Based on what I've heard other BBr's say , I say bad for both, but worst for Kai.
Phil is a contender for every show he attempts so I would think that if he cares about his legacy, and wants to continue to learn, and if he likes money, and enjoys the experience of competing, he's selling himself short. Considering how close and controversial the last year's contest was, and based on his improvement at the Olympia, he could have a new Hummer, and an extra $150,000 in a few months.
Kai is on a roll and unless the show is screwing up the way he comes in at the O - an idea I highly doubt since there's a total of at least 6 months separating the events - he should be trying to put another trophy on his shelf. Really, he's the one missing out the most because if Phil isn't doing it all he has to do is come in the same way and he'll have it in the bag. Branch wont overtake him and neither will anyone else if he's on point.
So I think it's bad news for both of them but since Phil has more time yet to be in the game, Kai's absence is a worst move. He should aim to tie or break Cutler's record of 3 straight Arnolds, accumulate a little more dough, and further cement his legacy.