LIV Golf-PGA Aftershocks Likely to Spur Pay and Sponsor Disputes

This week is a pivotal moment in golf history. The PGA Tour, LIV Golf, and the DP World Tour announced Tuesday their plans to merge, ending a year-long rivalry between the entities. While the merger is expected to unite professional golf players and fans alike, it raises many unresolved issues, and is a recipe for potential liability.

LIV Golf’s 2022-2023 inaugural season transformed the traditional way fans had enjoyed golf, including shorter tournaments, team play, and shotgun starts. Yet, the biggest—and most debated—topic was the enormous purse and bonus potential available for LIV golfers.

The winnings dwarfed those offered on the PGA Tour, but many professional golfers famously rejected LIV, which is funded by the Saudi Arabian government.

The PGA Tour publicly denounced LIV Golf by suspending all players that contracted with the new league, barring such players from future PGA Tour events. This ignited an antitrust suit brought by LIV players that formerly played for the PGA.

Meanwhile, players for the European DP World Tour sought relief in arbitration after facing sanctions from that league. Ultimately, those players were fined $100,000 each—a nominal sum by LIV Golf standards.

The explosive news that the warring leagues will merge will resolve most of the tours’ pending disputes, but this compact could expose the leagues to new litigation, liability, and scrutiny.

Compensation and Contracts

Many professional golfers who remained on the PGA Tour were extremely forthright in their denunciation of LIV Golf. Now that these players will be expected to play for an organization that supports LIV Golf, tensions may rise.

Shortly after the merger was announced, many PGA Tour players were said to have met at the Canadian Open for a “heated” meeting. Players who remained loyal to the PGA Tour, and rejected large money offers from LIV Golf, may seek reparations commensurate with what some of their competitors made when signing on to LIV Golf—bonuses in the hundreds of millions of dollars.

Players who joined LIV Golf signed lucrative contracts, whose details have been largely undisclosed. It is known, however, that any breach of a LIV Golf contract by a LIV Golf player would result in serious penalties.

Whether LIV Golf will fulfill its obligations under these stringent contracts, including large compensations through 2025 for some players, is also unknown. It’s uncertain whether LIV Golf would compensate players for LIV Golf tournaments that won’t occur as a result of the merger.

The inability for LIV Golf players to perform under their respective contracts at no fault of their own may raise contractual issues between LIV Golf and former LIV Golf players.

Sponsorships

PGA Tour and LIV Golf players may also face issues with their sponsors because of the merger. In 2022, when players joined LIV Golf, many lost their sponsorships.

Those sponsors cited the loss of goodwill associated with the PGA Tour and the public scrutiny that surrounded LIV Golf, based on Saudi Arabia’s human rights record.

Now that the merger will take place, sponsors may hesitate to continue their sponsorship of professional golfers, whether former PGA Tour or LIV Golf players. Accordingly, sponsors and professional golf players may face future contract liability depending on the circumstances.

Antitrust Scrutiny

Another issue with the proposed merger is whether it will be allowed by US antitrust regulators at the Department of Justice and Federal Trade Commission. Notably, the DOJ has been investigating the PGA Tour for the past year for alleged anticompetitive actions, which remains ongoing.

The proposed merger resolved the well-publicized disputes between the PGA Tour and LIV Golf, but the merger is far from final, as other administrative entities, including the FTC, are projected to scrutinize it.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Nicole Arcodia is a complex civil litigator.

Addison Fontein is a complex civil litigator.

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