LIV Golf loses BC Partners financial backing

LiveGolf is on life support as BC Partners, the financial partner that was set to inject $300 million into the LiveGolf 2.0 concept, is set to officially withdraw their financial support in a court hearing on Thursday. I'm Brian Baloggy with Golf NewsNet. Looking at the news that was first reported by the Financial Times and then at other outlets, including ESPN, with additional details talking about BC Partners and their credit arm, BC Partners Credit, formally preparing to announce their withdrawal of a planned $300 million investment into Live Golf to resurrect the league and also to transition it to a player-owned model so that BC Partners, with their ownership stake in the proposed 2.0 league, could then ultimately use the net operating losses of the original Live Golf league the six billion dollar investment from the Saudis to be able to fund operations and other acquisitions which was really the intent of Live Golf 2.0 in the first place what appears to have happened based on Financial Times reporting and ESPN reporting wasn't necessarily that there weren't enough players who were interested in the concept Closer to a deadline that was set for the end of October and then eventually pushed out, there were reports from the Financial Times and elsewhere that some 15 players from Live Golf 1.0 were interested in remaining in Live Golf 2.0, even though we have public declarations from the likes of Jon Rahm and Tyrrell Hatton and Ian Poulter and others, Sergio Garcia among them. They were not going to be playing in Live Golf 2.0 and would instead pursue other playing opportunities, whether that would be their DP World Tour membership, with the DP World Tour saying they would not allow players to basically have dual membership and play Live Golf and the DP World Tour in 2027. Or they could go to the Asian Tour, which has been a partner of the original LiveGolf model because the Saudis invested not only in LiveGolf to the tune of $6 million, but also into the Asian Tour with the creation of the International Series. The International Series no longer exists with the Saudi Public Investment Fund. Withdrawing all of their financial support for not only Live Golf, but Asian Tour as well, which now has a deal with the PGA Tour and the DP World Tour for its future operations and also a pathway for its players to advance to the DP World Tour and ultimately, hopefully, in their eyes, to the PGA Tour. So, BC Partners is prepared to say in a court hearing that they are withdrawing their financial support on Thursday, and that means that $300 million will go away, and the most likely outcome of that is that Live Golf will no longer have an available financial backer to be able to continue the league's operations, and that will then transition instead of a Chapter 11 bankruptcy that will lead to an exit in the creation of Live Golf 2.0. It will instead lead to a liquidation of LiveGolf's assets and the closure of LiveGolf entirely. There are some alternative scenarios where you could have other outcomes, and we'll talk about those in a bit, but this all seems to be precipitated by a lack of signed contracts from players who were interested in LiveGolf 2.0. There was that reporting that there were some 15 players who were interested around this floating October deadline that's since been pushed out. And that instead, more recently, there were closer to 30 players who were at least committed to the idea, and maybe another 10 who were particularly interested. However... the reporting suggests that the negotiations between Live Golf 2.0, BC Partners and the interested players and their representation wasn't really getting anywhere wasn't leading to signed contracts and as this deadline keeps getting pushed out and the reality of the situation probably hit BC Partners, they realized they weren't going to get what they needed they weren't going to get the key players that they needed certainly with the likes of Rom, Sergio, Sergio Garcia. Tyrrell Hatton and others saying they weren't going to be a part of Live Golf 2.0 that ultimately led BC Partners to their decision to walk away from the entire concept. Now, as a part of the agreement that was enacted in the first place approving this $300 million investment through these court proceedings in this Chapter 11 bankruptcy reorganization plan, there is a penalty that That has to be paid. by Live Golf to BC Partners in the form of about $9 million as a 3% penalty if this deal is not executed as planned. So that would mean $9 million is going to BC Partners for their time and effort effectively, and then the liquidation could start to begin. Now, this doesn't close Chapter 11. This doesn't close the bankruptcy proceedings whatsoever. There are still a variety of unsecured claims that we've talked about in previous videos that need to be resolved. While Live Golf has asked to no longer honor the contracts, executory contracts, player contracts, player participation agreements, different vendor agreements, it's part of bankruptcy, and that is almost certain to be approved and handled moving forward. There are still these unsecured claims of not only players, but also other vendors who have done work under these contracted deals and have earned money based on those deals. And that money still needs to be resolved and paid out with what's available. We don't know what's going to happen there, and there will be more details to find out about that. There is also, I guess, a couple of strange possibilities out there that could happen as a result of this that might not necessarily lead to the end of Live Golf. After all, the Saudi Public Investment Fund may have pulled their support and announced that back in April, leading to what amounted to a $500 million loan to run out the rest of this past season. However, Saudis also were a provider of debtor in possession financing for this bankruptcy proceeding. So now they have to figure out what they want to do moving forward. And there is, I guess, a very strange, minute outside possibility that the Saudi public investment fund could suddenly have a change of heart and decide they want back in and they're going to take ownership back. And they would do that through some mechanism through through the court proceedings. I guess that is something that is. Inside the realm of possibility, even if a minuscule one, but without some kind of clear financial backer to handle things moving forward, including paying off existing debts and then moving forward to fund the league. This is going to be a liquidation. And while Liv said in their September filing for Chapter 11 bankruptcy that they have somewhere between $100 million and $500 million in assets, they also said they have between $500 million and $1 billion in liabilities. And while those liabilities, many of them will be crossed out and not honored as part of this process, there's still that matter of where does the money come from to keep this thing going. and also what is the value of the assets that live golf does have intellectual property perhaps which really isn't particularly valuable on an open market unless you're intending to operate a live brand or live series of golf tournaments unto itself so there may not be much that comes from that liquidation and whatever is sold whatever value then winds up going to all of these various creditors the thousands of them who have different claims in a different pecking order Based on what their contracts are worth and the value of them, and it's very likely that a lot of the people who are the vendors who have these unsecured claims are going to see at best pennies on the dollar, if anything whatsoever. As a result of all of this, and it's a really unfortunate situation, but with the likes of Jon Rahm making an agreement to walk away from Live Golf to get his rights back and an opportunity to participate in the DP World Tour freely, and perhaps on the PGA Tour in 2027, in exchange for giving up the money he was owed, not only for services rendered, but also... For his contract moving forward, and then to have Rick Shields, one of the original golf YouTubers, pull out his claims, probably as a result of a settlement, but perhaps not. He had $7 million worth of claims between what was owed to him in contract money through future years of a deal and also a little over $1.3 million that was owed to him for services already rendered. Taking those claims away is an indication of one of two things. One, knowledge that they were never going to get paid those monies in the first place. Or two, a settlement that made sense for them, but really was never going to make them whole for that money, that size of claim. So those two things were probably an indicator that this wasn't going to wind up in necessarily the happiest outcome for Live Golf or BC Partners in the actual functioning of Live Golf 2.0. So what that means entirely is unclear. We'll find a little bit more information in the hearing on Thursday in U.S. Bankruptcy Court. We'll find out more about the future of BC Partners' potential involvement in this in some other structured way. If there's another investor, maybe if the Public Investment Fund of Saudi Arabia has some interest in getting back in this. Again, those are all long shot scenarios. But the most likely outcome here is that instead of Live Golf 2.0 being a new league, It's going to lead to the end of Live Golf, as we know it with the liquidation of its assets and the end of this rival.