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Threats to a Monopoly

Professional golf is a job. That said, comparing professional golfers to standard employees, or even top-level managers, is not without its complications. First, their compensation is entirely performance-based. The more they win, the more they earn from the tournaments, and the more marketable they become, which increases their sponsorship income. If they fail to perform for several years in a row, that money disappears. For anybody working in sales, performance-based incentives are nothing new. Second, professional golfers rarely have the luxury of determining how and when they perform. There is a governing body, the Professional Golf Association (PGA), that is in almost complete control, much like a typical employer. They set the schedule, determine tournament locations, and enforce the rules and standards of conduct. Each professional golfer has significant media obligations, and if they do not play by the PGA’s rules, there are thousands of other golfers ready to take their place. For decades, the PGA has been the only real employer in this sector, but a competitor has recently emerged that is shaking the foundations of the PGA to its core.

Anti-competitive Competitive Tours

The PGA has a vested interest in being the only employer in town. They do not want competitors to take their top talent, and they do not want to share sponsorship income. So, when the Kingdom of Saudia Arabia announced that they would be financing their own golf tour, headed by none other than golfing legend Greg Norman, it sent shockwaves through the golf world. By the time they made this announcement, they already had a list of some of golf’s biggest names on their list of players. These players knew full well in advance that the PGA would not respond kindly to their interest in LIV. At least 16 PGA Tour players have defied the tour and joined forces with the Saudis, including six-time major champion Phil Mickelson and two-time winner Dustin Johnson, who are competed in LIV Golf’s inaugural event in London. Two more major champions, Bryson DeChambeau and Patrick Reed, are reportedly defecting from the PGA Tour to the new LIV Golf Invitational Series in future events. The PGA Tour responded recently by suspending the 17 current or former members competing in London without releases. In a memo sent to players, Monahan didn’t specify how long the suspensions would last or if players could be reinstated. The players are ineligible for tour events and the Presidents Cup.

Major Influence

What makes things interesting is that the PGA has limited power. The four majors, the most important tournaments, have their own governing bodies. These spin-offs have the ability to make decisions for themselves, and they seem hardly as willing to be as stern as the PGA. The governing bodies that stage the four majors – Augusta National Golf Club (Masters), USGA (U.S. Open), PGA of America (PGA Championship) and the R&A (The Open) – do not seem ready to ban players who are competing in the LIV Golf circuit, at least not yet.

The U.S. Open is up next, at The Country Club in Brookline, Massachusetts, on June 16-19, five days after the completion of the London event. A dozen players in the LIV field, including Mickelson, Johnson, Garcia, Gooch, Grace, Na and Oosthuizen, are already exempt from qualifying for the U.S. Open. The USGA said it wouldn’t prevent players in the LIV events from competing in the U.S. Open. “Regarding players who may choose to play in London, we simply asked ourselves this question – should a player who had earned his way into the 2022 U.S. Open, via our published field criteria, be pulled out of the field as a result of his decision to play in another event? And we ultimately decided that they should not,” the USGA said.

While the PGA Tour and the majors have taken their stands, a lot of undecided players are taking the wait-and-see approach. There is a lot about the LIV tour that appeals to people. Their tournaments are shorter and less frequent, but still have very large purses (the winner of the inaugural event in London, Charles Schwartzel, went home with 4.75 million USD after beating a small field of players). There is much less of a grind; there is a lot more time to be there for one’s family. A deep-pocketed startup has come along and offered former PGA employees a better compensation package with better benefits, but the risk is inherent: like any startup, even well-financed startups, there is no guarantee that their venture will be successful. We are all watching the LIV experiment unfold, and no matter what happens, we have already learned so much about employer-employee relations.