Could the LIV Golfers Have Changed the World? Exploiting Leverage in Contracting.

The current debate in golf is simple when you get right down to it, is someone going or aren’t they? How much money are they taking? Will this end the PGA? Is a merger a foregone conclusion? [1]

A more complex question that is worth debate is ‘what if?’ What if in US sports questions were not solely relegated to personal interests? What if instead of arguing about what side of the pie athletes should get in relation to owners, questions were deeper about the obligations of those operating not just a business but an item of public trust – a sports franchise or a sports league/tour with attendant tax breaks, public subsidies, and enormous share of media coverage.

Is there any additional obligation? With public financing of even eventually privately-owned stadiums and tax deals, is there a corresponding obligation financially or via public relations to try to affect change? For a sport such as baseball with an anti-trust exemption conferring a monopolistic free pass unavailable to any other American business, is there a cost, or is the public simply fortunate to be able to subsidize teams with their public dollars for the opportunity to support them with their private dollars?  

But that conversation is for another day.

The point of this post is to focus on the current steel cage match between the PGA and Saudi-financed LIV golf tours.

Specifically, falling into that wider debate about the obligations of sports leagues is the question of whether golfers and broadcasters have traded a once-in-a-lifetime opportunity to pursue lasting change on the world stage in exchange for a fistful (well, quite a few fistfuls) of dollars.

Often, in contracting, where one party has a desperate need and the other party has unique resources to fill that need, the party with unique resources can exploit leverage [2] to not only enhance their personal return but make broader changes. For run-of-the-mill contracts, that change might be a build-out or rent concessions, it might be forgoing a personal guarantee, a right of first refusal, or favorable payment terms. But to be clear – leverage exists where there is a clear demand and supply. Leverage increases as the supply becomes non-fungible.

Greg Norman‘s Saudi financed LIV tour had an uphill climb to gain a real footing in the golf world. That uphill climb included player contracts that would give the tour the competitiveness required, and the credibility craved.

But the real incline on the hill was not sports contracts, it was that the Saudi’s were starting from a position of weakness in every respect except financing. To recap, it is widely believed that the Saudi Arabian government ordered the killing and dismemberment of Washington Post reporter Jamal Khashoggi. [3]  That and an interesting approach, shall we say, to human rights caused then-presidential candidate Joe Biden to call the Saudis pariahs [4].

Of course, the economic situation in the United States and gas prices coupled with the fact that the Saudis sit on top of one of the world’s largest oil reserves made the pariahs a fist-bumping economic partner in the past two weeks. Still, even those who believe that practical foreign policy considerations sometimes trump human rights principles have had a tough time with the idea of individuals, whether they be musicians, actors, comedians, or now golfers personally profiting from a despotic regime as opposed to macro decisions supposedly benefiting the whole (or, as a cynic might say, corporate coffers or a political party, or simply members of both political parties running for reelection).

But what if, rather than signing up for personal profit or ideological purity, we asked whether and how leverage can change a paradigm.

What if our top golfers when first approached, and I mean the golfers really needed to add competitiveness and credibility to the LIV tour, had exploited leverage to not only reap personal windfalls but also demand accountability or change on the part of the Saudis?

Maybe you are thinking it is a longshot that the Saudis wanted a golf tour so bad that they were willing to make human rights concessions or accept accountability for the Khashoggi murder. You might be right, but the job of an attorney in contracting for a client is not to limit discussions to either/or make the perfect the enemy of the good, the job of an attorney in contracting for a client is to find the best deal possible. Wise counsel should be focused on determining parties’ true interests and exploiting those interests to obtain the best deal possible for their client.  Getting to Yes is not just a guidebook for dividing oranges. [5]

If you know the party you represent has a non-fungible resource that the other party needs, then you can ask for the moon, your client will be thrilled to settle for a star.

When you combine the concept of leverage with the question of social responsibility and obligation in sports, maybe you don’t end up with an apology to the Khashoggi family, but maybe you end up crafting contracts that provide examples of breach and damage provisions akin to good conduct clauses that try to take some sort of a stand at preventing future atrocities.

For the Saudis, would contracts with golfers make the difference between expanded minority rights and fewer extrajudicial killings, who knows, but at least the athletes and sports personalities that possess leverage could try to make a stand.

It seems that ship has sailed. Phil, we are looking at you. Because if from the outset the expectation was that the Saudis would have to pay more than dollars to play, then every contract, whether for Rory or Dustin or Charles Barkley (who could make not being a show pony be about more than dollars [6]) could have had such change provisions as a given. Individuals who have worked hard to get where they are should not be judged for simply reaping the rewards of their hard work, but when part of their success is due to a public platform and opportunity created, then is it too much to ask that in reaping their rewards they at least attempt to utilize leverage to get something in addition to their own reward?

Whether discussing athletes or desirable businesses located in states considering legal changes, until we fully understand the true power of economic opportunity and leverage, change will be hard to come by.

It is much more difficult to get to yes where personal, commercial, and social interests collide than it is in routine contract negotiations for a client, but the benefits might be exponential if we expected people to give it a try.  

For more information on how Dunlap Bennett & Ludwig can help you with your legal needs, contact us by calling 800-747-9354 or emailing [email protected].

By: Ben Barlow