Scarcity can’t be bought: What LIV Golf tells private capital about investing in sport

Earlier this month I sat in a room in Melbourne at SportNXT, a gathering of global sport industry decision-makers and entrepreneurs, listening to a panel of major fund investors explain, with total confidence, why sport is now one of the safest bets in institutional finance. Between them, the panellists — from a global alternative asset manager, an industry superannuation fund, a sports-focused private credit shop, and a private equity firm — represented tens of billions of dollars of capital already committed to the sector. Their case was fluent, well-rehearsed, and, on its own terms, entirely persuasive.

Then, on 8 September, LIV Golf filed for Chapter 11 bankruptcy.

The timing is almost too neat. Here is a business that spent an estimated five billion dollars trying to manufacture, overnight, the exact conditions the SportNXT panel spent an hour describing as the reason sport works as an asset class. It failed. Understanding why is the more interesting story than the bankruptcy filing itself — and it tells you a great deal about which parts of the "sport is safe" thesis are actually true, and which parts were doing more work in the pitch deck than in reality.

The SportNXT panel's argument, stripped of its more evocative language, rested on four claims. Sport behaves like an institutional asset because of scarcity — there is only one NFL, one Premier League, one set of century-old franchises. It behaves like infrastructure because fan loyalty generates durable, protected cash flow, largely immune to the economic cycle. It offers a genuinely enormous investable universe — a market sized at somewhere between two and three trillion dollars once you count venues, data, technology and media rights alongside the teams themselves. And it is, by the numbers, wildly undercapitalised: something like ten per cent debt-to-value against seventy per cent for conventional infrastructure, which in the eyes of institutional lenders looks less like risk and more like opportunity.

Each of those claims is defensible. None of them is unconditional. And if you read the room closely, the panel's own members occasionally admitted as much — one investor's observation that "you can buy a great asset that's a poor investment" sits inside an otherwise bullish hour like a warning nobody quite followed up on.

Scarcity is doing all the work

Of the four pillars, three are really downstream of the first. Durable cash flow exists because scarcity gives fans nowhere else to put their loyalty. The ecosystem is valuable because scarce live content pulls money into everything around it — stadiums, broadcast infrastructure, data platforms. Undercapitalisation is attractive only because the underlying asset is assumed to be safe, which is itself a scarcity argument. Take scarcity away, and the other three claims lose their foundation.

Which is exactly the experiment LIV Golf ran, whether by design or by accident. You cannot buy decades of institutional memory, generational fan attachment, or the kind of media-rights leverage that comes from being the only game in town. LIV tried to buy the outcomes of scarcity — star names, a broadcast slate, instant relevance — without the process that normally produces them. Saudi Arabia's Public Investment Fund poured more than five billion dollars into the venture since its 2022 launch, and by most reporting the league was burning through cash at a rate approaching one hundred million dollars a month. That is not a sustainable business; it is a very expensive way of discovering that scarcity cannot be manufactured on a five-year timeline, however deep the pockets behind it.

The PIF paradox

What makes the LIV story instructive rather than simply sad is how PIF itself behaved once the funding no longer made sense. LIV Golf sits inside PIF's portfolio as a separate corporate entity, and PIF appears to have treated it the way any disciplined institutional allocator treats an underperforming position: it capped its losses. Rather than continuing to fund an open-ended cash burn, PIF signalled back in April that support would end with the close of the 2026 season, and reportedly offered only a modest debtor-in-possession loan — enough to keep the business alive through court proceedings, not enough to keep it running as before.

That is, in miniature, exactly the discipline the SportNXT panel described as the hallmark of institutional sports capital — assessing risk-adjusted returns rather than getting swept up in the romance of the asset. PIF walking away from LIV isn't a rejection of the "sport as infrastructure" thesis. It's confirmation of it. The fund behaved precisely as the panel said sophisticated capital should: dispassionately, and on the numbers.

A reset, not a death sentence

Chapter 11 is a legal mechanism for clearing unpayable legacy debt so that new capital can step in without inheriting the mess — a corporate reset rather than a corporate ending. The "LIV 2.0" proposal reportedly on the table, backed by the private equity firm BC Partners, would strip the league down to a leaner, more player-owned model with a smaller schedule and materially reduced guarantees. Players face a genuine fork: settle and join the new structure, settle and walk away, or pursue their existing contractual claims through the bankruptcy process as unsecured creditors.

There's an argument that this is the moment LIV starts, for the first time, trying to earn the conditions it originally tried to buy. A smaller, financially disciplined, equity-aligned structure is closer to how durable sports properties actually get built — slowly, with the people inside the business bearing some of the downside — than the original petrodollar-funded sprint ever was.

The distinction that matters

None of this contradicts the SportNXT panel. It sharpens their argument. Sport can behave like a safe, infrastructure-like asset class — but only where the underlying conditions are structural rather than purchased: scarcity that took decades to build, governance that has matured under scrutiny, fan bases whose loyalty long predates any capital raise.* Where those conditions are absent, no amount of capital will conjure them into existence on a five-year clock. You can bankroll disruption. You cannot bankroll legitimacy. LIV Golf is the clearest recent proof that the two are not the same purchase.

* That is, by the way, why the FIFA President was so keen to sell off 20% of the World Cup… It failed because FIFA governance is now further maturing under scrutiny.