Balsam said. “We will ultimately get a deal which evades any attempt of the government to block it by responding and adjusting to the government’s concerns. So, we’re gonna see a bit of a dance over the next few months.”

The Department of Justice will likely retain jurisdiction, Balsam said, because it had already opened an investigation into the Tour for potential anticompetitive behavior in response to LIV Golf last year. A few months later, LIV Golf filed an antitrust lawsuit against the Tour. 

The lawsuit, which was ongoing at the time of the announced merger, certainly complicates things regarding the future proposal. The PIF-funded LIV Golf lawsuit argued that the PGA Tour should not have been allowed to dominate golf and dictate the terms on which players can participate in tournaments, which it did by issuing lifetime bans for LIV defectors. 

But in reaching this agreement with the intent to merge, it creates an even bigger monopoly and exactly the type of landscape LIV claimed it was trying to prevent in the original suit. 

The way in which said lawsuit developed may have forced LIV’s hand, in Balsam’s opinion. 

LIV would have had to comply with discovery requests after its attempt to withhold that information was blocked in district court. LIV continued that fight in appellate court and likely would have lost again, eventually requiring the PIF to disclose information about their decision-making process, business plans, methods to acquire talent, the nature of player contacts and much more. 

Given the secretive nature of Saudi Arabia’s government, with PIF serving as a government agency, disclosing said information would have been a worst-case outcome. That’s why Balsam believes LIV was essentially forced to reach some type of settlement by any means necessary. The Tour, meanwhile, may have been hoping LIV would fizzle out after a year or fall victim to litigation. 

A settlement such as this may have always been the Tour’s backup plan, as they had no chance to compete with the $700 billion PIF through traditional means. 

“I can only conclude that this announcement was just a way for the Saudis to abandon the lawsuit while saving face and buying time to figure out the next move,” Balsam said. “They needed to abandon the lawsuit but didn’t want to do so in a way that embarrassed them or exposed their lack of foresight here. They have this handshake deal to invest in the PGA Tour, to be the exclusive future investor in the PGA Tour’s for-profit entity, without much of a concession from the PGA Tour. And it buys them time to figure out what this deal’s gonna bring.”

Mistakes have been made on both sides at multiple steps along the way. But in those terms, this is a deal both sides are desperate to reach. And they have time to figure out a structure which will likely allow it to survive. 

What the end result looks like is still anyone’s guess.