LIV Golf’s $5 Billion Path to Bankruptcy

SPEAKER_1 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Sean Zak (0:08)

LIV had one of the biggest financiers in the world, and then almost out of the blue, suddenly it didn't.

David Gura (0:15)

It would be hard to imagine back in 2021, when LIV Golf launched, that the star-studded multi-billion dollar league would end up filing for bankruptcy as it did this week.

Sean Zak (0:25)

This is a golf league that was spending lavishly thanks to the Saudi Public Investment Fund, and was doing so for over four years.

David Gura (0:34)

Sean Zak, senior writer at golf.com, was at LIV's first event in 2022

Sean Zak (0:40)

It will forever be remembered as a week that stopped the golf world in its tracks. You have Greg Norman and Phil Mickelson and Dustin Johnson and these heavy hitters in the golf world. It was brash and bold, and ultimately, that week ended with the governor of the Saudi PIF, Yasser Al-Rumayan, taking the mic and saying, I have so much money, I have so much power now. If anybody shoots a perfect round of golf, if anyone shoots 54, that would be 18 under on 18 holes.

I'm going to pay that person 54 million dollars.

David Gura (1:18)

And while all that money attracted attention and controversy, LIV was not able to convert that into viewership.

Sean Zak (1:25)

When you start talking about money that starts with a capital B and basically gets to the point of we're spending a billion a year and we're not making a whole lot coming back in, it starts to be obviously unsustainable, but in hindsight, it's just irrational.

SPEAKER_4 (1:44)

After five billion dollars, the Saudi money spigot is shut off.

David Gura (1:48)

LIV's chapter 11 filing shows the organization now owes millions of dollars a piece to some of its golfers and its plan is to use the bankruptcy process to restructure LIV into a LIV 2.0, an organization owned by the athletes themselves who have to decide whether they'll sign on to keep the tour alive.

Sean Zak (2:09)

This is the first week in which we really realize what that all looks like. And so the next three or four weeks are crucial for LIV Golf's management.

David Gura (2:23)

I'm David Gura and this is the Big Take from Bloomberg News. Today on the show, how a Saudi funded competitor to the PGA Tour burned through $5 billion and where LIV Golf goes from here.

Take me back to 2021 when this league was founded. What sparked its creation? What was it trying to offer that was different from what the PGA offers?

Sean Zak (2:47)

If you look at the PGA Tour five years ago, it was very traditional.

It was a non-profit and it was not that exciting. But one week a year, there's team golf. It's at the Ryder Cup. It's at the President's Cup. And so those events have been so popular with fans, have been so just boisterous and fun. It felt like such a hard pivot from the golf, the staid traditionalist sport that we've known that maybe LIV could tap into something. Maybe its founders could create a team corner of the game that would be even more exciting than the golf that we knew.

David Gura (3:26)

How was it received from the get-go?

Sean Zak (3:29)

Well, it depends on who you ask because it became very political at some point. The status quo, the PGA Tour decried it immediately.

And the funding was coming from a sovereign wealth fund of a country with a repressive human rights reputation. It was immediately discussed in many ways as an entity that was sportswashing its reputation, which is just to say investing immensely in corners of the sports world that could tell people, hey, the Saudis are doing things differently.

David Gura (4:03)

How was the game itself different from the PGA's format?

Sean Zak (4:06)

It was a limited field. It was going to start with four player teams, 12 teams. Everyone was going to get guaranteed money and everyone was going to play at the exact same time. Now, one of the weird things in golf is that you have guys teeing off at 7 in the morning competing with guys who tee off at 3 in the afternoon. The weather changes, the course itself changes, grass grows during that time. And what LIV was offering was everyone starting at the exact same time at different points on the same course. It's called the Shotgun Start. It narrowed the TV window by about 50 to 60%.

So that was more enticing in theory for a TV broadcast. And it was planning to go all over the world. And it was going to tally up scores for players on a team and offer up $5 million every week just to the team competition. They also brought concerts to golf tournaments. Every single place they went, they brought a headlining concert, and sometimes two.