LIV Golf is undergoing a major financial restructuring after Saudi Arabia’s Public Investment Fund decided in April to stop providing future funding to the league. CEO Scott O’Neil has since pursued new investment while working toward a slimmer version of the operation, with fewer events, reduced expenses, and a new equity model.
The situation has become increasingly important as LIV Golf attempts to finalize that new financial arrangement. The Athletic reported that the league is dealing with large player contracts while also trying to build a business model that can operate with less funding. The league has formally announced that a lead investor signed a term sheet, although the investor and the size of the investment have not been disclosed.
Bryson DeChambeau Has Leverage as LIV Golf Navigates Possible Bankruptcy
GettyBryson DeChambeau of United States
Bryson DeChambeau has significant leverage in LIV Golf’s restructuring because the league still needs its biggest stars while trying to reduce costs, according to The Athletic’s Gabby Herzig.
She reported that BC Partners may be seeking assurances that LIV Golf’s star players will remain with the league as a condition of finalizing a loan.
That creates a difficult situation for LIV, which needs recognizable players to help generate meaningful revenue from sponsors and television partners while also trying to establish a leaner financial structure.
Sarah Foss, global head of legal and restructuring at Debtwire, explained why the league cannot simply replace its biggest names.
“You need these players. You need them to continue on,” Foss said. “It’s not like you can just say, well, we’ll get some new golf stars to join us. That’s not likely to happen. I think this is probably being heavily negotiated. One party doesn’t have the upper hand. They both are going to need each other.”
DeChambeau’s position is particularly notable because The Athletic described him as committed to LIV Golf’s future despite his contract expiring. He also led a player meeting at Bedminster and has been directly involved in discussions surrounding investors.
That gives LIV Golf a complicated choice. Holding onto DeChambeau and other major players could make the league more expensive, but losing them could weaken the product at a time when investors are evaluating its future.
The Athletic reported that the league could enter a U.S. Chapter 11 bankruptcy, though no bankruptcy filing has been made.
Several developments, including the loss of PIF funding, the involvement of restructuring adviser Gene Davis, the work of Ducera Partners and the potential BC Partners loan, were cited by experts as indicators pointing toward that possibility.
The league is also considering an out-of-court restructuring, which could avoid the cost and publicity associated with bankruptcy.
Jon Rahm and Other LIV Golf Stars Face Contract Decisions
GettyJon Rahm of Spain
The financial pressure extends beyond DeChambeau. Jon Rahm is described by The Athletic as another particularly valuable player for LIV Golf, while Cameron Smith is also among the names connected to the league’s expensive contracts.
Rahm has been cautious when discussing his future.At the same time, LIV Golf has limited resources for negotiations as it attempts to create a smaller, more sustainable operation.
If LIV Golf enters Chapter 11, the league could potentially review its player contracts individually and determine which agreements remain financially viable.
Players could be offered a choice between renegotiating guaranteed money for equity in LIV 2.0 or having their contracts rejected.
An out-of-court restructuring could provide another route.
Foss said creditors or lenders can sometimes exchange some debt for equity in a reorganized company, creating a possible path for LIV to restructure without formally rejecting contracts.
The broader issue is that any money or equity secured by DeChambeau, Rahm, and, to a lesser extent, Smith could leave less available for other players.
As one expert told The Athletic, “Rahm and Bryson have leverage because they can say, look, I’m sure you’re choking on my agreement, I’m sure you’re not happy about it, but you can’t run the league without me.”
With LIV Golf targeting a final investment agreement around September, the next stage of its restructuring will determine how the league handles its star players and existing contracts.
Bryson DeChambeau Dealt Career-Defining LIV Golf News as Bankruptcy Looms