Is There a Future for LIV Golf?

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0:42Welcome back to The Deal. I'm Jason Kelly alongside Alex Rodriguez. Today on the show, Scott O 'Neill. Alex, you know, he's the CEO of Live Golf. This is a guy you and I have both known over the past few years. Gotten to know him pretty well. And I've certainly watched his career very closely. There are very few more influential and candidly successful executives in sports. But, man, what a challenge he has on his hands now. Yeah, he sure does. And Scott O 'Neill is someone I've gotten to know a little bit. And like you said, he's as well-regarded sports executive as there is out there. And Mark, Laurie, my partner, and I, when we took a run at Mets, we got a great time to get to know him for the CEO job of that potential opportunity.

1:28We talked to him again with the Wolves. But as far as enthusiasm, energy, grit, if anybody can pull this off, I think Scott O 'Neill is one of them. I mean, but to pull it off is going to require a series of miracles, I think. You know, we're talking about Live Golf, which, you know, was heavily, heavily funded, created by the Public Investment Fund of the Kingdom of Saudi Arabia. And they looked very committed to it until they were not. There was a strategic shift at the government level where they basically pulled the funding after this year. And Scott O 'Neill went from a job that was much heralded, bringing in a very well-seasoned and well-regarded executive, as we've been talking about.

2:16And this is now – he's got to save this thing. He has to figure out a way to keep it in business. He is out talking to investors all day, every day. The business is continuing to run. They have some very notable golfers, Bryson DeChambeau probably being the best known. Jon Rahm, obviously another big-name global golfer. He's got to hang on to them, but he's got to pay for this thing. It's a huge, huge challenge. So I'm so excited to hear what he has to say, especially because we know him to be a really thoughtful and smart guy. Yeah, look, they were flush with cash, with massive investments and deep pockets.

2:54And now you go from an artificial, essentially, league to a real league that has to make a profit and has to cut expenses, and he has to clean things up. And, you know, I think his private equity background with Blackstone will help his experience working with David Stern and Adam Silver. So he has an incredible amount of experience. But like you said, this is the toughest headwind he's ever going to face and has ever faced. Yeah, absolutely. All right. Well, we're really excited to get into it with Scott O 'Neill.

3:35All right, welcome back to The Deal. I'm Jason Kelly alongside Alex Rodriguez. Really excited to have with us an old friend of both of ours and someone who is in the thick of it right now, to say the least. Scott O 'Neill, the CEO of Live Golf. Scott, really, really good to see you. A lot going on in the world of sports and maybe nothing bigger or more interesting than what you're doing. And that's coming from two guys who just witnessed the Knicks win the NBA Finals. How are you doing? You know, I'm pretty happy. You know, as I say to those who will listen, I feel like I won life's lottery. You know, I really do.

4:14I mean, I've had the chance to work for these amazing brands, Madison Square Garden, NBA under David Stern and Adam Silver, and the Philadelphia Eagles, when Jeff Laurie bought the team for$188 million, and people said he was crazy, and now it's worth$8 billion, you know? And then to work for Josh Harris and David Blitzer and, you know, have a chance to work with them on building HBSC to what it is now. And then now to, you know, to take on Live Golf. And by the way, that's in the throes of having four amazing daughters, an incredible wife and a happy life. And so the hard stuff is really good in my life, you know.

4:51And so and that's how this is felt. We have a world-class management team. We have crazy momentum in this business. I mean, you have, we, my first year, I mean, I'm only 18 months in. So, you know, in the first year in 25, we doubled revenue. The 26, the first half of the second year, we're up another 100 million. Like the momentum is like this on 3 % expense growth. And then the world changes. And so you have a couple choices or opportunities when things that are out of your control, you know, change in a different way, a different direction or out of your favor. And, and I'm, you know, fortunately, whether it's genes or just surrounding myself with extraordinary people, you know, we kind of dug in and said, okay, like, what's next?

5:31How are we going to do this the right way? What does it look like? And so the first thing we did is got together as a group, and we cut a lot of money out of this budget for the remainder of this year, thinking, those of us that are a bit more long in a tooth, like, let's extend this runway as long as we can. It's the first thing we did. And then the second thing we did the next weekend was, okay, what is a plan of the future? And how do we reshape and reimagine what this is like? And the third thing you can imagine is, like, we have very strong relationships with the I have very strong relationships with these players.

6:03And so we went to them and said, how can we build a plan and a program together with you, for you, through you, that makes you the majority shareholders in this league, resets the economics and reimagines what golf should or could be with a real return. And so it's not that some things didn't happen as we expected, of course. And it's not that at times I felt like the rug was pulled six months or six years early. And that's okay. And I will tell you, right now, I'm locked in. I feel focused. We're out meeting investors. I'm out here at the US Open at Shinnecock. And just about every private equity guy in the world seems to be out here.

6:49So it's in the Hamptons, in New York. It's almost too good to be true in terms of putting all the fish in one barrel. So that's been fun. I've been out here a few days and I'm out here for a couple more and just making sure I'm connected with old friends and seeing what's of interest. So, Scott, I mean, I think with your experience that you just mentioned, I can't think of anyone who's better positioned and has better experiences dealing from the MSGs to Josh's to some of the best people around. You mentioned David Stern and Adam Silver. I guess my question, and as a leader, no matter what happens, all eyes are on you.

7:28When the day starts, middle of the day, and at the end, and you're a great leader. But take us in some of the conversations, because I've been on the side of the players and the owners. what are those conversations from players to you and what are some of the things you're telling them and at the same time by the way you also have to raise capital so you have a lot going on yeah well nobody knows the all eyes on for either of you two no all's eyes on eyes on you nobody knows that better than two of you um and so some people are meant for this moment and and i i i don't know if i'm meant for this moment but i can tell you is like i'm excited about the moment the the it's it's what's been reported on coming to live is they all got huge payments they all didn't get huge payments a lot of guys got really big payments you know and and what we were acquiring was their rights so we were buying their nil rights up and we were paying up front for them in many cases and and those guys hopefully could or should justify those payments by if if their agent was out selling them they would either get more than that in you know in that case we got a better deal or less than that.

8:33And that case we may have overpaid or read on the money, but, but generally that's what we're acquiring is their NIL rights. Um, and so when we talk to that, the players, one thing we ask is, you know, they say is they're happy. When I talk to their wives, when I talk to their caddies, the players love what they do. And some of that's around team golf. You know, I had, I had an investor meeting with a guy. He's like a traditional golf fan. He says to me. I don't get it. I don't get this team golf. I said, do you get the Ryder Cup? Do you get that? Do you get the Olympics? Yeah, I get that. Do you get college golf?

9:07Yeah, I get that. I was like, okay, how about the World Cup? You watching the World Cup at all? Yeah. I said, look, our teams are very much geographically based. We have a Ripper is an Australian Camp Smith team, an Australian team. Louis Oostazin is a South African team. Ben Ahn, it's a Korean team. Ian It's the UK team. I said, so we're wrapping these teams around these countries. So when we go, there's something to identify with. And I can tell you, in Australia, like it was great. Anthony Kim, I don't know if you've helped closely to follow golf, but Anthony Kim is storming down 18. He's got Jon Rahm and Bryson DeChambeau, two of the greatest players on the planet in his group.

9:44And he is freaking storming. Like six, seven birdies on the back nine. And I'm looking around at these people, like going crazy and cheering and getting emotional. And they all have Ripper hats on and Ripper t-shirts and Ripper hoodies. And I was like, okay, this is working. And by the way, we set the all-time attendance record for a golf event in Australia. We go to South Africa two weeks later, and we have a South African team with four South Africans. They're on the first tee for the first two days, and their family's there. And they literally, the golfers, are on the first tee. And it's very much like Ryder Cup, like our first tee.

10:18It's surrounded by people, and it shoots all the way down one. Again, largest attended golf event in the history of South Africa as well. over a hundred thousand people. So as you're talking to investors, you know, I mean, I talk to investors all the time. Alex does too. I'll just, I'll keep it a bean. They're very skeptical about this, you know? I mean, and, and I don't know if it's. Which part are they skeptical about? I think they're skeptical about the sustainability of, of the business model that you'll be able to hang on to the golfers and that you can cut the costs enough that this is a business that will be, essentially investable.

10:57So how do you answer those questions in terms of really just keeping it going for long enough to prove out what, you know, what you believe to be true? Yeah, all good, all tackled. And if you have real investors that you're talking to, send them my way. I'll show them the business plan. It's pretty robust. And while I won't share the figure publicly, I will tell you the amount of money we cut off this budget would make the hair on the back of your neck stand up for next year. So I have no interest in a folly. I have no interest in running a business for the sake of running a business. I'm interested in growing value.

11:36I'm interested in discipline and the strategic approach to how we provide return. And part of that is getting to a cashflow positive business, which we have every intention of doing, but it will take three years. We could do it quicker, just so you know, we could do it quicker. I don't want to lose some of what makes Live Golf really special. And we can talk about what's happening in the golf world, which makes this more interesting. So from a cutting the expense side, I mean, it's the easiest job I've ever done in my life. And that has not been a problem. And part of that's having a wonderful team to work with.

12:15And the other part is necessity. And then look, this business was built for various reasons. And I don't think any of us should apologize for it. I mean, the reality is for a country, for a sovereign wealth fund to have this sort of platform, when wherever I have gone in the world, I've been standing next to world leaders. I've been standing next to 50, 60 of the chairman and CEOs of the biggest companies in the country. And this is a commercial to do business and access beyond. Golf is the best business development tool in the history of the world. And so I don't apologize for what we built or what was built before I got here, nor am I defending it.

12:56All I'm saying is going forward, the world has to change and it has. And we'll get to a business and a sustainable business. As far as the players go, they built this plan with me. And so this isn't like me standing in front of a room saying, and another thing, we're going to build this. No, this is like, this, this is, this is different. I mean, this is like heavy on committee, heavy on engagement. I'm not even sure if I should tell this story, but I'm going to for sport. It was a 8 a.m. my time and 6 a.m. Bryson's time. And he wanted the bankers on the phone because he wanted to walk through SG &A.

13:33He thought it was still too high. That's Bryson DeChambeau, my friends. That's one of the best golfers on the planet. And he's going through spreadsheets with me. And finally, my wife was doing this youth program for kids at our church. And I was like, hey, man, I've got like, I had an hour and a half booked. I was like, I've got about 30 more minutes. I've got to choose one here and I'm choosing her. So let's get through these problems. But that's the level of engagement. Carlos Ortiz, who's competing in the US Open as well, who I find is one of the smartest businessmen I've met as a professional athlete, a heck of a golfer as well.

14:09And look, Graham McDowell was texting right before he came on today about, hey, have you called so-and-so? Call him. These guys are my partners. They're my business partners. And we intend them to make them major equity shareholders. So they have a lot of incentive to manage costs. They have a lot of incentive to drive revenue and certainly find investors. Now, what the other golf leagues, what the golf ecosystem has done to help us, I'll be forever grateful. Like they, they have, they have not rolled out the red carpet and I appreciate that. Um, they have eliminated, you mean to bring them back.

14:47Okay. And they have eliminated what, what's the plan? 65 % of their events taken away the sponsor platform, taken away from television and plummeting prize purses. Thank you very much. You know, the European tour becomes track three of the track one, track two, track three. Thank you very much. And so we'll sit right between track one and track two. And if you want to live in Dubai or live in Australia or South Africa or Europe or the UK, and you want your kids to go to school or you went to school, and you want to raise them properly where you grew up, and you're not interested in living in Jupiter, and there's nothing wrong.

15:23I love Jupiter, and there's nothing wrong with it. But that might not be what your wife has planned for your children. And the question is, do you want to play around the world or do you want to live and stay entirely in the continental U.S.? And that's not for every player. For Bryson DeChambeau, and I've never seen anything like this from a professional athlete, he wants to grow the game of golf around the world in the purest, most beautiful sense. And when I go to the majors and sit down, I'm always asking kids, like, who's your favorite player? There isn't a kid under 13 that hasn't told me Bryson DeChambeau.

15:54Yeah. And so I think, and then we've got like some core players, you know, who look what will happen with the European tour and they're decreasing their prize pools in the core season. You know, we're going to be a place to play. If you want to play in a big time event around the world, you're coming to live golf. The reality is, is the golf industry needs to get healthier.

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16:58Scott, speaking of getting healthier, help us understand how you're thinking about this round of investment. As an example, if investor A comes in, is he investing into a team or is he investing into the league or a particular player? How does that work? That is probably the best attribute we have and we're selling. So, of course, I mean, we have a term sheet on a team now. So you can, if you wanted to buy a team, you can buy a team. And I'm hoping that those investors come from the respective markets where those teams hail. Like I would like an Australian to buy into the Ripper, for example. But when you come into this league, you're going to own 60 to 70 percent of all the teams in the league.

17:40And if you look, and I mentioned Jeff Lurie from$188 to$8 billion. We talked about the Timberwolves recently. You guys have done okay for yourselves as well, like overnight. A heck of a double. Yeah, no, God bless America. And then you look at, we mentioned the IPL franchises and how they're rolling. And Adam Silver, the best commissioner I've ever seen, is selling expansion franchises between$7 and$9 billion. dollars. And so when you think about what's going to happen, these franchise values, I feel pretty good about the prospects of an investor saying, yeah, I'd like to own a team next to John Rahm.

18:19Sure. Yeah. Phil Mickelson seems like a really good. How about Bryson DeChambeau? What about Cam Smith? So I like that prospect and we have 13 of them. We can go to 15. And so are they worth a hundred million? I sure as heck hope so. Are they worth 200 million? I sure as heck hope so. Can they be worth 500 million someday? If they're worth any of those numbers I mentioned, this is the easiest return of an investment you'll ever have in your life. Now, I wish, you know, if it were just that, I would take the bet, me personally, and have. But I've watched, I've also studied what happened in MotoGP and the Formula One.

18:52Two interesting comps. Like, we don't really compare ourselves with and around other golf leagues. It's just a different property. But MotoGP sold to Liberty Media for$4.8 billion and Formula One over$8 billion. And so what did Liberty see? Well, they saw a business that could grow in sponsorship value. They saw a business that could grow in premium seating. They saw a business that has broadcast tied with sponsorship with huge opportunity increases. They saw a huge ticketing business and they saw global, your entree to the world to do business. And so from our rights, we think there's also a second bite of the apple on the league level.

19:31So from an investment standpoint, it's really compelling. And so, Scott, just going back to sort of the existing golf leagues, the PGA has made some changes. You mentioned the track one, track two. Every conversation at Shinnecock that's not about the golf, that's not about live, is about this track one, track two, signature events, all these different things. you know there was a time where it looked like there was going to be some sort of business arrangement between live and the pga is that still possible or what is the relationship going forward yeah i think our focus is on this transaction okay that's where our focus is a hundred percent of the time and and we and we don't let two percent creep at this point um we have a ticking clock, and we have to lock in and focus.

20:26If I had a crystal ball, I'd definitely be in a different business, for sure. But I will say we have strong relationships with Strategic Sports Group. I've known them for years. Sam Kennedy's been a dear friend for years, and I've had the chance to spend some time with John Henry. And Brian Rolap and I went to school together, and we've known each other for years. I consider him a friend as well. Brian Rolap, the commissioner of the PGA, just for people who don't follow it as closely. Commissioner of the PGA, Brian Rolap, go ahead. Yeah. And so, I mean, our focus has to be locked in on what our task is at hand.

21:03Is there a smart deal to be had? Absolutely. Is it an easy deal to construct? It is. And I think we both have work to do to get our own houses in order. There's a lot of uncertainty. There's a lot of change. and that's probably the worst time to even contemplate a deal. And so we all have work to do. But our focus, whether there's a deal or not, this could be one heck of an investment. And I like the prospects and we just need to get it funded. You know, Alex has been through this and he can speak to this better than I can. But I do wonder as you're making the rounds, pun intended, at Shinnecock, as you're talking to investors, Who are the investors that you think this makes the most sense for?

21:47Is it an institutional play? Is it a high net worth play? Is it someone who is already interested in sports, in golf? I know it could be all of the above, but what's the shape of this in terms of the target audience, as it were, from an investor perspective? Yeah, so I think there are several groups this makes good sense for. institutional is probably easy. If they're locked in on a 3x over six years, this hits that mark. We could fail and hit that mark. So I think there's a pretty good case to be made there. There's an NOL component here, a net operating losses carry forward component that is in the billions in the US and in the billions in the UK.

22:40And so we have a pretty good structure that can provide an unbelievable opportunity going forward, not just for our business, but for the acquiring business or a business we can put together with this one. So from an institutional big PE firm, and I've worked in PE for the last 12 years, and that's not for the faint of heart, I can tell you that. But it is something you choose. I think that would be a great place. The second one is media companies. As you'd imagine, this is not only because of the NOL, but we unlock so much opportunity. I mean, we're broadcasting 200 countries. We've barely scratched the surface.

23:22And if you track what MotoGP and F1 are getting in terms of global broadcast rights in some of these countries, It's a really like a logical one to look where to look. Family offices have been pretty robust in their approach. That's more in like the 25 to 50 million range, at least the ones we're talking to, as opposed to taking on all 300 million. And they seem to want to come in and are trying to, you know, some of them would like to lead and others would like to follow on. Um, and then there's the, uh, I don't know how else to say it, but the, I'd say team owners probably the best way to say it.

24:03So a team owner, you know, around the world are very, those seem to be very interested and those can be football clubs globally. They can be, you know, uh, American sports. Uh, but, but there, there seems to be a knock there because just because of the value creation opportunity. So, so that's, that's what we've seen. Scott, I look at you and admire you as an executive. And I think in this one regard, I think we're similar in where when there's a lot of noise and adversity, you don't lean back, you lean in and you get excited and you get hyper focused. And it's a great trait to have. And I guess my question is about your time.

24:43As a leader today, how do you divide your time if it was a pie? Are you raising capital? Are you operating the business? Is it a media messaging? Talk to me a little bit how you're dividing your time right now. So between Chris Heck, our president, and Katie O 'Reilly, Chris I've worked with four times, Katie I've worked with three times before, and Ross Howell, it was my first time working with him. He's an extraordinary. Those are three extraordinary operators. and the business is in their hands. And so I'm not spending much time on the current business. I'm spending almost all my time on investor outreach and working with the advisors we have in place.

25:21Now, listen, we have Alex Partners, who's, they're extraordinary. Do Sarah's our bank. They've been fantastic. Gibson Dunn, world-class law firm. And then our board members, John Zimmon and Gene Davis. I mean, Gene's done 400 of these restructurings. And so we've surrounded ourselves with extraordinary advisors who can help navigate the ship in some dark and stormy waters. And so, but I'm locked in. I know what I have to do and I'm willing to do it. And then, of course, you know, and I hope the two of you would say the same. It's like, number one, you take care of your employees. Like you take care of yourself first, then employees second.