Can LIV Golf survive? Bankruptcy attorney breaks down the risks
Earlier this week, LIV Golf CEO Scott O'Neil announced that the league is close to securing funding to keep the circuit afloat for the 2027 season and perhaps beyond.If LIV does survive, it will need to move forward in a very different fashion, as it has burned through billions since its ballyhooed 2022 launch.Before finally turning the spigot off, Saudi Arabias Public Investment Fund approved a fresh $266.6 million capital injection back in February, pushing its total investment in LIV Golf to approximately $5.3 billion since the leagues launch. LIVs net outlay averaged roughly $100 million per month across 2024 and 2025.And while many have speculated that LIV Golf appeared to be priming for a Chapter 11 bankruptcy filing, that might not be in the league's best interest, according to Joe Bain, a partner who focuses on restructuring for the law firm Jones Walker LLP.The Houston-based attorney is a golf fan, and he's been keeping a close eye on the proceedings, although he has no first-hand knowledge of what's going on behind the scenes at LIV Golf's corporate offices.Bain sat down with Golfweek to talk player contracts, best-case scenarios and break down some of the intricacies in this complex dance.GW: When you look at LIV Golf and the potential for the league to file for bankruptcy, what are the advantages for LIV Golf in going that route?Joe Bain: I always tell my clients that the thre,at of bankruptcy is often more powerful than the actual filing because bankruptcy is just very expensive, especially. So just taking a step back, there are basically two types of bankruptcy filings for a company of this size. One is Chapter 7. One is Chapter 11. The big advantage with the Chapter 11 case is that you maintain control of the process but it's also incredibly expensive so there are advantages but oftentimes especially in a situation like this you know, may throw that term out there but you, it's all about trying to preserve value and at the end of the day, you can do certain things in a bankruptcy context that you can't do in a normal commercial context. But you're trying to get to some sort of a deal to either avoid that or to have a very short ride through bankruptcy.If LIV Golf does go that route, what would be the disadvantages long term for the league in terms of restructuring?One thing is restructuring; obviously, there's out-of-court and in-court restructuring, so out-of-court would be you're avoiding bankruptcy altogether. That's their ideal situation primarily because the 'B' word, the bankruptcy word, in my view and kind of where this is headed, is they're trying to secure TV rights or trying to get some sort of value through that. And just oftentimes the appearance of a bankruptcy filing and all that can damage kind of your brand globally. So they're certainly trying to avoid that if they can. That's the major disadvantage. And then the other one is, quite frankly, in the Chapter 11 case, you have to pay for your own attorneys.Oftentimes, there's a creditors committee that's appointed. You have to pay for the fees of the creditors committee. They all come out of what's called the bankruptcy estate. So it is a very, very expensive process. So there are ways to mitigate that. And, like I said, it really comes down to trying to create some sort of a deal on the front end. So even if you have to go to bankruptcy, it's very quick. You try and get in and out as quickly as you can.One of the big concerns has player contracts and where that might stand. There was a lot of money thrown at these guys up front. If they go to Chapter 11 bankruptcy, what does that mean to the player contracts that are currently in place, and how could it affect future negotiations?So it's interesting, especially in this circumstance. Bankruptcy is a system set up to try and preserve value. And here, you know, your biggest value is your players. So this is kind of a unique situation. You've seen bankruptcy filings in the past. But normally it's like a team. So you have the L.A. Dodgers several years ago. You have the Texas Rangers, for example. Here you're talking about the entire league. So it's not a team. It's the league. The player contracts. There's a provision in the Bankruptcy Code. It's Levin USC 365 that allows you to reject contracts or assume and assign them. If you reject them, then they become, under the bankruptcy code, under federal law, it acts as a pre-petition breach. So it's as if you breached that contract right before you filed. And the reason is because you'll get pennies on the dollar normally. So there's certainly the threat of that. Oftentimes in retail bankruptcies, they'll look at all their leases and they'll say, well, we're profitable here, but these leases are really killing us in terms of profitability. So they'll reject those leases and they'll keep their more profitable ones. So you can do the same thing here, in theory. The recent discussion about a potential deal is talking about equitizing or making the players part of the ownership structure. I'm looking at that from a bankruptcy standpoint; there's a common strategy where you equitize your debt. You basically take something you owe whatever X amount of millions of dollars and rather than having debt, it turns into equity. And I think that's what they're trying to do here is they're trying to bring their real value drivers, their players, into the fold to try and secure viewers, TV rights, all of that to drive profitability. Bryson DeChambeau seems to be all in on wherever the future of LIV Golf goes, but Jon Rahm seems very lukewarm at times. Could he then, in the case of a Chapter 11 bankruptcy, void his own contract or can he tweak his own contract and try to return to the PGA Tour? He could certainly. There's a couple of things that could happen to his contract. What I suspect he's doing is, and again, I don't have any firsthand knowledge, but based off of my own experience in similar situations, in bankruptcy, you often try to preserve all your optionality, right? So he's trying to see where things are going before he actually makes a decision. But all the ability to reject or assume a contract goes with the debtor. So the company filing for bankruptcy. So in this case, LIV. So he would not have any rights to necessarily change his contract. But generally in a bankruptcy case, you're allowed to assume and assign your contracts to other entities, like you go through a sale and you could assume it and assign it. Personal service contracts like player performance are a little bit different and there's some restraints on your ability to do that and there are other things that he could do as the counterparty. He would have the right for what's called the adequate assurance of future performance, so just basically making sure whoever ends up with that contract can perform. So he's not without any kind of a remedy. Certainly there are things he can do in the bankruptcy case. And most notably, also he, as I understand it, he would be one of the largest creditors out there. So he certainly has leverage. There are basically two games in town. There's LIV and there's the PGA. He's probably looking at both options. And oftentimes what you see in Chapter 11 bankruptcy context or in a pre-filing context where they're just trying to negotiate things on the front end with the idea that there might be a filing at some point in the future if they can't get the deal they want or the deal they need, more appropriately. He can renegotiate just out of court and usually they'll want to bring him into the deal. I suspect this is going on right now. I don't know the exact figures but I understand they owe him a lot of money. So they're probably trying to figure out, okay we can't pay that because cash flow, so they're trying to equitize his debt and give him some equity in the new structure. You see this in other sports and that can be worth a lot of money depending on if the league is successful or not. When you talk about creditors, and obviously we're talking about players as creditors, that's one thing, but other creditors that would be involved. What do they stand to lose in this process if that is the case?It's subject to contract law, so if there are certain circumstances that you know, would not allow the contract to be profitable. LIV can go to those creditors. My understanding is most of their creditors are the players, but obviously in running any kind of operation like this, you have the vendors, you have the mom and pops, the little guys who are just doing deals. And this could have huge implications for their own business. So oftentimes you will see an attempt on the company that's in distress to try and renegotiate some of those contracts. And again, it kind of goes to the leverage that they have: the threat of bankruptcy. Like, you need to agree to cut this or spread out the payment, or we're possibly going to have to file for bankruptcy.That can be very motivating for a creditor who's like your mom and pop because oftentimes in a bankruptcy case like this, they'll expect pennies on the dollar. I'm a golf fan, so I'm very hopeful that they're able to pull this deal together. They're not making widgets; they're making golf, so your ability as a creditor to recover something is minimal because they don't have a lot of assets that are worth a lot of money, they have player contracts and indentured servitude ended in this country a long time ago. This has to be consensual at the end of the day, or it just doesn't work. Because of all the factors that are at play with a 2027 season, and trying to hash out contracts, trying to find venues, when you look at a timeline for something like this, what should we be expecting, if they are to file? Would it happen in a certain time frame soon? And if that is the case, how long would that process then take to play out? It depends, and I know that is the most lawyer answer out there, but usually in a distressed context, you're not talking about a lot of time. We always use the saying, a melting ice cube, because they have to pull together some sort of a deal or they're going to start running. Ultimately here, if they start losing the potential for TV deals or viewership or people just stop paying attention, it's gonna be very hard for them to generate revenue in 2027 and beyond. So there is a very short timeframe because they need to ensure the brand to the ultimate end consumer, which in this case is all the golf fans, and they need to get that done fairly quickly. And I think a lot of that's going to be driven by the discussions with some of the key players, because if they get buy-in from those key players, then this could be very exciting. On the other hand, if they don't get that buy-in, worst case scenario, you could see a Chapter 11 filing sooner rather than later. If you were to wager something on, yes, they'll file; no, they won't file, where would you stand on that? As someone who's gone through these processes before, what do you see as the most likely scenario?If you would have asked me a week ago, I would have said that I think that there's probably going to be a filing in the short term. You saw rumors of them hiring restructuring advisors and so forth, preparing to do something. I think the announcement from the CEO this past week, Scott O'Neill, I think it's going to depend on what that deal looks like. I mean, if that is real and if they get players and buy-in, I think that there is a lot of value here. I think that the sport, you know, means an alternative to the PGA to some extent. And I think a lot of things that you saw, I just think that there's a lot of potential. So they might be able to avoid it all entirely. I think a lot of it's going to hinge on what happens with those discussions with those players. Again, I'm pontificating. I have no first-game knowledge, but they're going to their value drivers, which are their players, and saying, look, I know we owe you whatever in exchange for equity in this new organization, which I'm sure they're showing their financial projections and all of this. They're really betting on, can they get buy-in for next season? Can they possibly get a lucrative TV contract? And, you know, you see this in other sports, right? I'm a big F1 fan. You saw this with F1 when it really took off. And now some of the players, some of the stakeholders in that, you know, Toto Wolff comes to mind. He's a billionaire because he took equity in something that just took off. And you could imagine scenarios where some of these players do the same. Even with the amount of money that they make, there are very few sports billionaires. If they get equity in a business like this, and again, it really depends on the deal and what it looks like, but for example, Rahm, I don't know how many more years he has to play. That equity could pay him well past his retirement, depending on how it's set up. Like I said, I'm a golf fan, so I'm hopeful that something comes out of this. It was interesting to see LIV kind of come onto the scene. If nothing else, it gave us something to talk about extensively. I really enjoy the business side of sports, so it was interesting to see all this play out. Especially as a restructuring lawyer, you know, we live and breathe trying to save businesses. So I really hope that they're able to come up with something. You can see this being extremely profitable or you could see 2027 just kind of being a dud for whatever reason. And they might say, you know what, we tried it. We can't get any more money in. This isn't going to work. You could see both scenarios. Have you seen a lot of examples of companies that perhaps outspent what they should have spent early, but then through a process like this, got it back on track to be able to be a very profitable and successful business? Or is that something that's a long shot?They spent all this money and what they did was they created a brand and the brand is worth something because people are paying attention to it. They clearly brought stars over to their side. And I love watching the tournaments on Sunday. I'm a big follower. But there was clearly a desire, at least on the players' part, to have someone alternative to the PGA Tour. I'm trying to think of an example. I mean, the L.A. Dodgers went through bankruptcy, and they're I'm an Astros fan, so I, you know, it's hard. I can't talk about the L.A. Dodgers because I don't think that my PR guy would like the words coming out of my mouth, but they have been very successful and they have a lot of resources. So they're a good example. I also think you look at, and this is more of an abstract example, the most profitable league that exists is the NFL. And if you watch the NFL, what they really keyed in on, and you saw it in the Jerry Jones documentary on Netflix was, you know, one of the things, reasons why the Cowboys became so successful is because he started really playing up for the TV rights.And for that, you could see LIV Golf do something like that and be insanely profitable, but the key is gonna be the next, you know, over the short term, getting some sort of buy-in from the players, and then also really ramping up for next year to get some sort of a TV deal and get people to really pay attention. And then who knows?Tim Schmitt is the managing editor of Golfweek.This article originally appeared on Golfweek: Can LIV Golf survive? Bankruptcy attorney breaks down the risks
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