Lawyers already representing golf star Bryson DeChambeau are seeking to organise an alliance of players to negotiate terms as the successor to the bankrupt LIV Golf league pitches them on joining a new tour.
A mooted “steering” committee of players only, represented by Weil, Gotshal and Manges and separate from an official creditors committee, could press player demands directly in court and with BC Partners and LIV, two major counterparties in the Chapter 11 bankruptcy case.
DeChambeau’s interest in continuing the next iteration comes as lawyers for LIV’s other marquee star, Jon Rahm, told a federal bankruptcy court in New Jersey on Wednesday that Rahm would not sign up for the potential new team-format league. Rahm’s lawyer further said the Spaniard was in “advanced discussions on a consensual separation agreement” with the existing LIV.
The FT has reported the bulk of the roughly $400mn outstanding payments to golfers from LIV is owed to Rahm and DeChambeau.
An agreement struck this week between LIV, its previous backer, the Public Investment Fund of Saudi Arabia and private capital sponsor BC Partners includes a $4mn contribution to an existing $50mn bankruptcy loan extended by PIF, with the asset management firm’s money funding the launch of “LIV 2.0”.
The Saudi Arabian fund has told the court it will shift the bankruptcy case to a “wind-down” should the new plan not come together by the end of the month, leaving BC in a race to bring a critical mass of players on board.
BC said it was willing to lead a total $300mn investment to launch LIV 2.0 but PIF insisted the investor inject money immediately to show their seriousness about forming the new league, the FT has reported.
The settlement between BC and PIF now has freed the private capital firm to make its final pitches to players, as it requires the investor to have agreements with a “requisite” number of players by October 25.
“The ball is literally in the court of BC and the company,” said a person close to PIF, who noted that no player had publicly committed to LIV 2.0 and that it was now up to the private capital firm to share a fully formed business plan.
A committee of unsecured creditors has been formed with just a single golfer, Michael La Sasso, among its seven members. The other committee members are largely trade vendors who have previously provided services to LIV Golf and its tournaments and are owed payment.
Advisers to the committee include law firm Willkie, Farr & Gallagher and consultant group Berkeley Research Group. LIV may owe more than $100mn in total to the trade creditors, according to a person familiar with the situation.
Ted Goldthorpe, an executive at BC Partners, told an audience at a conference in London sponsored by trade publication Sportico that team franchises in LIV 2.0 could eventually be worth $100mn or more.
The preliminary terms for the revived LIV call for players to own a majority of the equity in the new league as a settlement for their existing claims against LIV. Players who choose to play in the new league can then get extra payouts.
“You can point to David Beckham in Miami or Magic Johnson and the Lakers. There are many examples. These guys get to have their cake and eat it too,” Goldthorpe said.
“They can create real wealth at the team level and the holding company level, and they still play for prize money and make good money. To the extent we can make the league sustainable, they will create real wealth on these teams,” he added.
LIV 2.0 is expected to rehire staff in the coming days and has assembled a preliminary tournament schedule, according to a person familiar with its plans. Large family offices have expressed interest in participating in the contemplated $300mn financing, the person said. The BC discussions are occurring directly with players as well as agents and the businesspeople who run the current LIV team franchises.
An unsecured creditor committee is largely looking out for trade vendors whose interests may diverge from players, that gap leading some law firms to market the idea of a players-only advocacy group.
Besides economic terms, players considering LIV 2.0 have expressed concern that rival leagues such as the US PGA Tour and Europe’s DP World Tour may not allow them to shuttle between circuits during a season.
Weil, Gotshal is one of the most prominent firms in US corporate restructuring, most recently representing auto-parts maker First Brands in its Chapter 11 case.
Multiple players have had their respective legal counsel register an appearance with the bankruptcy court. One law firm, Reed Smith, is representing five players and may also angle to form a committee.
LIV recently agreed to a request from golfer Sergio Garcia to allow him to formally terminate his player agreement with the league, even as the league had already sought to void such contracts as a part of the bankruptcy.
Garcia’s lawyers told the court they needed a formal termination, in addition to the voided agreement through the court process, to be able to enter into new endorsements and join another league — LIV 2.0 or otherwise.
In the court hearing on Wednesday, lawyers for multiple golfers said they also wanted formal termination. It was unclear if Garcia or any of the other players seeking termination remain interested in LIV 2.0.