31st August 2026
There is a rather good business lesson developing on the golf course.
LIV Golf was created with billions of dollars behind it, attracted some of the world's biggest golfing names by offering enormous contracts and prize money, challenged the established PGA Tour and succeeded in changing the economics of professional golf.
Yet now, barely four years after its launch, LIV Golf is preparing for the possibility of bankruptcy.
That does not necessarily mean it will disappear. But it does raise a much more interesting question.
What happens when a business built on virtually unlimited financial backing suddenly has to stand on its own feet?
The latest reports are serious. Reuters and the Financial Times say LIV is preparing for a possible Chapter 11 bankruptcy filing as early as the week beginning 7 September. The Saudi Arabian Public Investment Fund, which has invested more than $5 billion in LIV since its launch in 2022, has stopped providing financial support beyond the 2026 season.
LIV has also laid off the majority of its workforce, with many employees due to leave in early September. At the same time, the organisation is trying to secure new investment for what it calls the next stage of the competition. This is a remarkable turnaround in 4 years
When LIV appeared in 2022, its financial muscle was one of the things that made it so disruptive.
The league could offer players sums of money which the established tours could not easily match. Some of the world's leading golfers accepted enormous guarantees to join.
The strategy worked and LIV got the players with pelnty of publicity.
It got the arguments going and it forced the established golf authorities to take the challenge seriously.
But there was always one question lurking underneath the spectacle.
Could LIV ever become a self-sustaining business?
That question has now become rather more urgent.
The Saudi money changed everything
The Public Investment Fund of Saudi Arabia was not an ordinary investor.
It is one of the world's largest sovereign wealth funds.
That gave LIV the ability to operate on a scale which would have been extremely difficult for a normal start-up business.
A conventional new sports league would normally have to build an audience, secure television deals, attract sponsors, sell tickets and gradually develop its revenues.
LIV effectively began at the other end.
It had the money first.
It could then spend that money to attract the stars.
The stars attracted attention.
The attention attracted more viewers and commercial interest.
And the hope was that eventually a sustainable business would emerge.
That is a perfectly understandable strategy for a wealthy investor pursuing a long-term objective.
But it becomes a problem when the investor decides that the losses have gone far enough.
And that appears to be what has happened.
The bill for the experiment is enormous
More than $5 billion has reportedly been invested in LIV since its creation.
That is an extraordinary amount of money for a golf competition which is still trying to establish itself commercially.
It also illustrates something which is often misunderstood about business.
Revenue is not profit.
A company can generate enormous publicity, have valuable employees, attract customers and become a household name while still losing money.
LIV's problem is that the cost of attracting and retaining its players has been enormous.
The league has offered guaranteed payments and bonuses which are difficult to reconcile with a conventional sports business model.
Now that its principal source of finance is withdrawing, those commitments have become a serious problem.
According to the Financial Times, some players are being offered settlements representing only a fraction of the money they were originally promised. Players who do not settle could potentially become unsecured creditors if LIV enters bankruptcy proceedings.
That could produce some extremely complicated legal arguments.
Bankruptcy does not necessarily mean the end
This is where the headlines can be misleading.
If LIV files for Chapter 11 protection, that does not automatically mean the organisation closes its doors.
Chapter 11 is primarily a restructuring process.
It can give a company protection while it renegotiates debts, contracts and other obligations.
And that appears to be part of what is being considered.
The proposed future version of LIV, sometimes referred to as LIV 2.0, would reportedly be considerably smaller. The Financial Times reports that the plan could involve only ten global tournaments rather than the much larger operation previously envisaged.
Prize money would also be reduced substantially.
In other words, the proposed solution appears to be remarkably simple in business terms.
Spend less.
That may sound obvious.
But it is also a recognition that the original model was not sustainable without the Saudi money.
The players are now part of the problem
Perhaps the most fascinating part of the story is what happens to the golfers.
LIV attracted players by offering them financial security on a scale rarely seen in professional sport.
That was one of its great strengths.
It may now be one of its greatest weaknesses.
If a player has been promised tens of millions of dollars, who is responsible for paying it if the organisation cannot?
And if the player accepts a much smaller settlement, what happens to the remaining amount?
The answers will be determined partly by contracts and partly by bankruptcy law.
But the practical problem is obvious.
A golfer who once had the financial security of an enormous guaranteed contract may suddenly discover that the guarantee is worth rather less than expected.
That is a sobering lesson for anyone who signs a contract with a company whose future depends heavily upon one wealthy backer.
The suppliers have a problem too
It isn't only the players.
Reports have also emerged of vendors and contractors claiming that they are owed money by LIV.
That is where the story starts to resemble an ordinary business failure.
A large organisation employs people.
It hires suppliers.
It books venues.
It pays for travel.
It contracts television and media services.
It buys advertising.
It pays consultants.
It creates a large network of businesses which depend upon being paid.
If the central source of funding disappears, the consequences spread far beyond the headline organisation.
That is why bankruptcy protection can become necessary.
It gives the company a mechanism for dealing with all those competing claims.
Could someone else rescue it?
Possibly.
LIV is reportedly negotiating with potential investors, including BC Partners, with a possible investment of around $300 million being discussed.
There is therefore a possibility that LIV emerges from this crisis as a much smaller and more conventional sports business.
That would be quite an achievement.
It would also be a very different organisation from the one launched in 2022.
The question is whether a smaller LIV can generate enough revenue to survive without another enormous financial subsidy.
That is the real test.
And there is an uncomfortable lesson here for business
We often hear that money solves problems.
It certainly solves some.
Money can buy premises.
It can buy machinery.
It can employ people.
It can advertise a product.
It can acquire another company.
And, as LIV demonstrated, it can buy some of the world's most famous sporting talent.
But money does not automatically create a viable business model.
At some point customers have to pay enough for the product or service to cover the costs of producing it.
That is the bit which cannot be avoided indefinitely.
A billionaire can subsidise losses for years.
A sovereign wealth fund can subsidise losses for years.
A government can subsidise losses for years.
But eventually somebody has to ask whether the underlying activity can stand without the subsidy.
That is the question LIV is now being forced to answer.
There is a lesson here far beyond golf
This is why the LIV story is actually more interesting as a business story than as a golf story.
There are plenty of businesses around the world which have been built on cheap money, government support, private equity, venture capital or wealthy owners prepared to tolerate losses while the company grows.
Some become successful.
Others don't.
The danger comes when everyone mistakes access to capital for evidence of commercial success.
They are not the same thing.
A company can be extremely well financed and still have a fundamentally flawed business model.
Conversely, a relatively small company can survive for decades because it generates enough cash from its customers to pay its bills.
That is often much less glamorous.
But it is sustainable.
LIV may yet survive
It would be wrong to write LIV's obituary today.
There is still a potential investor.
There is still a proposed future league.
There are still major players attached to it.
And Chapter 11, if it happens, could provide the mechanism for restructuring rather than liquidation.
But something has clearly changed.
The days when LIV could simply spend billions to disrupt professional golf appear to be over.
The next stage will have to be much more disciplined.
It will have to ask how many tournaments it really needs.
How much prize money it can afford.
How many staff it requires.
How much television revenue it can generate.
How much sponsorship it can attract.
And, ultimately, whether people are willing to pay enough to make the whole thing work.
That is not a particularly glamorous question.
But it is the most important one.
Perhaps the greatest irony of LIV Golf is that the organisation which set out to disrupt the traditional golf business may now be discovering one of the oldest rules in business.
You can borrow, invest or spend your way into a market.
But sooner or later, the customers have to pay the bills.