[Edaily Marketin Reporter YunJi Kim ] The professional golf league “LIV Golf,” into which Saudi Arabia’s Public Investment Fund (PIF) poured more than $5 billion (approximately 7 trillion won), is heading toward bankruptcy, causing disruptions to its operations in South Korea. LIV Golf had set out to penetrate the Korean market by assembling a team of Korean players and securing sponsorship from Korean companies, but with Saudi funding cut off, even the hosting of tournaments and the operation of the team have become uncertain. Amid this situation, BC Partners, a British private equity fund (PEF) manager, has played a new card by acquiring distressed debt to push for a league restructuring, raising the key question of whether the league’s existing operations in Korea can be maintained.

Shifting from Direct Investment to Debt Acquisition… BC Partners Takes a Gamble

According to local investment banking (IB) industry sources and foreign media reports on the 9th, the British private equity fund manager BC Partners is considering a plan to acquire $50 million (approximately 67.6 billion won) in LIV Golf loan bonds held by the Saudi Public Investment Fund (PIF). These bonds constitute DIP financing (loans to fund the operations of a company in bankruptcy protection) provided to maintain the business operations of a company that has entered bankruptcy protection proceedings. BC Partners plans to secure these bonds to increase its influence in the restructuring process and reorganize parts of LIV Golf’s business to launch a new golf league.

LIV Golf is a professional golf league launched by Saudi Arabia in 2022 to rival the U.S. PGA Tour. It expanded rapidly by paying hefty signing bonuses to star players such as Phil Mickelson and Dustin Johnson and offering massive prize pools, but it fell into financial difficulties as it could not cover the costs of player recruitment and tournament operations with its own revenue. Ultimately, the Public Investment Fund (PIF) decided in April of this year to halt additional funding, and LIV Golf filed for bankruptcy protection in a U.S. court last September.

Following the bankruptcy filing, BC Partners pursued a plan to launch a new golf league by investing up to $300 million (approximately 405.8 billion won). The plan aimed to reduce operating costs by granting players equity stakes in the league and their respective teams and scaling back the size of tournaments; however, negotiations hit a snag as some players demanded payment of guaranteed sums under their existing contracts and the right to withdraw from contracts to join the new league. Ultimately, BC Partners withdrew its investment plan on the 4th, and LIV Golf announced the following day that it would wind down its operations.

Rather than completely abandoning the possibility of restructuring the business, BC Partners played a new card: the acquisition of loan receivables. The strategy is to move away from the original approach of directly injecting funds to relaunch the league; instead, they plan to first secure creditor status and use that as a springboard to take the lead in the restructuring process.

It is reported that tax losses also played a role in the British private equity firm’s interest in LIV Golf, even leading it to alter the transaction structure. According to foreign media, the tax losses LIV Golf has accumulated in the U.S. and the U.K. amount to $5 billion (approximately 6.7355 trillion won). Since tax loss carryforwards can be deducted from future profits to reduce the tax burden if certain requirements are met, BC Partners is reportedly even considering ways to utilize them in the process of acquiring new businesses or restructuring the league.

Sponsorship of Korean Tournaments and Companies Also a Variable… Sustainability Uncertain Even if New League Launches

In South Korea, as LIV Golf’s liquidation process gets underway in earnest, analysts suggest that the future of the tournaments and sponsorship initiatives the organization had been pursuing in the country has become uncertain. LIV Golf held its first tournament in South Korea last May at the Jack Nicklaus Golf Club in Incheon, followed by a second tournament this May at the Busan Asiad Country Club. Although LIV Golf accelerated its push into the Korean market by signing a multi-year hosting agreement with the Busan Asiad Country Club, the suspension of league operations has made it difficult to guarantee that tournaments will be held next year.

Issues regarding unpaid contract fees for Korean players have also come to light. LIV Golf operated the Korean Golf Club this year, featuring An Byeong-hun as the core player alongside Song Young-han, Kim Min-kyu, and Moon Do-yeop; however, as financial difficulties worsened, the organization was unable to settle some of the contract fees and expenses owed to the players. According to creditor documents filed with a U.S. bankruptcy court, Ahn Byeong-hun’s unpaid third-quarter signing bonus amounts to approximately $1.81 million, and it is reported that Kim Min-kyu and Song Young-han have also not received their signing bonuses and tournament participation expenses. Subsequently, Ahn Byeong-hun left LIV Golf to compete in the qualifying school for the DP World Tour, and as the remaining players also parted ways with the league, the Korean Golf Club effectively began the process of dissolution.

Consequently, domestic companies that had been using LIV Golf as a sports marketing platform will likely need to reevaluate their sponsorship strategies. Hanwha Financial signed a multi-year sponsorship agreement with the Korean Golf Club this year, and domestic golf apparel and hotel companies also participated in sponsoring the team and the Busan tournament. However, following the suspension of funding from PIF, the Busan tournament faced difficulties securing sponsors, causing disruptions in sponsorship efforts; some major corporations that had been considering sponsorship actually withdrew from the final list. As the league enters liquidation proceedings, the industry anticipates that the future marketing plans of sponsors with long-term contracts will also undergo changes.

Meanwhile, even if BC Partners succeeds in restructuring the business, it remains uncertain whether the Korean tournament and the team’s operations will continue as before. This is because, unlike LIV Golf—which expanded its operations based on the massive financial resources of the Saudi sovereign wealth fund—BC Partners is planning to launch a new league focused on reducing operating costs. However, it is reported that BC Partners recently conveyed to business partners its willingness to inject additional funds if necessary to launch the new league. Depending on the outcome of the debt acquisition negotiations and the scale of the league’s restructuring, the hosting of tournaments in Korea, the management of the player roster, and sponsorship agreements with domestic companies are expected to change accordingly.