This article examines the conflict between LIV Golf and the PGA Tour, exploring how a dominant organization responds to challenges from innovative competitors. It analyzes the competitive and regulatory issues at stake and the strategic decisions made by both tours.
In June 2022, the inaugural LIV Golf event took place outside of London. LIV Golf, offering players larger purses and greater flexibility, aimed to disrupt the established golfing landscape. The PGA Tour responded by suspending all players who participated in LIV Golf events, escalating tensions between the two entities. This conflict culminated in LIV Golf filing an antitrust lawsuit against the PGA Tour. In a surprising turn of events, both tours announced a merger in June 2023.
\This article delves into the competitive and regulatory issues at play, examining whether the PGA Tour took the right actions in response to LIV Golf's entry. It explores how a dominant organization like the PGA Tour can effectively address challenges from innovative competitors. The article also draws lessons from the PGA Tour's response to LIV Golf's market entry, explaining when it's more strategic to view a competitor as a partner rather than an adversary. \HBR On Strategy curates the best case studies and conversations with leading business and management experts to provide insights into innovative business practices. New episodes are released weekly, featuring case studies and conversations with world-renowned experts, hand-selected to help you unlock new ways of doing business. \How should a dominant organization, like the PGA Tour, respond to a challenge from an innovative new competitor? What can we learn from the PGA Tour's response to LIV's entry into its market? And at what point does it make more sense to treat a competitor as a partner? Today, we bring you a conversation with former Harvard Business School associate professor Alex MacKay, who studied the competitive and regulatory issues at stake for a business case study he wrote about LIV Golf and the PGA Tour. \Brian Kenny: On July 11th, 2023, the Senate Permanent Subcommittee on Investigations convened a hearing on a proposed merger of the PGA Tour and its upstart rival, the LIV Golf tour. Golf may be a genial game, but there was nothing cordial about the demeanor of the committee members who teed off on PGA Tour executives for over three hours, firing questions and expressing their concerns about the configuration of the deal and its implications on the global stage. It's a hearing that just weeks earlier would've been unimaginable because since its launch in 2022, the LIV tour was vilified by the PGA Tour as the avowed enemy of golf, the beneficiary of a rich, but ruthless foreign regime seeking to cleanse its reputation by association with the sport. The PGA Tour was the keeper of the flame, sworn to uphold the integrity of the ancient but honorable game. One that has remained virtually unchanged since the rules of golf were first formalized in Leith, Scotland in 1744, but as we often see, disruption happens when you least expect it. Today on Cold Call, we've invited Professor Alex MacKay to discuss his case titled, “LIV Golf.” I'm your host, Brian Kenny, and you're listening to Cold Call on the HBR Podcast Network. Alex MacKay’s Research focuses on matters of competition, including pricing, demand, and market structure. And today we're here to talk about a subject near and dear to my heart, which is golf. Alex, thanks for joining me. \Brian Kenny: I was very excited when I heard that you were writing this case because I’m a golfer. I really love the game and like anybody who follows golf, this was an amazing series of events that started back in 2022 and continues to unfold in really unexpected ways. So I think people will love hearing more about this as a case of disruptive innovation within an existing sports league, but also some of the drama that surrounds it and some of the politics. So thanks for being here to talk about it
LIV Golf PGA Tour Antitrust Lawsuit Merger Disruptive Innovation Competition Business Strategy Sports Industry
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