PGA Tour non-profit status

[tacklingdummy]

On 6/20/2022 at 8:54 PM, italianstallion said:

After all expenses are paid, everything left over gets parked into investment and pension funds for the PGA TOUR members. This is why Players agree and sign to be members of the PGA TOUR.

 

If you’re a long time PGA TOUR member in good standing, when you retire you stand to make just as much in pension as you did in on course winnings. 

 

Do you have anything to back up statements? I do not think your statements are correct.  From several articles I read,  the PGA tour player retirement fund is a portion of the PGA tour player's own winnings and is their own money. The PGA tour may just manages the money for the players. However, I haven't found anything that is related to your comment that "money left over that gets parked into player pension funds for PGA tour members" or "when you retire, you stand to make as much in pension as you did in on course winnings". 

 

https://www.golfdigest.com/story/golden-retirements-pga-tour-pros-get-a-gift-that-keeps-giving

 

 

[aus10KC]

6 hours ago, tacklingdummy said:

 

Do you have anything to back up statements? I do not think your statements are correct.  From several articles I read,  the PGA tour player retirement fund is a portion of the PGA tour player's own winnings and is their own money. The PGA tour may just manages the money for the players. However, I haven't found anything that is related to your comment that "money left over that gets parked into player pension funds for PGA tour members" or "when you retire, you stand to make as much in pension as you did in on course winnings". 

 

https://www.golfdigest.com/story/golden-retirements-pga-tour-pros-get-a-gift-that-keeps-giving

 

 

"The plan is funded by a variety of revenue streams, including advertising revenue, investments, corporate partners, TPC profits, digital revenue and TV money."

 

I guess they could put that money into purses instead of retirement plan...

 

 

 

[bladehunter]

Why would setting forth and enforcing code of conduct rules for their contractors jeopardize their non profit status ?    and why would competing for market share jeopardize it ?  
 

uou don’t think St Jude competes for market share ?????  Those commercials aren’t for fun.  
 

 

Edited June 22, 2022 by bladehunter

[oikos1]

7 hours ago, grm24 said:

Appreciate the information you've posted about the non profit designation. That said FWIW the NFL gave up it's 501(c)(6) status in 2015.

Bingo!  And do we know why?

 

"The NFL's decision to give up its tax-exempt status isn't some noble recognition of the tax burden it's unfairly been shirking. It's a calculated move to pay a relatively small fee to avoid scrutiny and preempt possible Congressional action."

 

https://www.vox.com/2015/4/28/8509767/nfl-tax-exempt-nonprofit

 

No one likes to be on the "radar".  That's exactly where the PGA Tour finds itself right now.

[bladehunter]

6 hours ago, tacklingdummy said:

 

Do you have anything to back up statements? I do not think your statements are correct.  From several articles I read,  the PGA tour player retirement fund is a portion of the PGA tour player's own winnings and is their own money. The PGA tour may just manages the money for the players. However, I haven't found anything that is related to your comment that "money left over that gets parked into player pension funds for PGA tour members" or "when you retire, you stand to make as much in pension as you did in on course winnings". 

 

https://www.golfdigest.com/story/golden-retirements-pga-tour-pros-get-a-gift-that-keeps-giving

 

 

I don’t know that it’s all of the leftover. I’m sure it’s not. But. 
 

i do know a couple players and I do know that there  is some type matching situation.  So it’s not entirely their own earning contribution.   From what I hear it’s a great parachute at the end for those of the post tiger generation of players.  There’s no way that comes to be just from management…., they wouldn’t all put into it if it were not being matched in some way.  

[NMBob]

from reading, it seems a major difference between the pga tour and other sports leagues mentioned is that the teams themselves were/are not non profit.  When MLB used to be a  non profit, The yankees  were a separate business and were not a non profit.   So the yankees ticket sales, yankee merchandise sales, and yankee tv rights sales that they control, are all taxed as a business.   For the pga tour, doesn't it seem they control all of that, and it is all tax exempt? 

[DavePelz4]

On 6/20/2022 at 10:54 PM, italianstallion said:

The whole non-profit thing is blown out of proportion, but that’s mainly because people don’t understand why it’s a non-profit. Its not a non-profit because it gives money to various charities and it’s not a non-profit because it’s trying to avoid taxes. The PGA TOUR is non-profit because all of its actions are done on behalf of and for the benefit of its members, the Players. After all expenses are paid, everything left over gets parked into investment and pension funds for the PGA TOUR members. This is why Players agree and sign to be members of the PGA TOUR.

 

If you’re a long time PGA TOUR member in good standing, when you retire you stand to make just as much in pension as you did in on course winnings. 

 

You're mostly right but I suggest you read the PGA Tour's annual report which details the amount of money the leadership of the PGA makes, along with what goes into their personal pension funds.

[Stevens24]

When you start hearing players like Cantlay say the tour should be paying guarantees the jig is up. They can’t due to this status, but as more player leave for them the more other player want them. 
 

never forget these guys play for money, and like in every sport, when they say it isn’t about the money they are lying in almost every case

[BlackDiamondPar5]

3 minutes ago, DavePelz4 said:

 

You're mostly right but I suggest you read the PGA Tour's annual report which details the amount of money the leadership of the PGA makes, along with what goes into their personal pension funds.

Right but even so the leadership comp only accounts for around 2% of revenue.  It's a lot of money and they do pay taxes on that income don't they?

[betarhoalphadelta]

9 minutes ago, NMBob said:

from reading, it seems a major difference between the pga tour and other sports leagues mentioned is that the teams themselves were/are not non profit.  When MLB used to be a  non profit, The yankees  were a separate business and were not a non profit.   So the yankees ticket sales, yankee merchandise sales, and yankee tv rights sales that they control, are all taxed as a business.   For the pga tour, doesn't it seem they control all of that, and it is all tax exempt? 

 

No, the only key for the PGA Tour is that the purpose of the Tour is not a profit-making enterprise. They will invariably make profits certain years. Perhaps others, such as 2020, they will not, and so they carry a significant financial reserve to weather downturns if they occur. But the goal is that the players themselves are "the teams", basically like the Yankees. The players pay taxes on their winnings, endorsement deals, etc. 

 

When MLB was a non-profit, they still did some things like the PGA does. They negotiated national broadcast deals, collected the revenue, and distributed it to the teams. They set the rules of play, number of games, format, etc. Like the PGA Tour, they probably had a significant financial reserve, but they were still a non-profit. 

 

4 minutes ago, Stevens24 said:

When you start hearing players like Cantlay say the tour should be paying guarantees the jig is up. They can’t due to this status, but as more player leave for them the more other player want them. 
 

never forget these guys play for money, and like in every sport, when they say it isn’t about the money they are lying in almost every case

 

Can you justify the bold statement legally? 

 

Nothing about the 501c6 setup says that they can't pay guarantees. I suspect you're relying on the portion of the 501c6 description that says that their profits can't go to specific individuals. However, that is their *net* profits or earnings, as I understand it. If their revenues couldn't be distributed to individual people, they couldn't pay Jay. His salary is considered an expense, and thus is not considered coming out of the net profits or earnings. 

 

Corporations that pay out dividends are using net profits or earnings to pay out shareholders, which is a completely different thing than guaranteed money to top players or appearance fees, which would be an expense, not a distribution of earnings. 

 

If the PGA Tour, as a member organization, were to ratify something in their bylaws that the top 20 FedEx finishers were to receive guaranteed payouts for the following year, they could do so. If they were to ratify something in their bylaws that the PGA Tour directly, or sponsors, could offer guaranteed money or appearance fees (currently not allowed), they could do so. 

 

In fact, these 8 no-cut events are basically offering appearance fees equal to the 50th place finish to every player, and they're paid for performance on top of that. Doesn't jeopardize their 501c6 status at all. 

[DFS PFD]

I do not care what the PGA Tour's tax status is either way. I just wish these multi-billion dollar in revenue organizations would be subject to a little more public scrutiny for exploiting our tax laws (the laws are the problem, I know) instead of having a cult like following of people saying Jay's salary of approximately $10MM plus benefits is just par for the course like other non profits! My small business pays a ridiculously large percentage of tax compared to these massive companies whose entire livelihood is avoiding tax liabilities. 

[Stevens24]

33 minutes ago, betarhoalphadelta said:

 

No, the only key for the PGA Tour is that the purpose of the Tour is not a profit-making enterprise. They will invariably make profits certain years. Perhaps others, such as 2020, they will not, and so they carry a significant financial reserve to weather downturns if they occur. But the goal is that the players themselves are "the teams", basically like the Yankees. The players pay taxes on their winnings, endorsement deals, etc. 

 

When MLB was a non-profit, they still did some things like the PGA does. They negotiated national broadcast deals, collected the revenue, and distributed it to the teams. They set the rules of play, number of games, format, etc. Like the PGA Tour, they probably had a significant financial reserve, but they were still a non-profit. 

 

 

Can you justify the bold statement legally? 

 

Nothing about the 501c6 setup says that they can't pay guarantees. I suspect you're relying on the portion of the 501c6 description that says that their profits can't go to specific individuals. However, that is their *net* profits or earnings, as I understand it. If their revenues couldn't be distributed to individual people, they couldn't pay Jay. His salary is considered an expense, and thus is not considered coming out of the net profits or earnings. 

 

Corporations that pay out dividends are using net profits or earnings to pay out shareholders, which is a completely different thing than guaranteed money to top players or appearance fees, which would be an expense, not a distribution of earnings. 

 

If the PGA Tour, as a member organization, were to ratify something in their bylaws that the top 20 FedEx finishers were to receive guaranteed payouts for the following year, they could do so. If they were to ratify something in their bylaws that the PGA Tour directly, or sponsors, could offer guaranteed money or appearance fees (currently not allowed), they could do so. 

 

In fact, these 8 no-cut events are basically offering appearance fees equal to the 50th place finish to every player, and they're paid for performance on top of that. Doesn't jeopardize their 501c6 status at all. 

To be exempt, a business league's activities must be devoted to improving business conditions of one or more lines of business as distinguished from performing particular services for individual persons.  Per the IRS.

 

anything benefiting an individual and not the direct line of business is not allowed. I can see an argument being made but this would be shaky ground. They would need to pay a guarantee of equal amount to every exempt player. From a PR standpoint this would be a negative because then every argument used by Jay stating the LIV is an exhibition would have been done by the tour also

[DavePelz4]

51 minutes ago, BlackDiamondPar5 said:

Right but even so the leadership comp only accounts for around 2% of revenue.  It's a lot of money and they do pay taxes on that income don't they?

 

Lots of perspective here.  There are 336 people who work for the PGA who make over $100K.  They pay people in multiple ways including a salary from the actual PGA, compensation from "other related organizations," and an "estimated" amount.  This doesn't include 401K matching which is up to 5% of salary.  Monahan, for example, has a salary of $5.4M, comp from related organizations of $3.6M and some other small amount.

 

In 2020, the PGA Tour donated about $42M to charity (3%) (don't believe the reported $190M, look at the fax filings) while the top 28 employees were paid over $45M.  Keep in mind that's just compensation from the PGA and related organizations and doesn't include other salaries from non-related businesses that have ties to the PGA. 

 

I can't speak for any of those individuals and their personal tax situation. 

 

BTW...here's the statement in the 2019 tax filing on donations...

 

"IN ADDITION TO PROMOTING AND BUILDING THE SPORT OF PROFESSIONAL GOLF, PGA TOUR, INC. IS COMMITTED TO GENERATING SUBSTANTIAL CHARITABLE CONTRIBUTIONS IN THE COMMUNITIES WHERE ITS TOURNAMENTS ARE PLAYED, EVEN THOUGH PGA TOUR, INC. IS NOT A CHARITABLE IRC SECTION 501(C)(3) ORGANIZATION. A MAJORITY OF THE TOURNAMENTS ARE OPERATED BY CHARITABLE ORGANIZATIONS THAT GIVE 100% OF THE NET PROCEEDS FROM THE TOURNAMENT TO LOCAL CHARITIES. AREAS OF SUPPORT INCLUDE, BUT ARE NOT LIMITED TO: HEALTHCARE, EDUCATION, YOUTH DEVELOPMENT, DISASTER RELIEF, FOOD BANKS, MILITARY AND ENVIRONMENT. IN 2019, PGA TOUR, INC. AND ITS TOURNAMENTS GENERATED MORE THAN $200 MILLION OF CHARITABLE DONATIONS IN THE COMMUNITIES WHERE THE EVENTS WERE PLAYED, BENEFITTING MORE THAN 3,000 CHARITIES. INCLUDED IN THIS AMOUNT IS $50 MILLION OF DIRECT CONTRIBUTIONS MADE BY PGA TOUR, INC. THIS BRINGS PGA TOUR, INC.'s TOTAL CHARITABLE DONATIONS TO MORE THAN $3 BILLION SINCE THE FIRST $10,000 CONTRIBUTION WAS MADE IN 1938. ALSO, A SUBSTANTIAL AMOUNT OF ADDITIONAL CHARITY DOLLARS ARE RAISED EACH YEAR BY PGA TOUR, INC. MEMBERS THROUGH THEIR INDIVIDUAL FOUNDATIONS AND FUNDRAISERS."

 

Adding this tidbit...The corporation type for Pga Tour, Inc. is Foreign Non-Profit.

 

Hmmm...foreign?

Edited June 22, 2022 by DavePelz4

[PorkChopExpress]

Never discount accounting

[RobS]

46 minutes ago, NMBob said:

from reading, it seems a major difference between the pga tour and other sports leagues mentioned is that the teams themselves were/are not non profit.  When MLB used to be a  non profit, The yankees  were a separate business and were not a non profit.   So the yankees ticket sales, yankee merchandise sales, and yankee tv rights sales that they control, are all taxed as a business.   For the pga tour, doesn't it seem they control all of that, and it is all tax exempt? 

Comparing the Tour to other professional sports, the PGA Tour players are the equivalent to the team owners.  The money from the league passes through to the owners and the owners pay taxes on their net income.  Everyone in the chain from commissioner down to caddie pays personal income tax on their individual earnings.  No individuals playing on or working for the Tour get tax free income.  The money that the tour puts away would be considered retained earnings in the corporate tax world and might not be taxed until it reaches an individual.  The retained or accumulated earnings could be taxed if the IRS considers the amount "unreasonable".  That tax rate is 20%.  The intent of that tax is to prevent corporations from retaining money in lieu of paying shareholders dividends.  The IRS would prefer to collect the higher tax dividend vs waiting for it to be distributed as lower rate capital gain.  The Tour like other corporations would argue, most likely successfully that they need the cash to support or expand their operation.  In the grand scheme, this whole tax exempt situation is incidental and would likely be somewhere between 0 and 0.5%% of revenue. 

The primary reason the NFL, MLB and NBA gave up non-profit status was to better insulate themselves from government regulation or public scrutiny.  Converting from non-profit to profit is complex enough that it's not really feasible in the PGA Tour's case.  If they decided to go that route, they would likely start a for profit subsidiary because a non-profit can't just simply sell or transfer their assets.  For profit means owners or shareholders. In the case of the NFL, that straightforward.  You have 32 teams and owners.  For the PGA, you have 125 exempt players and there is turnover every year.  How does a new tour player with modest income to date buy their shares?  You can give the shares to a player but they would have to pay tax on the fair market value.  That's a taxable event and how does that player pay the tax?  The alternative is for the Tour to go to outside investors to be the "owners" on a new subsidiary.  That creates a whole new situation where the players give up a significant level of control and you have owners looking for and taking profits which would have in part gone to the tournament purses.

[Naptime]

The NFL is non-profit.  Can they ban players from simultaneously playing Arena Football and USFL?

[lowndes]

6 minutes ago, Naptime said:

The NFL is non-profit.  Can they ban players from simultaneously playing Arena Football and USFL?

 

Yes.

[RobS]

5 minutes ago, Naptime said:

The NFL is non-profit.  Can they ban players from simultaneously playing Arena Football and USFL?

The NFL gave up non-profit status a few years ago.  The individual players sign contracts with the team all of which include prohibited activities.  A more relevant comparison would be the NFL prohibiting the the Cowboys from sliding over to the USFL to play in a few games.

[Golfer4Life]

On 6/20/2022 at 10:20 PM, aus10KC said:

They serve to advance professional golf and put on events for their members. Can an organization decide it's own rules for membership? 

 

They have no shareholders as well. They do pay taxes, members and employees pay taxes, they give the communities they are in an economic boost and help local charities in those communities. 

 

I'm sure this will go to court, but should the govt get involved in something like this. I say no, unless they restricting membership based on a protected status. 

When the PGA Tour is behaving like a business subject to FTC scrutiny, yes the government has a duty to investigate.

 

The PGA Tour is acting as if they have total ownership of professional golf and LIV, or any other professional golf endeavor, has no right to engage in the professional golf business. 

 

I have no problem with the PGA Tour behaving like a business as long as they give up their non-profit status.

Edited June 22, 2022 by Golfer4Life

[Shilgy]

4 minutes ago, Golfer4Life said:

When the PGA Tour is behaving like a business subject to FTC scrutiny, yes the government has a duty to investigate.

 

The PGA Tour is acting as if they have total ownership of professional golf and LIV, or any other professional golf endeavor, has no right to engage in the professional golf business. 

How? Are they preventing anyone from going to the new tour?

[Golfer4Life]

Just now, Shilgy said:

How? Are they preventing anyone from going to the new tour?

First, LIV is not a tour, is a handful of events.

 

I do not know that, so I can't answer your second question.

[DavePelz4]

57 minutes ago, Naptime said:

The NFL is non-profit.  Can they ban players from simultaneously playing Arena Football and USFL?

 

The CBA does not allow for anyone who is on an NFL roster to play in the USFL.  Right now each NFL team has a max of 90 players and none of them can be on a USFL roster.

 

[RobS]

8 hours ago, bladehunter said:

I don’t know that it’s all of the leftover. I’m sure it’s not. But. 
 

i do know a couple players and I do know that there  is some type matching situation.  So it’s not entirely their own earning contribution.   From what I hear it’s a great parachute at the end for those of the post tiger generation of players.  There’s no way that comes to be just from management…., they wouldn’t all put into it if it were not being matched in some way.  

It's a little bit of semantics on who is contributing.  For every cut you make up to 15 cuts in a year, you earn around $5k per cut.  It jumps up to $10k per cut after 15.  They also get pretty significant money put in their pensions for where they finish in the FedEx cup.   The PGA Tour awards you that money and puts it in your pension.  Technically, the player earns the money but it's not a deduction from their prize money.  

[aus10KC]

8 minutes ago, Golfer4Life said:

When the PGA Tour is behaving like a business subject to FTC scrutiny, yes the government has a duty to investigate.

 

The PGA Tour is acting as if they have total ownership of professional golf and LIV, or any other professional golf endeavor, has no right to engage in the professional golf business. 

 

I have no problem with the PGA Tour behaving like a business as long as they give up their non-profit status.

 

I disagree, they partner with DP World Tour, USGA, R&A, ANGC, PGA of America to help grow the game of golf.  Are they currently the top dogs in professional golf? Yes. Are they the only game in town? No. Is LIV threatening that Top dog status? Yes and there is nothing the PGAT can do about LIV Golf throwing insane amounts of money at the professional level. 

 

I typically prefer the Gov't to stay out of something like this and most things, and they definitely have more to worry about then the PGAT tax status. Of course you'll have some grandstanding congress person saying something has to be done (There is a reason approval rate of congress has been extremely low for years). I'd be interested to see who Greg Stuebe has taken money from to go after the PGAT. 

 

The PGAT are acting as they should, in benefit of their members, professional golfers. All of these attacks on PGAT is straight from GN and the Saudi's playbook and talking points. They have a right to protect their membership, events, sponsors and media partners, all work towards growing the game of professional golf. 

 

 

[forrester_fire]

I'm not sure how a non-profit and how they handle their membership qualifications would impact their tax status.

[forrester_fire]

On 6/21/2022 at 10:23 AM, andyville99 said:

the article said $8.88 million in 2019 - not bad for running a "non profit"!!

 

Look at the CEO salary for any large charity.  The CEO of the Shriners earns over $2.6m, the CEO for the American Heart Foundation earned around $2.3m in 2021.

[forrester_fire]

20 minutes ago, DavePelz4 said:

 

The CBA does not allow for anyone who is on an NFL roster to play in the USFL.  Right now each NFL team has a max of 90 players and none of them can be on a USFL roster.

 

 

And in MMA, UFC fighters are "independent contractors" and they can't compete in any other combat sport (boxing, grappling, kickboxing, etc.) without UFC approval.  I don't know why people think the "independent" part of their job description means they can work for any competing organization while simultaneously competing in PGA Tour.

[DFS PFD]

5 minutes ago, forrester_fire said:

 

And in MMA, UFC fighters are "independent contractors" and they can't compete in any other combat sport (boxing, grappling, kickboxing, etc.) without UFC approval.  I don't know why people think the "independent" part of their job description means they can work for any competing organization while simultaneously competing in PGA Tour.

Are the UFC or NFL currently a 501 (c)(3) organization? That might make the restrictive practice relevant. But I honestly don't know. I'm sure the lawyers will litigate this to the moon, and I don't care what the outcome is either way. I have no dog in the fight. 

[forrester_fire]

6 minutes ago, DFS PFD said:

Are the UFC or NFL currently a 501 (c)(3) organization? That might make the restrictive practice relevant. But I honestly don't know. I'm sure the lawyers will litigate this to the moon, and I don't care what the outcome is either way. I have no dog in the fight. 

 

Neither are, but I don't know if that matters.  I'm no lawyer.  The NFL was until 2015 and their players were similarly restricted.

[aus10KC]

 

1 minute ago, Golfer4Life said:

I don't know or represent Greg Norman nor I represent the Saudis, so your comment is kind of petty.

 

I agree with you, less government is better, but the PGA Tour seems to be borderline messing with antitrust laws by claiming a de facto monopoly on professional golf.

 

Monahan protecting the PGA Tour by adopting the LIV concept, which Rory and J.T. have classified as a money grab and they won't be part of.  Come on man! 😄

 

Everything is a bowl of hypocrisy.

 

Again, I disagree... And things you've been saying are exactly the same things GN is saying. 

 

These extra events, they still have to be earned by being in the top 50 based on your play. 

 

This is different then LIV buying players to play in their events. PGA Tour players have to earn it thus making it more compelling.

 

If only our govt cared about antitrust issues, I'd rather see them go after ticketmaster/live nation.