By now, many will have heard of the eye watering amounts of cash being offered to professional golfers to lure them away from the long-standing historic and safe arms of the PGA Tour for Greg Norman’s Saudi-backed LIV Golf Tour. Phil Mickelson, six-time major PGA Tour championship, has apparently been offered $200 million to play in the tournament. Australia’s own, Cameron Smith is also reportedly weighing up his options with serious amounts being put on the table.
The PGA is no shrinking violet though. It has taken the extraordinary step of suspending the memberships of a long list of players for participating in the competing tournament, reportedly on the basis that it is a wilful violation of PGA Tour Regulations.
With the stakes as high as they are, many players will be considering challenging any suspension to exclude them from play. For those watching at home, we have outlined some of the potential claims we think might be brought. Exactly which claim is brought (if any) is anyone’s guess. There are a host of uncertainties that surround this question. The PGA operates across several different countries. The laws that apply and regulate their conduct are not uniform. This piece will only look at what could happen in Australia.
Unlawful restraint of trade
The first question we considered is whether the PGA’s decision to ban players such as Australia’s Cameron Smith from its tours would constitute an unlawful restraint of trade.
Insofar as restraint of trade is concerned, it is generally associated with circumstances where an employee is subject to an express restraint of trade provision in an employment contract.
Golfers who are members of the PGA are not employees as such. They are members of an association, subject to its rules. In terms of the Australian PGA, the Player Handbook & Tournament Regulations states: ‘‘no PGA Tour Champions member shall participate in any other golf event on a date when a PGA Tour Champions cosponsored tournament … is scheduled, except as follows … An event for which a member obtains an advance written release for his participation from the Commission’’.
It further states: ‘‘Each PGA Tour Champions member, by participating in a co-sponsored, co-ordinated or approved tournament, acknowledges the right and authority of PGA Tour Champions Division Board … to (i) fine and suspend the member from tournament play … for violation of these Tournament Regulations.’’
Thus, to take the current imbroglio, although the rules mean that a golfer could be banned from participating in PGA events, that would not stop that golfer from participating in LIV events. So, is it an unlawful restraint of trade if the golfer can still earn a living?
The answer is that it could be. It is not definitive, but provisions in a commercial agreement or in the rules of sporting codes can be – and have been – found to be an unlawful restraint of trade.
The PGA’s source of power to restrain the players from playing in other competitions is an interesting, and perhaps distinguishing feature of this case. As we understand it, the PGA isn’t relying on any express terms in the players’ contracts that prohibit them from entering other competitions. Instead, the restraint is the consequence of the PGA’s decision to suspend those players who decide to play in a competitor’s tournament. Perhaps there is no restraint at all, in a strict sense. Players are free to play for whoever they want. The fact of them doing so would not breach any particular clause in their contracts. However, in a world in which the PGA Tour is the main organiser of golf tours, and tours are basically every weekend of the year, the effect is essentially the same as a restraint.
Challenging the disciplinary process
Apart from restraint of trade, another consideration could be the legal probing of any process to discipline a golfer. Procedural fairness during a disciplinary process is a requirement and, moreover, the reasons for making a disciplinary decision can be scrutinised and overruled.
In Australia, an association can generally suspend or expel a member provided they do so in a manner consistent with the association’s rules. A court will not intervene to set aside a decision to suspend or expel a member, even if it disagrees with the decision, as long as the decision has been properly made in line with the rules of the association, and the member has been afforded procedural fairness along the way.
Whilst not on the same professional playing field as the PGA TOUR, the Supreme Court of NSW considered a not too dissimilar set of circumstances in Cheer v Eastlakes Golf Club  NSWSC 1240. In that case, two members challenged the club’s decision to suspend their memberships for three years for allegedly breaching club policy. The Court found serious defects in the way the allegations had been set out to the members. The procedural defects were such that it was not possible for the members to respond or to have a proper hearing. The court set aside the suspensions on the basis that there had been a denial of natural justice.
Challenge on discrimination
Given so much of the controversy has to do with Saudi Arabia’s human rights records, one possible challenge we could see is discrimination based on political belief. Greg Norman faced backlash for a response he gave that seemed to downplay the issue. Since then, he has insisted that he will “not go down that road” and solely “focus on the golf”.
Again, there are myriad questions around jurisdiction. In New South Wales and South Australia, discrimination based on political opinion is not covered. It is in Victoria though, where ‘political belief’ means ‘holding or not holding a lawful political belief or view’. Perhaps a player might argue they have been discriminated against for not taking a political stance. Although unlikely, it’s not outside of the realms of possibility.
Challenge from the regulator
Beyond action from players, we may see involvement from regulators. In the US, the Wall Street Journal recently reported that the Department of Justice is investigating the PGA Tour for potential antitrust tendencies. Perhaps we will see the ACCC taking similar action.
The ACCC has already taken an active role with the PGA. Just last year, it granted players the ability to engage in collective bargaining for the terms and conditions of membership of the PGA and the WGPA.
This insight follows the recent article written by Kingston Reid’s very own Steven Amendola with the assistance of Peter Willink and Catherine Flannery-Sweet which was printed in the Australian Financial Review on 23 July 2022. This article can be found here.