ICYMI: PGA Tour on the Brink as Start Up League Attracts Players according to Inside Sources

WASHINGTON, Feb. 22, 2022 /PRNewswire/ — Alden Abbott, the former general counsel of the Federal Trade Commission, wrote for Inside Sources that the most troubling action in the professional sports world today is the claim that the PGA Tour will impose a lifetime ban on any professional golfer who associates with LIV Golf, the new league led by golfing legend Greg Norman. Abbott says that imposing a lifetime ban on players would likely trigger three dire consequences: (1) filing of an antitrust lawsuit by Norman’s upstart league, the players, or even federal antitrust enforcers; (2) losing the tax-exempt status that the PGA Tour currently enjoys; and (3) causing immediate and lasting damage between the PGA Tour and professional golfers.   

Excerpted paragraphs are below. Read the entire piece here.

Perhaps the most brazen bluff unfolding in the professional sports world today is the claim that the PGA Tour will impose a lifetime ban on any professional golfer who associates with LIV Golf, the new league led by all-time great Greg Norman.  Let’s be clear:  A lifetime ban is never going to happen.  PGA Tour Commissioner Jay Monahan is no doubt being advised by high-priced lawyers who—if they are worth even a fraction of their lofty rates—have surely advised him of the legal consequences that will blow up on the PGA Tour’s face if it imposes lifetime bans on independent contractors who choose to associate with a competitor. 

Most notably, imposing a lifetime ban on players would trigger a slam-dunk antitrust lawsuit by Norman’s upstart league, the players, or even federal antitrust enforcers who have made it a priority to protect workers’ ability to ply their trade for whomever they please without interference from corporate giants.  The Supreme Court made clear in Lorain Journal Co. v. United States in 1951 that it is an antitrust violation for a monopolist to attack competition by coercing third parties—such as independent contractors—not to deal with a rival.  Other dominant sports leagues employed similar blacklisting tactics in the past, but abandoned them decades ago under antitrust pressure.  For example, in the 1940s and 1950s, the NFL blacklisted players for playing with rival leagues.  One of those players, William Radovich, asserted an antitrust claim against the NFL and its commissioner based on his ban.  The NFL claimed that it was immune from the antitrust laws under baseball’s antitrust exemption, but when the Supreme Court rejected that defense, the NFL quickly settled Radovich’s claim.  And when the NFL was unsuccessful in lobbying Congress to grant it an antitrust exemption, the league abandoned its blacklisting practices.  The result was the launch of the AFL in 1960, and the explosion of competition transformed the landscape of professional football.  Surely Monahan’s lawyers are aware of the lesson learned by the NFL more than sixty years ago.

In addition to the antitrust consequences, the grenade blowing up in the PGA Tour’s face would also likely result in the loss of the PGA Tour’s tax-exempt status.  The PGA Tour receives tax-exempt status under Section 501(c)(6) of the Internal Revenue Code, which requires that an exempt entity must be directed at the improvement of business conditions for an entire “line of business.”  The Supreme Court has held that a business association loses its tax-exempt status if activities are no longer aimed at benefiting all competitors in the marketplace.  As the Supreme Court explained in National Muffler Dealers Association v. United States, the tax exemption “is not available to aid one group in competition with another within an industry.”  A lifetime ban on all players who affiliate with a competing tour is difficult to square with this requirement.

There is also the matter, not to be underestimated, of the immediate and lasting damage a ban would do to relations between the PGA Tour and professional golfers.  The opportunity for Norman’s league arose in the first place because professional golfers are recognizing that they are paid far less than what they are worth and are dissatisfied that they are guaranteed no earnings, must go out of pocket for substantial expenses, and the great bulk of the revenues generated on their shoulders goes to pay for the bloated bureaucracy of the PGA Tour and the multimillion dollar salaries that Monahan and his colleagues pay to themselves.  If Monahan—the beneficiary of $7.4 million in payments in 2018, the last year for which public disclosures are available—dishes out lifetime bans to players for the offense of plying their trade where they choose and trying to make the best living possible for themselves and their families, that would undermine any remaining trust the players have in the PGA.  The recent statements by golfers to the press—even those who assert loyalty to the PGA Tour—make clear that they take great pride in their independent contractor status, and are unlikely to react well to efforts by the PGA to claim total control over them.

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SOURCE Inside Sources

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