LIV Golf and the PGA Tour – a legal update

The motion for a temporary restraining order, equivalent to an interim injunction in England and Wales, is part of a wider case brought by a number of LIV Golf members which challenges the PGA Tour’s conduct in response to those players joining LIV Golf. The basis of that wider claim is threefold:

• firstly, that the PGA Tour has instigated a group boycott, alongside the DP World Tour, in response to the threat posed by LIV Golf;
• secondly, that the PGA Tour has maintained a monopoly in elite professional golf; and
• thirdly, that the PGA Tour has breached its own regulations in denying certain LIV Golf members the right to have their suspensions stayed pending appeal.

A temporary restraining order will only be awarded where, amongst other criteria, the plaintiff shows that, without such an order, he or she would suffer “irreparable harm” – this is, ultimately, where Gooch, Swafford and Jones’ motion failed.

The plaintiffs argued that, in being denied the opportunity to participate in the FedEx Cup Play-Offs (for which they had each duly qualified), they would (i) lose the opportunity to qualify for certain Major Championships and other leading tournaments (ii) lose the opportunity to achieve Official World Golf Ranking points (which, currently, participation in LIV Golf does not offer) (iii) lose income earning opportunities (the FedEx Cup Play-Offs offer up to $20m in individual prize money) and (iv) suffer damage to their reputation and brand.

In response, the PGA Tour argued that the plaintiffs’ delay in seeking a temporary restraining order undermined their assertion of irreparable harm, on the basis that the plaintiffs had only sought the order two months’ following notification by the PGA Tour of their suspensions. The PGA Tour further argued that monetary losses (for which damages can be sought) and, what the PGA Tour described as, “speculative” reputational damage are insufficient to show “irreparable harm”.

The court, in this instance, sided with the PGA Tour and denied the temporary restraining order sought meaning that Gooch, Swafford and Jones will not be permitted to compete in the FedEx Cup Play-Offs.

The court found that LIV Golf players are not barred from playing professional golf against the world’s top players, competing for lucrative prize money, securing valuable endorsements or building brand, rather, they are simply barred from doing so on the PGA Tour. Given the other playing opportunities open to them (through LIV Golf), the threshold to show “irreparable harm” was, in the court’s view, not met. The court further suggested that the up-front payments made to LIV Golf members have been carefully calculated to account for the losses that those players would suffer as a result of the “virtually certain” suspension from the PGA Tour. Ultimately, the court concluded that LIV Golf members would likely earn significantly more from playing LIV Golf than they would by being permitted to play in the FedEx Cup Play-Offs.

Somewhat perversely, it seems that the relative success enjoyed by LIV Golf to date in (i) securing a number of top players (for example, half of the top 10 in the PGA Tour’s Player Impact Programme for 2021, a ranking of the most impactful professional golfers on tour, have joined LIV Golf) (ii) awarding significant prize money and (iii) operating high-profile events, has contributed to the court’s conclusion that LIV Golf is already a viable competitor to the PGA Tour and therefore that no restraining order was required.

It’s important to note that, as yet, the case in question is brought by the players themselves as opposed to LIV Golf meaning that the current focus is on whether the players have suffered harm. It remains to be seen whether LIV Golf itself will take steps to protect its own position – if they do, focus will likely shift towards establishing whether the PGA Tour can be shown to have acted anti-competitively in its attempts to stifle the threat posed by LIV Golf.

Whilst the PGA Tour were successful at Tuesday’s hearing, there remain many more days in court to come as and when the substantive case is heard. It’s possible that the dispute may also be looked at from a European competition law perspective as and when those sanctions imposed by the DP World Tour are examined further.

Part 2, no doubt, to follow…