LIV Golf, the rebel golf league, has officially filed for Chapter 11 bankruptcy protection in the United States, an equivalent to voluntary administration in Australia. This significant development occurred months after Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), withdrew its primary funding. Bankruptcy documents reveal several prominent golfers, including Jon Rahm, owed over $US7.4 million, Bryson DeChambeau, about $US5.7 million, and Dustin Johnson, $US5.4 million, are now among the creditors. While the PIF will reportedly provide almost $US50 million in interim financing, exploring alternative models, the league’s long-term survival without substantial Saudi backing remains highly uncertain. This could prompt Australian golfers like Cameron Smith to reconsider traditional tours.
The league’s collapse coincides with escalating geopolitical tensions in the Middle East, as a fresh surge in the Iran war briefly pushed crude oil prices above $US99 a barrel following US strikes near Iran’s key crude export hub. These renewed attacks are fuelling fears of a prolonged conflict, exerting pressure across global financial markets. Bond yields continue to climb as investors factor in higher inflation and increased debt issuance. The US 10-year Treasury yield briefly hit 4.8 per cent, with average 10-year yields across the G7 now at 4 per cent, up from 2 per cent in 2022.
The escalating conflict adds significant strain to the Saudi economy. Official data showed the kingdom suffered its deepest contraction since the pandemic in the June quarter, and Saudi Arabia recently raised $US3.25 billion in US dollar bonds. The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, diversifies the kingdom’s economy from oil, investing globally across sectors like sports, technology, and infrastructure, supporting Vision 2030. Once a driving force behind ambitious goals, the PIF now faces difficult choices. A potential reduction in Saudi Arabia’s financial firepower, amidst energy market disruptions and a slowing economy, could contribute to a further rise in the global cost of capital, impacting more than just elite golfers.
