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PGA tour faces DOJ probe over antitrust violations

Yahoo Finance's Josh Schafer details the trajectory of PGA golfers being able to participate in tournaments outside the league, such as the Saudi-backed LIV Golf.

Video Transcript

[MUSIC PLAYING]

BRIAN CHEUNG: The US Department of Justice is launching a probe into the PGA TOUR over potential anticompetitive behavior in its spat with LIV Golf. Yahoo Finance's Josh Schafer here with more. This story really escalated, Josh. Government now stepping in.

JOSH SCHAFER: Yeah, so LIV Golf is, of course, the Saudi-backed league that is taking a lot of the PGA players, offering them more money, a lot more money than they've ever got at the PGA TOUR. And so it's kind of been competitive. But what the problem has been is the PGA has several rules in place, guys, that permit these golfers from going over to LIV Golf.

So these LIV golfers pretty much had a choice of, am I going to just rescind my PGA TOUR membership? Which some did, Dustin Johnson did that, notably. But Phil Mickelson, Bryson DeChambeau, they went forward with it. They're now suspended. So now there's this antitrust lawsuit over the two rules that are on the screen now that you can see. And really, what those prohibit is, players playing in other televised golf events.

And then there's another rule where you have to get cleared by the commissioner to play in another golf event. Both of those, obviously-- you can see where the antitrust concern is there. It's not something we see very common in sports, though, which I think is interesting, right, when you think about the fact that a lot of these leaks have rules like that.

Not a lot of other sports have Saudi-backed leagues that are competing with them that actually make players want to go over there. And I think that's where this is interesting, is players, for once, actually do want to break the rules and defect from the main league.

AKIKO FUJITA: Well, and that's what's interesting about the DOJ investigation, because up until now, the criticism on LIV was about the money coming in from the Saudis, but the DOJ is saying, well, the PGA can't necessarily--

BRIAN CHEUNG: It's not the contract.

AKIKO FUJITA: --prevent you to go.

JOSH SCHAFER: Right, and this is, we should point out, too, one of the most fascinating parts of this, to me, is this argument has been made in the past. It was made in the '90s. And it was made by LIV Golf CEO Greg Norman, who's a big name in golf. He won the British Open twice. He's the CEO of LIV Golf. He tried to do this in the '90s.

And when we finally got to the end of it after a four-year case, the FTC said, ah, you guys can just go ahead and keep the rules. And one of the rules was that commissioner rule. So we've already-- this happened 30 years ago. Now it's just, has the stance changed? And I guess we'll find out.

BRIAN CHEUNG: Yeah, and I guess I want to kind of ask, though, just to kind of baseline here, the substantial traction that LIV has gotten, right? You've got those big names like Dustin Johnson, like a Phil Mickelson, kind of headed towards the league. We're hearing now from Tiger Woods is the latest?

JOSH SCHAFER: Yeah, Tiger Woods was talking today ahead of the open this weekend. So another big Major in golf, where these LIV golfers are going to be playing with the PGA golfers, right? So at the major championships, the LIV golfers are still allowed to play. So it's this conversation that keeps coming up. And Tiger Woods pretty much said what you'd expect Tiger Woods to say. He's a PGA TOUR stan. He does not like what is going on with LIV Golf. And he sort of pointed to what Norman did back in the '90s and said it didn't work then. I don't think it's going to work now.

And they don't really have a good argument for it. I think Tiger Woods is a lot similar to Fred Couples, who we've heard from, too, on our air. They're old school guys. They earn their money in the tour. They believe in that system. And they want to keep that system. And this contract thing that LIV's doing when you're just going, you get money no matter what, that's not really what the old school golfer is like. They don't just sign contracts like it's the NBA.

BRIAN CHEUNG: LIV stands for?

JOSH SCHAFER: It's the Roman numerals, Brian.

BRIAN CHEUNG: Wait. It's, what, 44?

JOSH SCHAFER: 54.

BRIAN CHEUNG: 54. Oh, it's-- L is 50.

AKIKO FUJITA: Yeah, I just stay silent. I was like [INAUDIBLE]

BRIAN CHEUNG: Akiko's acknowledging now.

JOSH SCHAFER: It's a three-day tournament. That's the other thing that the other golfers--

BRIAN CHEUNG: OK, so it's 18 holes times--

JOSH SCHAFER: The other golfers are making fun of some of these younger guys that are going over there and saying, well, you only want to play three days. That's why you're doing it. And you play less tournaments, and you make more money.

AKIKO FUJITA: This is interesting, though, how the debate around it has evolved from where the money is coming from to the rules of the game overall and whether competition should be allowed.

JOSH SCHAFER: Well, and that's why some of these golfers, when they are arguing, we're not just going for the money, there is a little bit of validity to what they're saying. There's always been concerns about how the PGA distributes its money, what the players are allowed to do. And so we're going to see that part actually get investigated here. And I do think that'll be interesting, right? That's the part that I don't think has been talked about. You're right.

BRIAN CHEUNG: I feel like the arc has changed very much from, where is the money coming from, to, oh, man that's a lot of money. We don't really care where it's coming from. Yahoo Finance's Josh Schafer, thanks so much for the breakdown there.