PGA Tour non-profit status

[aus10KC]

@Golfer4Life tried to PM you but you don't accept those. Nothing I said was petty or insulting. Again I disagree with your post and pretty much every post you make... We are at the opposite ends of how we view the PGAT and LIV. So be it that is fine and part of life, I welcome it, but edit your comment and quit trying to play victim in a debate in which nothing personal was said towards you.

[golfortennis]

I could be wrong, but is the PGA Tour's status in the same category as college athletic departments?

 

Reason I ask, is, part of the maintenance of said status is spending money that comes in("reinvesting" is the term to water-carriers will use.)  A look at college athletic departments shows how, not only are football and basketball teams getting locker rooms that would make even the richest pro team blush, multiple indoor practice facilities, umpteen "improvements" on stadiums, but you also see it spilling over to other sports.  Volleyball coaches making $500k a year, coaching a sport that would struggle to bring in that much revenue in a professional league.  Water polo coaches making $100,000, again in a sport that would struggle to keep itself from getting booted from the pool for more aquabics classes.  There is no real market for these people's services that would justify those salaries, just an artificial, insular bubble.

 

The not-for-taxes designation leads to spending on things that would never get any attention were it not for "we have to keep from hoarding too much money."  So you get things like the salaries being completely out of whack, a new opulent headquarters in PVB.  I have asked this question many times about the Shriners(who do actually do good work): why does the organization need an opulent head office on prime waterfront property in Tampa, FL? 

 

The 501(c) designation distorts the incentives of how the organization operates, and typically a handful cash in big on that.  Apparently, 28 people in this case to the tune of $3 million more than was actually distributed to charity. 

[bobfoster]

The thread is mind-bottling. Seriously, even the article that starts it:

 

"Supporters of the new league object to the PGA’s pushback, particularly given its nonprofit status. Why would an enterprise that is allegedly in the business of generating charitable contributions care about competition?"

 

 

From the very beginning, fundamental misunderstandings about what "non-profit" means, how businesses (both for profit and non-profit) are structured, even basic anti-trust law. 

 

Plus I think it has already been talked about ad nauseum on two or three different occasions in the LIV thread.

 

Edited June 22, 2022 by bobfoster

[betarhoalphadelta]

24 minutes ago, golfortennis said:

I could be wrong, but is the PGA Tour's status in the same category as college athletic departments?

 

Reason I ask, is, part of the maintenance of said status is spending money that comes in("reinvesting" is the term to water-carriers will use.)  A look at college athletic departments shows how, not only are football and basketball teams getting locker rooms that would make even the richest pro team blush, multiple indoor practice facilities, umpteen "improvements" on stadiums, but you also see it spilling over to other sports.  Volleyball coaches making $500k a year, coaching a sport that would struggle to bring in that much revenue in a professional league.  Water polo coaches making $100,000, again in a sport that would struggle to keep itself from getting booted from the pool for more aquabics classes.  There is no real market for these people's services that would justify those salaries, just an artificial, insular bubble.

 

The not-for-taxes designation leads to spending on things that would never get any attention were it not for "we have to keep from hoarding too much money."  So you get things like the salaries being completely out of whack, a new opulent headquarters in PVB.  I have asked this question many times about the Shriners(who do actually do good work): why does the organization need an opulent head office on prime waterfront property in Tampa, FL? 

 

The 501(c) designation distorts the incentives of how the organization operates, and typically a handful cash in big on that.  Apparently, 28 people in this case to the tune of $3 million more than was actually distributed to charity. 

Yes... And no...

 

The fundamental nature of college athletics is the amateurism, not the not-for-profit aspect. Colleges are flat out barred from paying their players by the NCAA. Even in the new paradigm of NIL, the colleges cannot themselves be "pay for play". 

 

This is different from the PGA Tour in that the 501c6 structure is designed to give money to the players. The fact that it is not-for-profit is basically saying that it is a membership organization that exists to set up the field to make money, and that ultimately that money will go back to the members (the players). When the PGA Tour takes in more money than it spends in a year, that money isn't just given to shareholders or "owners", it is held in reserve for future spending to benefit the membership. 

 

Now, where you have a point is that fundamentally the NCAA athletic departments are competing for recruits, just as the PGA Tour is competing to attract members and to get the top players to play in as many tournaments as possible. As a fan of a college football team that is a low-to-mid-level P5 team (Purdue in the Big Ten), I understand fully that my team is NOT competing on a level playing field, off the field in the area of recruiting, as teams like Alabama or Ohio State or Notre Dame. Those teams have giant fan bases, tons of history, and those are the teams on which recruits want to play. Just as the DP World Tour or Asian Tour are not competing on a level playing field with the PGA Tour. The PGA Tour is the biggest and the best, and so players around the world know that if you want the best competition, the best chance for legacy, and the best chance for money, you go to America and join the PGA Tour. 

 

To an extent the LIV tour is like the University of Oregon. A billionaire (Phil Knight of Nike) decided that he wanted to turn his alma mater into an athletic powerhouse. So he just started pouring money into the Ducks, and turned a team that historically didn't have much history, legacy, or as we call it, "helmet" power, and turned them into a powerhouse. Unlike LIV, he couldn't just start buying players (at least, not before NIL), but he could throw so much money into facilities, budget for coaches/etc, promotion, etc that Oregon became "a big deal". 

 

So, the LIV understands that the best way to be an elite tour is to attract elite players. Elite players aren't forced onto the PGA Tour, and many are swayed by things ($$$$$) other than records, history, legacy, particularly if they believe they can still play the majors, which let's face it really what we mean when we say history and legacy. And LIV is sitting on a pile of money that looks at Phil Knight like he's a pauper. 

 

The PGA Tour isn't building opulent headquarters to attract the players to their tour... But then they've never had a sovereign investment fund that's been willing to bankroll a competitive tour at outrageous and IMHO unsustainable levels to compete with. 

Edited June 22, 2022 by betarhoalphadelta
proofreading

[Shilgy]

3 hours ago, Golfer4Life said:

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

 

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

It’s 14 events next year….but I’ll agree as it’s really a series of touring exhibitions.  A real golf tour involves actual competition where the participants actually GAS* about winning rather than the moolah.

 

 

* I think everyone can figure out GAS.😎

[Shilgy]

1 minute ago, Shilgy said:

It’s 14 events next year….but I’ll agree as it’s really a series of touring exhibitions.  A real golf tour involves actual competition where the participants actually GAS* about winning rather than the moolah.

 

 

* I think everyone can figure out GAS.😎

Edited to add….you couldn’t figure out for yourself that they are not preventing anyone from going elsewhere? Have they taken anyone to court for jumping? C’mon man!🤣

[Shilgy]

2 hours ago, Golfer4Life said:

I guess we disagree with each other, no big deal 😄

 

I'll make sure good ol' Greg send me my royalty check😄

 

Get over it! Your insult is petty and unworthy of further acknowledgment. 

Stop with th “insults” thing…nothing was said to insult you.

 

Meanwhile in Greg’s lair….he is “thinking” of creative things like “grow the game”!  Were London and Portland lacking in that regard? lol the whole thing is like a magician’s sleight of hand….a misdirection….to get folks looking at things lik their real barbaric behavior.

 

But then hey, we all make mistakes.🫢

Edited June 23, 2022 by Shilgy

[mikedellgolf]

I work for a nonprofit and the CEO salary is 4M+/year for the past five years with a 1.5M/year of retirement for life.  There are 40 EVPs in the management committee and each one of them make over 1M/year.  
 

The nonprofit also has 1B in the bank as cash reserve.

Edited June 23, 2022 by mikedellgolf

[bscinstnct]

Ironically, it’s the non-profit pga tour that drives 7 Billion in rev 

 

And the liv that throws money into a black hole ; )

 

Or did I get “irony” wrong again? Never use the word correctly lol

[2bGood]

Hate the game not the player. 501c6 is written into the IRS tax code for organisations like the PGAT. The PGAT is not doing anything odd or bending any rules in any way. 

 

Now is the tax code 'fair'. In my view not even close to it. Frankly the 501c6 status is small potatoes on the list of things needing to be changed. 

Edited June 23, 2022 by 2bGood

[johnseg]

It is amazing with all this discussion that there are people that cannot discern the difference between a non-profit and a charitable organization. The PGA is not a charitable organization. They are not required to give any money to charity at all.

 

It is really quite simple.

[PorkChopExpress]

1 hour ago, johnseg said:

It is amazing with all this discussion that there are people that cannot discern the difference between a non-profit and a charitable organization. The PGA is not a charitable organization. They are not required to give any money to charity at all.

 

It is really quite simple.

 

They just give the public the impression they are giving mega moulah to charities which folks then presume it's them

 

[lowndes]

4 minutes ago, PorkChopExpress said:

 

They just give the public the impression they are giving mega moulah to charities which folks then presume it's them

 

 

I think they give the impression that their events raise a lot of money for the communities the event are located in and to certain charities.  Most of that money does not flow directly through the PGA Tour.  Its not that confusing.  To say PGA Tour events do not raise an enormous amount of money for charities is inaccurate.  Doesn't mean the money first has to go to the PGA Tour and then for them to donate it though.  Again this has absolutely nothing to do with their status as a non-profit though.

[BlackDiamondPar5]

1 hour ago, johnseg said:

It is amazing with all this discussion that there are people that cannot discern the difference between a non-profit and a charitable organization. The PGA is not a charitable organization. They are not required to give any money to charity at all.

 

It is really quite simple.

John, I'm sure you've noticed that some people here are quite simple and may not be capable of understanding the difference 🙂 

[mikedellgolf]

Like I said, the PGA tour, as a nonprofit, is in the business of money grabbing, just like the non-profit that I am working for.  Both the PGA tour and the nonprofit that I am working for have one thing in common, they are both a monopoly in what they do.  My nonprofit employer also gives the impression that they are giving lot of money to various charities but they don't.  That's why you have 4.1M salary for the CEO and 1M+ for 40 other EVPs of the company.  Just like the PGA tour, we also have an army of lobbyists to keep the status quo.  Not that I am complaining 😀.

[Titleist99]

45 minutes ago, mikedellgolf said:

Like I said, the PGA tour, as a nonprofit, is in the business of money grabbing, just like the non-profit that I am working for.  Both the PGA tour and the nonprofit that I am working for have one thing in common, they are both a monopoly in what they do.  My nonprofit employer also gives the impression that they are giving lot of money to various charities but they don't.  That's why you have 4.1M salary for the CEO and 1M+ for 40 other EVPs of the company.  Just like the PGA tour, we also have an army of lobbyists to keep the status quo.  Not that I am complaining 😀.

The PGAtour's sole purpose is to present opportunities for the players. Creating revenue is all part of it.....

[Golfnuck]

On 6/20/2022 at 8:54 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. 

 

Not a US tax expert by any stretch.

 

I would expect that when the players receive their pensions it would be taxed in their personal tax returns at that point.

[Golfnuck]

1 hour ago, mikedellgolf said:

Like I said, the PGA tour, as a nonprofit, is in the business of money grabbing, just like the non-profit that I am working for.  Both the PGA tour and the nonprofit that I am working for have one thing in common, they are both a monopoly in what they do.  My nonprofit employer also gives the impression that they are giving lot of money to various charities but they don't.  That's why you have 4.1M salary for the CEO and 1M+ for 40 other EVPs of the company.  Just like the PGA tour, we also have an army of lobbyists to keep the status quo.  Not that I am complaining 😀.

 

But isn't the salaries paid taxable to the employees?

 

With a profit enterprises the cost of those salaries would have been deducted before arriving at taxable income.

 

So the real advantage is the tax deferral on the retained surplus.  However when that surplus is paid out to any individuals it would be taxed at that point.

[baitdragger]

11 hours ago, PorkChopExpress said:

 

They just give the public the impression they are giving mega moulah to charities which folks then presume it's them

 

I’ve been watching golf for 30 years and never once thought any tour or association was giving mega mullah to charities 

 

I have always assumed the PGA is like the NHL, FL,BA etc.

 

organizing events, schedules, rules, advertising etc.

 

if they happen to host a kids golf day before an event, then they take the extra press…but I must be missing it when they act like they are a charitable organization first and foremost 

 

does anyone think the PGA is the United Way?

[oikos1]

Most viewers are not tuning in to learn about what charities that week are benefiting form the PGA Tour.  It's a great concept and the money raised is a wonderful thing for those charities, but most know that most everyone wants to know what's happening in the tournament, who-is-where on the leader board.  Then it's what course, what are they playing for, what's the significance of the tournament (in no particular order).

 

It's golf.  It's a ball and stick game.  It's competition.

 

The PGA Tour is a business.  It's peoples livelihood.  They're being challenged.

 

I suppose this is why I much prefer playing golf as opposed to watching golf.

 

 

Edited June 24, 2022 by oikos1

[BottleCap]

28 minutes ago, baitdragger said:

I’ve been watching golf for 30 years and never once thought any tour or association was giving mega mullah to charities 

 

I have always assumed the PGA is like the NHL, FL,BA etc.

 

organizing events, schedules, rules, advertising etc.

 

if they happen to host a kids golf day before an event, then they take the extra press…but I must be missing it when they act like they are a charitable organization first and foremost 

 

does anyone think the PGA is the United Way?

The Sunday broadcast usually has this spot where they bring on a stodgy old CEO of the title sponsor of the tournament and either Dan or Jim get on their knees and praise how much money the tournament is raising for charity. 

 

This is usually the time i get a refill, visit the bathroom, or yell at my kids to complete my chores before their mother gets home.

[mikedellgolf]

The non-profit organization that I am working for currently has 1B in cash reserve.  It used to have 2.5B in cash reserve.

 

Because the nonprofit is in a monopoly industry, about three years ago, it decided to raise membership fee on all members and there were significant push back on this. Members complain that why raise the membership when the organization has 2.5B in cash reserve.  The nonprofit decided to spend 1.5B in the next 24 months in giving bonuses to employees, and huge bonuses to members of the executive committee to get it down to 1B, which is enough to support the organization for the next 12 months in case there is a downturn in the economy.  Membership fee was raised by 40% last year and lot of members were not happy but since this is a monopoly business, nothing they could do about it. 

 

The PGA tour is doing exactly the same thing.  It is good to be a monopoly, until someone come along and challenge the PGA tour.  Now the PGAT is running scared.  All of the sudden, it just found an extra 160M to increase the purse of PGA events, LOL...

Edited June 24, 2022 by mikedellgolf

[aus10KC]

I believe it's technically $54 million in purse increases as legacy events like the Memorial, Rivera and API are included in the $20 events. There will maybe be 3 new events.

 

So it's not really $160 million new money... I get it though 8 events at $20 a piece but that isn't the true story. 

[nvr3putt]

20 minutes ago, mikedellgolf said:

The non-profit organization that I am working for currently has 1B in cash reserve.  It used to have 2.5B in cash reserve.

 

Because the nonprofit is in a monopoly industry, about three years ago, it decided to raise membership fee on all members and there were significant push back on this. Members complain that why raise the membership when the organization has 2.5B in cash reserve.  The nonprofit decided to spend 1.5B in the next 24 months in giving bonuses to employees, and huge bonuses to members of the executive committee to get it down to 1B, which is enough to support the organization for the next 12 months in case there is a downturn in the economy.  Membership fee was raised by 40% last year and lot of members were not happy but since this is a monopoly business, nothing they could do about it. 

 

The PGA tour is doing exactly the same thing.  It is good to be a monopoly, until someone come along and challenge the PGA tour.  Now the PGAT is running scared.  All of the sudden, it just found an extra 160M to increase the purse of PGA events, LOL...

 

I am somewhat surprised that nonprofits are not required to have more financial transparency. Publicly-traded companies pay corporate taxes, no?

[mikedellgolf]

6 minutes ago, nvr3putt said:

 

I am somewhat surprised that nonprofits are not required to have more financial transparency. Publicly-traded companies pay corporate taxes, no?

There are so many financial accounting loopholes that companies and nonprofits can get away with.  They pay lobbyists to legally "bribe" corrupted politicians to write laws in their favors.  "Financial transparency" means different things to different people 😀

[DavePelz4]

On 6/22/2022 at 7:01 PM, Shilgy said:

It’s 14 events next year….but I’ll agree as it’s really a series of touring exhibitions.  A real golf tour involves actual competition where the participants actually GAS* about winning rather than the moolah.

 

 

* I think everyone can figure out GAS.😎

 

Sure...it's about $6.00/gallon.

[DavePelz4]

1 hour ago, nvr3putt said:

 

I am somewhat surprised that nonprofits are not required to have more financial transparency. Publicly-traded companies pay corporate taxes, no?

 

If you read their annual reports there is transparency.  The question is who does anything about how they spend their money or pay their employees?

 

My guess is <10% of the members of this site actually give a rat's arse in terms of how much money the leadership of the PGA makes.

[mikedellgolf]

The PGAT reminded me of the old IBM in the early '80.  There was a startup by the name of Microsoft.  IBM didn't see it coming until it was too late.

[DavePelz4]

29 minutes ago, mikedellgolf said:

The PGAT reminded me of the old IBM in the early '80.  There was a startup by the name of Microsoft.  IBM didn't see it coming until it was too late.

 

And the folks at Wang  never thought the PC would take off.

[ray9898]

On 6/23/2022 at 10:43 AM, johnseg said:

It is amazing with all this discussion that there are people that cannot discern the difference between a non-profit and a charitable organization. The PGA is not a charitable organization. They are not required to give any money to charity at all.

 

It is really quite simple.

 

It is baffling.  No matter how many times it is put out in simple terms people will continue to make inaccurate connections like they are a charity.