Breaking Down the Business Plan of the PGA Tour: Is It a Nonprofit?
Jun. 7 2023, Published 10:52 a.m. ET
In an unexpected turn of events, the PGA Tour and LIV Golf are merging. The professional golf leagues, alongside the DP World Tour, announced in June 2023 that they would combine their commercial rights into a new for-profit venture funded by the Public Investment Fund.
As expected, many players and fans were shocked by the PGA Tour's willingness to work with LIV Golf after stating it would never work with the Saudi-backed league. Others have mentioned the PGA Tour's nonprofit status — wait, is that real? Is the PGA Tour really a nonprofit? Let's find out.
Is the PGA Tour a nonprofit organization?
As a matter of fact, yes — the PGA Tour is a nonprofit and operates as a tax-exempt nonprofit 501(c)6 organization.
The nonprofit status has been scrutinized by many, including Congress. In March 2013, former Republication senator Tom Coburn introduced an amendment that would eliminate tax breaks for sports leagues. U.S. Representative Greg Steube reintroduced the legislation to take away the PGA Tour's nonprofit status in February 2022.
A few months later, on Aug. 24, 2022, PGA Tour commissioner Jay Monahan confirmed that the league had no plans to renounce its nonprofit status. He told Golf Channel, "The 501(c)6 status and the integrity of that and all it does for us, that's always going to be a central fabric to who we are as an organization. It will always be that way."
"But that status, if you think about our impact in the communities where we play, our history, our legacy," the current commissioner, Jay Monahan, added, "that's a point of differentiation for our sport, that’s a point of differentiation for the Tour, and that will continue to be that way."
The tour doesn't pay federal taxes, and a 2013 report from ESPN determined that the PGA Tour's nonprofit model had allowed it to avoid as much as $200 million in federal taxes. When accused of not paying its fair share, the PGA Tour noted that it donated billions of dollars to philanthropic causes.
Despite merging with LIV Golf, the PGA Tour will remain a nonprofit.
On June 6, 2023, the PGA Tour and LIV Golf announced they agreed to merge their commercial rights, as well those of the DP World Tour, into a single, for-profit entity. The tour will remain a tax-exempt nonprofit 501(c)6 organization and retain full control over how its tournaments are played.
Under the agreement comes a new entity that will "work to ensure a cohesive schedule of events that will be exciting for fans, sponsors, and all stakeholders." The Public Investment Fund will initially be the exclusive investor, alongside the PGA Tour, LIV Golf, and the DP World Tour.
"Going forward, PIF will have the exclusive right to further invest in the new entity, including a right of first refusal on any capital that may be invested in the new entity, including into the PGA Tour, LIV Golf, and DP World Tour. The PGA Tour will appoint a majority of the Board and hold a majority voting interest in the combined entity."
