PGA Tour non-profit status

[aus10KC]

3 minutes ago, PorkChopExpress said:

There are bunch of old people there

bahahaha

 

I guess the PGAT should see if TIKTOK will sponsor a tournament. 

[golfortennis]

31 minutes ago, Soloman1 said:

1. The PGA Tour has “parked” $1 billion of nonprofits. The players are not getting everything left over.

 

2. Advertising and brand awareness for sponsors suggests the business benefits from the sponsorship. The rules are that money given to charity cannot be done with the expectation that the business will have any measurable financial gain from the charity donation.

 

3. The PGA Tour gives only 3% to charity. On one hand it touts itself as a charitable entity for public affairs, but would be ranked at the bottom of all tax-exempt charities. The local tournaments average 16% of revenue, again near the bottom.

 

Try creating a tax-exempt charity and give 3% to charity. Good luck with the IRS.

 

4. The PGA Tour owns 30 private and public access courses. Imagine you’re a privately owned public course in the same area, but you have to pay taxes, but the TPC property doesn’t have to pay local, state or federal taxes.

 

See there you go bringing reality and business into the mix.  Why can't you just drink the kool aid like you are told to?

 

Next thing you'll try to pull is to convince people that spending $3 billion on the Olympics isn't a good idea even though it will finally get that $100 million highway improvement done.

[golfortennis]

1 hour ago, joshrad_golf said:

I appreciate this insight. That said, is banning its members really done on behalf of the players?

 

Ding, ding, ding.  We have a winner.

 

Everyone kept saying that "the players are the tour."  Sure seems strange then that so many are willing to take an adversarial position if that were the case.

[Ghost of Snead]

1 hour ago, PorkChopExpress said:

but they’re going to smaller and smaller less notable tournaments

Palm Springs other than Florida makes the most sense though

bunch of old people who still think what Amex is 

 

younger generation could care less about Amex and what it used to mean to have one 

 

What does the younger generation care about besides selfies ? 

[PorkChopExpress]

36 minutes ago, Ghost of Snead said:

 

What does the younger generation care about besides selfies ? 

tiktok videos

[Soloman1]

Here’s a question: Do TPC courses charge you sales tax on retail goods  and food?

 

If they are, they are being deceptive and keeping the money, since 501(3)(c) are exempt from collecting sales tax in almost all states.
 

The list of chicanery is long and unknown to the public. The IRS filings do not show the P&L details and the PGA Tour finances are an accounting black hole, never to be revealed. Very few people within the organization know the details.

 

[RobS]

4 hours ago, joshrad_golf said:

I appreciate this insight. That said, is banning its members really done on behalf of the players?

Colt Knost talked about this on his radio show.  He mentioned that the players supported the decision to suspend because they didn't like the idea that guys could leave for the LIV payday and then cherry pick PGA Tour events to fill out there schedule and still make money off of the PGA Tour.  Granted, Knost is no longer on tour and not in the meetings but he's well connected to a lot of the players.

[aus10KC]

6 minutes ago, RobS said:

Colt Knost talked about this on his radio show.  He mentioned that the players supported the decision to suspend because they didn't like the idea that guys could leave for the LIV payday and then cherry pick PGA Tour events to fill out there schedule and still make money off of the PGA Tour.  Granted, Knost is no longer on tour and not in the meetings but he's well connected to a lot of the players.

 

But saying banned sounds so much more fun than suspended. 

[stinger_gc]

5 hours ago, joshrad_golf said:

The funny part is that the PGA TOUR itself doesn't give all that much money to charity. They help put on these events, and the tournament host companies and others sponsor's do lots of charity functions during the week of the PGA TOUR event, and they are the ones that raise the money for charity and give it to charity. The PGA TOUR does give some money, but most of the money raised for and given to charity is done by companies that Tour has partnered with for the week.

 

Ding Ding Ding. This is something that is glossed over a lot. The Tour always likes to tout they raised X amount of money for a local charity but in reality companies like 3M from this past week are already heavily involved in the community. (based in my home state).

[2bGood]

8 hours ago, Soloman1 said:

3. The PGA Tour gives only 3% to charity. On one hand it touts itself as a charitable entity for public affairs, but would be ranked at the bottom of all tax-exempt charities. The local tournaments average 16% of revenue, again near the bottom.

 

Try creating a tax-exempt charity and give 3% to charity. Good luck with the IRS.

 

4. The PGA Tour owns 30 private and public access courses. Imagine you’re a privately owned public course in the same area, but you have to pay taxes, but the TPC property doesn’t have to pay local, state or federal taxes.

PGAT is not a charity and does not call itself one. It also not set up as one under the tax code. It is a Non-Profit. All charities are non-profit, but not all non-profits are charities. 

 

If you would like to create a tax-exempt non-profit that gives 0% to charity you can easily do that. No issue at all. Non-profits have no requirement to give money to charity. none. You are mixing up 501c(3)- with is a charity and 501c(6) with is non-profit set up for non-chartable purposes.

 

Below is the IRS outline of what a 501c6 is so you have a better idea.

 

Also to your point 4, MANY golf courses do no pay property taxes. For a start the publicly owned ones, but you will find many 'clubs' fall under the IRS 501C(7) status that grants non-profit status to social clubs. From the IRS: "

 

The central purpose of social clubs is to provide benefits to members, including access to social and recreational facilities such as club houses, golf courses, and swimming pools."

 

Again this is the an example of tax exempt non-profit status is for many types of organisations and charity is not needed for any of them except 501c3 orgs. 

 

 

Here also is the info 501C6 orgs as this the PGAT status.

 

Section 501(c)(6) of the Internal Revenue Code provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual. An organization that otherwise qualifies for exemption under Internal Revenue Code section 501(c)(6) will not be disqualified merely because it engages in some political activity. In addition, the organization may engage in lobbying that is germane to accomplishing its exempt purpose without jeopardizing its exemption. However, if the organization  engages in political and/or lobbying activities, it may need to give members notice of dues used for such activities, or be subject to a proxy tax on the amount of the expenditures.

A business league is an association of persons having some common business interest, the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit. Trade associations and professional associations are business leagues. 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. No part of a business league's net earnings may inure to the benefit of any private shareholder or individual and it may not be organized for profit to engage in an activity ordinarily carried on for profit (even if the business is operated on a cooperative basis or produces only enough income to be self-sustaining).  The term line of business generally refers either to an entire industry or to all components of an industry within a geographic area.  It does not include a group composed of businesses that market a particular brand within an industry.

Chambers of commerce and boards of trade are organizations of the same general type as business leagues.  They direct their efforts at promoting the common economic interests of all commercial enterprises in a trade or community, however.

Edited July 25, 2022 by 2bGood

[Soloman1]

I know this. We’ve been discussing this for a while now, and I think most everyone who has read some of the comments instead of parachuting in here knows this.

 

It’s about the tour pulling out the charity card every time Congress challenges the tax-exempt status.

[2bGood]

1 hour ago, Soloman1 said:

I know this. We’ve been discussing this for a while now, and I think most everyone who has read some of the comments instead of parachuting in here knows this.

 

It’s about the tour pulling out the charity card every time Congress challenges the tax-exempt status.

But aren't you the one that made the comments I quoted? Why would you say the following if you understand being non-profit does to mean you are a charity:

 

"Try creating a tax-exempt charity and give 3% to charity. Good luck with the IRS."

 

You don't need good luck at all. It is right in the tax code. There are plenty of non-charity categories with non-profit status. I would not be surprised if you belong to at least one of them. An HOA, a social club, golf clubs, swimming pools,  chamber of commerce, a sports league, board of trade, Business association, profession assoc etc.  All can be tax exempt non-profits and are not required to give a dime to charity. 

 

Personally the charity part does not move me. Don't get me wrong, I think it is great there is a Charity component to the PGA Tour, but if the people involved wanted to raise money for charity without the PGAT, they could easily match the totals. 

 

Edited July 25, 2022 by 2bGood

[golfortennis]

1 hour ago, 2bGood said:

But aren't you the one that made the comments I quoted? Why would you say the following if you understand being non-profit does to mean you are a charity:

 

"Try creating a tax-exempt charity and give 3% to charity. Good luck with the IRS."

 

You don't need good luck at all. It is right in the tax code. There are plenty of non-charity categories with non-profit status. I would not be surprised if you belong to at least one of them. An HOA, a social club, golf clubs, swimming pools,  chamber of commerce, a sports league, board of trade, Business association, profession assoc etc.  All can be tax exempt non-profits and are not required to give a dime to charity. 

 

Personally the charity part does not move me. Don't get me wrong, I think it is great there is a Charity component to the PGA Tour, but if the people involved wanted to raise money for charity without the PGAT, they could easily match the totals. 

 

 

What he is saying is they are using the charity part to obfuscate to Congress the need to maintain their non-profit status.  They essentially are claiming all this charitable activity/giving will go away if they lose their not-for-taxes status, when, as you point out, charity has nothing to do with their status.   

[Soloman1]

1 hour ago, 2bGood said:

but if the people involved wanted to raise money for charity without the PGAT, they could easily match the totals. 

 

The PGA Tour claims to Congress that that is not so. Only by being tax exempt can they provide the players to local tournaments to entice sponsors for tournaments and money could not be raised without it.

 

Respectfully, I don’t think you’ve studied deep enough into workings of the tour.

[aus10KC]

@2bGood 

 

What @Soloman1 is getting at, each tournament is setup as a 501 3(c) charity and very little of that goes to charity if you look at the percentage of revenue brought in for that tournament compared to what is paid to charities. 

 

It's a valid point, but the expense of putting on a PGAT event is very costly. I think looking at the bottom line of what is given rather then the percentage given makes more sense. If each PGAT event raises a $1 million for charity, and you have 40 events. That's $40 million for charity.

 

I'm sure there is some BS in the accounting of these tournament charities. Who knows what the tournament director makes for example? That won't show on the PGAT financials for executive pay. The college football bowl games used to and still might operate the same way.

[2bGood]

1 hour ago, aus10KC said:

@2bGood 

 

What @Soloman1 is getting at, each tournament is setup as a 501 3(c) charity and very little of that goes to charity if you look at the percentage of revenue brought in for that tournament compared to what is paid to charities. 

 

It's a valid point, but the expense of putting on a PGAT event is very costly. I think looking at the bottom line of what is given rather then the percentage given makes more sense. If each PGAT event raises a $1 million for charity, and you have 40 events. That's $40 million for charity.

 

I'm sure there is some BS in the accounting of these tournament charities. Who knows what the tournament director makes for example? That won't show on the PGAT financials for executive pay. The college football bowl games used to and still might operate the same way.

You have two separate issues though.

 

As for the Tour:

 

PGAT - is not a charity. @Soloman1 said "The PGA Tour gives only 3% to charity. On one hand it touts itself as a charitable entity for public affairs, but would be ranked at the bottom of all tax-exempt charities."

 

Yes if it was charity it would be ranked at the bottom. But as it is not and charity and it gives about 3x times as much as the average organisation of it size. Which actually make it at high end as far charity goes for organisation of it type.  Why get hung up calling it charity when it is not?

 

As for individual tournaments. Yes most of them are Charities. All of the financials are public and can be reviewed if you like and will show what the top executives etc make. I am not going to argue their fundraising costs are appropriate or not. The more you know about this topic the more nuanced the discussion becomes. But if you like you can review their fillings - https://apps.irs.gov/app/eos/copyOfReturnsSearch

 

 

Edited July 26, 2022 by 2bGood

[2bGood]

1 hour ago, Soloman1 said:

 

The PGA Tour claims to Congress that that is not so. Only by being tax exempt can they provide the players to local tournaments to entice sponsors for tournaments and money could not be raised without it.

 

Respectfully, I don’t think you’ve studied deep enough into workings of the tour.

For the record, I am not arguing the the PGAT is accomplishing some wonderful good for the world or are the greatest thing to happen to charities. They are (like many organisations that give to charity) donating in part to engender some goodwill. By the numbers they actually give-away more to charity than most as the average large non-profit or for profit give less the 1% to charity. 

 

My argument about the PGAT is they are really not set up from an IRS perspective in a very unique or interesting way and that anything they do charity wise has nothing directly to do with their non-profit status. Making claims that they are a bad charity is like claiming Kermit is a bad lizard. Of course you are right - they are bad charity, so bad they don't even try to be one, or are registered as one. 

 

Now should they be a non-profit? As far the law goes they can be. Should the law allow them to be? Maybe-not, but in my opinion there is way more tax reform needed before we worry about the code that allows the PGAT to be a non-profit. 

 

 

Edited July 26, 2022 by 2bGood

[oikos1]

Looking forward to the possible plays the PGA Tour makes in these uncertain times.

 

Gravy, meet train...

[Chunkitgood]

The setup of having sponsors give money to charities who then put on tournaments and pay some of the prize money so that the sponsors can get a deduction is sheer brilliance.

 

The collective group of the best players in the world over time has benefited enormously thanks to the genius and foresight of whoever set the system up.

 

There’s no hypocrisy.  The players want money, they or their lawyers or whoever set up a system for them to get it.

 

And some charities get some money too.

 

A win all around.

[PorkChopExpress]

But now everyone wants more moneyz 🙂

[Titleist99]

11 hours ago, oikos1 said:

Looking forward to the possible plays the PGA Tour makes in these uncertain times.

 

Gravy, meet train...

I'm sure that the PGATOUR will find a way to stop players from being poached and that will leave the Saudi Golf League with cultivating its own talent.

 

Let's stipulate that they take all the top ten talent and pay each one $100M each (which they're foolish enough to do so)......the Pgatour will be fine with its big4, Rory, Scheffler, Rahm and Thomas. Tiger and a bunch of second tier players will ascend to the top- and 72-hole stroke play tournaments will be even better......IMO

[PorkChopExpress]

Rory ain't gonna be around that much longer, he's not gonna go play the Champions Tour

 

Most of these top players will call it done and move on. 

 

Younger players are looking to make a name, simply cause that's how you get paid

 

[Pastit]

25 minutes ago, PorkChopExpress said:

Rory ain't gonna be around that much longer, he's not gonna go play the Champions Tour

 

Most of these top players will call it done and move on. 

 

Younger players are looking to make a name, simply cause that's how you get paid

 

Are you speculating or commenting upon evidence ? Rory’s about thirty-four I believe, I’ll leave the maths to you but I think you’re wide of the mark here unless he’s unlucky with health.  
 

He manages his schedule well, looks fit and can win even if he loses length with increasing age. 
 

ps A quote published Jan 2022:

"But when that day comes, hopefully not for a long time - another 15 or 18 years - I don't want to be sitting in my house thinking 'OK what do I do?'"

Edited July 26, 2022 by Pastit

[betarhoalphadelta]

It might be worth investigating the prohibition on appearance fees. 

 

Not that the Tour itself needs to provide the appearance fees to golfers. I'm not a lawyer, but it's possible that individually negotiating appearance fees, by the Tour itself, could jeopardize the 501c6 structure by setting up deals that benefit members individually rather than setting up a structure for the membership as a whole. But right now--or, at least in the 2019-2020 handbook--the language is such that the players are prohibited from receiving them at all, even if it's not from the Tour itself. 

 

 

Quote

 

NO GUARANTEE FOR APPEARANCE

Neither players nor other individuals acting on such players’ behalf shall solicit or accept any compensation, gratuity or other thing of value offered for the purpose of guaranteeing their appearance in any PGA TOUR cosponsored, approved or coordinated tournament, including any pro-am played in connection therewith, except as may be specifically authorized by the PGA TOUR Policy Board prior to the tournament.

 

 

 

I think there are certain "wink and nod" sort of agreements, i.e. if RBC sponsors DJ, it may not be written into a contract that he needs to play the RBC Canadian Open, but he shouldn't be surprised if his sponsorship goes away if he skips it. 

 

But the RBC can't openly (or secretly) reach out to Scottie Scheffler and say "we need to boost the profile of our tournament--would you come play for a guaranteed $250K?" And Scottie can't go to the RBC tournament directors and say "hey, I'm trying to set my schedule for this year--I'd be willing to play in your tournament for $250K guaranteed."

 

I suspect this is put into the PGAT handbook specifically to protect the tournament sponsors from players shaking them down for guaranteed appearance fees. But at the same time I don't think they want a bunch of tournaments with zero top 10 players and only 1-2 top 25 players, and allowing the tournament sponsors themselves attract players via appearance fees could help rectify that. 

 

Thoughts?

[PorkChopExpress]

Rory's Nike contract goes to 2027? He'll be around 40-ish by then.

Think his TM contract also goes til then

 

He'll also start to lose some swing speed, just father time.

There's no way he's gonna play til 50 to join Champions

 

I would see Champions dropping it to 40 to keep the big names keep playing

The moneyz only going to grow, golf longevity will only shrink

Edited July 26, 2022 by PorkChopExpress

[Pastit]

1 minute ago, PorkChopExpress said:

Rory's Nike contract goes to 2027? He'll be around 40-ish by then.

Think his TM contract also goes til then

 

He'll also start to lose some swing speed, just father time.

There's no way he's gonna play til 50 to join Champions

I’ve added this:

"But when that day comes, hopefully not for a long time - another 15 or 18 years - I don't want to be sitting in my house thinking 'OK what do I do?'"

Maybe you’re right unless he’s unlucky in love - like Monty. 

[PorkChopExpress]

2 minutes ago, betarhoalphadelta said:

It might be worth investigating the prohibition on appearance fees. 

 

Not that the Tour itself needs to provide the appearance fees to golfers. I'm not a lawyer, but it's possible that individually negotiating appearance fees, by the Tour itself, could jeopardize the 501c6 structure by setting up deals that benefit members individually rather than setting up a structure for the membership as a whole. But right now--or, at least in the 2019-2020 handbook--the language is such that the players are prohibited from receiving them at all, even if it's not from the Tour itself. 

 

 

 

 

I think there are certain "wink and nod" sort of agreements, i.e. if RBC sponsors DJ, it may not be written into a contract that he needs to play the RBC Canadian Open, but he shouldn't be surprised if his sponsorship goes away if he skips it. 

 

But the RBC can't openly (or secretly) reach out to Scottie Scheffler and say "we need to boost the profile of our tournament--would you come play for a guaranteed $250K?" And Scottie can't go to the RBC tournament directors and say "hey, I'm trying to set my schedule for this year--I'd be willing to play in your tournament for $250K guaranteed."

 

I suspect this is put into the PGAT handbook specifically to protect the tournament sponsors from players shaking them down for guaranteed appearance fees. But at the same time I don't think they want a bunch of tournaments with zero top 10 players and only 1-2 top 25 players, and allowing the tournament sponsors themselves attract players via appearance fees could help rectify that. 

 

Thoughts?

 

Is this the reason they instituted that every pro has to play each tournament every 3 years? Or something like that?

 

Tour doesn't pay the appearance fees, pretty sure they have some influence though hahahaha

[PorkChopExpress]

1 minute ago, Pastit said:

I’ve added this:

"But when that day comes, hopefully not for a long time - another 15 or 18 years - I don't want to be sitting in my house thinking 'OK what do I do?'"

Maybe you’re right unless he’s unlucky in love - like Monty. 

 

Well we all know what Caroline Wozniaki did to him hahahahaha 🙂

[Pastit]

3 minutes ago, PorkChopExpress said:

 

Well we all know what Caroline Wozniaki did to him hahahahaha 🙂

Are you confessing to being a “ Peeping Tom “ ?

[idrive]

9 minutes ago, betarhoalphadelta said:

I think there are certain "wink and nod" sort of agreements, i.e. if RBC sponsors DJ, it may not be written into a contract that he needs to play the RBC Canadian Open, but he shouldn't be surprised if his sponsorship goes away if he skips it. 

 

 

You do realize RBC dropped DJ like a hot potato when he joined the exhibition and subsequently skipped the RBC this year?