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PGA Outclubs FTC in Antitrust Fight

October 22, 1995|DAVID WILLMAN | TIMES STAFF WRITER

But for the World Tour to prosper on American television, it would need to siphon some top U.S. players from the PGA Tour, to the potential detriment of PGA tournaments. Finchem immediately warned players that he would suspend them if they played in World Tour events.

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A Fox executive said the network stands by its $25-million pledge and is eager to air the tournaments. But for now, the World Tour remains idle.

A spokesman for Norman declined to be interviewed regarding the PGA investigation.

Clearly, the PGA case is not the first time that a big-time sport has confronted the power of federal antitrust law.

An antitrust lawsuit, pressed in the early 1980s by the University of Oklahoma, broke up the National Collegiate Athletic Assn.'s exclusive control of televised college football. The Supreme Court ruled in 1987 that the NCAA's rules were too restrictive--freeing Oklahoma to directly negotiate its own TV contracts.

Indeed, big league baseball is the only major U.S. sport that is absolutely exempt from antitrust law. But it is precisely the unruliness of baseball, with its unending labor strife, that defenders of the PGA Tour cited while opposing the FTC's antitrust unit.

"I am concerned that eliminating the [PGA Tour] rules would only serve to 'fix' something that isn't broken, effectively destroying what is perhaps the only professional sport which is still working today," said Sen. Conrad Burns (R-Mont.), in a May letter to the FTC chairman.

Finchem's campaign took several months, but in the end the score wasn't even close:

The FTC announced on Sept. 1 that the commissioners had voted 4-0 to kill the PGA investigation by rejecting the staff antitrust lawyers' recommendation to take legal action. The announcement was made late on a Friday afternoon before the Labor Day weekend and received little attention.

FTC investigations are kept confidential, but agency officials said the commissioners in an overwhelming number of cases have voted to follow the antitrust unit's recommendations.

According to people familiar with the unfolding of the PGA investigation, the congressional overtures injected a tension that could not be ignored.

"I'm sure it was a factor in their decision," said Edward L. Moorhouse, executive vice president and general counsel of the PGA Tour, referring to the FTC commissioners' 4-0 vote, adding that he believes the PGA prevailed on the basis of legal merit. Moorhouse acknowledged that seeking the congressional support was not without risk.

"It certainly was something that we thought about," he said. "We didn't know how the [FTC] commissioners would react."

Said an official at the FTC, who spoke on a condition of anonymity: "I can tell you that those letters were taken very seriously here."

All the more so because the attacks on the PGA investigation came at the same time the FTC faced a new congressional leadership, eager to downsize or eliminate government regulatory agencies. Legislation approved by a Senate subcommittee threatened to slash by 20% the FTC's existing budget of $98.9 million.

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"The threat was really very clear to the agency," said one FTC official familiar with the sensitivity of the PGA investigation.

Pitofsky, the FTC chairman, declined to discuss the investigation, noting that he abstained from the vote because his former law firm once represented the PGA. Generally, he said in an interview, "you don't want regulators coerced into failing to do their job. On the other hand, the regulators are creatures of Congress, and need to be aware" of what Congress wants.

Another recent Clinton appointee to the FTC, Commissioner Christine A. Varney, said she was untroubled by the intercessions.

"The Congress is always watching what the antitrust division is doing," Varney said. "There was interest in this case. Does it have any relationship to the way the commission voted? Probably not."

Perhaps. But soon after the PGA case died, FTC officials found a new ally as their proposed budget appropriation has moved behind closed doors to a Senate-House conference committee.

Hollings--the South Carolina senator who derided the FTC's "fiddle-faddling"--has pledged to carry the agency's fight for the full, $98.9-million appropriation.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Winning Stroke

Professional golf is big business and getting bigger all the time. Under the aegis of PGA Tour Inc., the number of professional golf tournaments has nearly doubled in the past 10 years and purse money has quadrupled.

Number of PGA Tour events

'84: 72*

'94: 125**

*

Purse money for PGA Tour events

'84: $26.5 million

'94: $107.3 million**

*

Total annual charitable contributions

'84: $9.4 million

'94: $31.7 million

* Includes events of both the regular tour and senior tour (for players 50 and over)

** Includes events of regular tour, senior tour and Nike tour (for developing professional players)

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