LIV Golf faces possible liquidation after rescue plan collapses

What happened

A plan to reboot LIV Golf has unraveled, and liquidation is now on the table, per someone briefed on the talks. The same person said BC Partners, which had pledged to spearhead a $300 million lifeline, now intends to pull the plug on the restructuring.

The individual wasn't authorized to speak publicly. LIV did not reply to a request for comment. The league is slated to go before the bankruptcy court on Thursday. The Financial Times reported earlier on BC Partners' move.

Why the restructuring cracked

LIV filed for Chapter 11 in September after Saudi Arabia's Public Investment Fund cut off funding following losses of about $5 billion. The upstart got rolling earlier this decade by luring players from the PGA Tour with big-money deals, then stormed into 2022 touting quicker formats and more spectacle.

The turnaround plan hinged on trimming hefty upfront payments to golfers. In exchange, the revamped structure called for players to end up owning most of the league's common equity in an entity nicknamed LIV 2.0, with BC Partners and additional investors taking minority positions. Lawyers told the court they were racing a tight clock to secure player approval because, out of bankruptcy, the players would own LIV.

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League representatives said they were on pace to get that support despite the departure of top player Jon Rahm. Rahm - a Masters champion - was due roughly $7 million at the time of LIV's bankruptcy filing. During court proceedings last month, a LIV attorney contended that Europe's DP World Tour was impeding progress by requiring players to choose between the tours.

The investor angle

This bankruptcy is unusual: the players are both the largest unsecured creditors and among the league's most valuable commercial assets. If LIV winds down, it would cap a volatile run that even pushed the PGA Tour into merger talks in 2023 that never closed. In plain English: billions spent, soft attendance and TV ratings, then the Saudis stepped back.

For your portfolio, the episode is a reminder that sports leagues built on rich guarantees can be fragile when the capital tide turns - especially when core talent doubles as the creditor base. The bottom line: investor resolve and contract flexibility matter as much as fan interest when the business model meets a rough patch.

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