PGA Tour’s Nonprofit Status Complicated By LIV Merger
Concerns have been raised regarding the future of the nonprofit PGA Tour following its proposed merger with for-profit LIV Golf, supported by Saudi Arabia’s Public Investment Fund, as reported by The Nonprofit Times and The Washington Post. Despite its intentions to maintain its nonprofit status, this proposed merger has led to an inquiry from the U.S. Senate into potential indirect benefits for a foreign government from U.S. tax provisions designed for nonprofits. H.R. 3908, or the No Corporate Tax Exemption for Professional Sports Act, was introduced by Rep. John Garamendi (D-California) to exclude such organizations from tax-exempt status in the future, as reported by The Nonprofit Times. The PGA Tour, a 501(c)(6) organization, primarily serves its member’s benefits, generating a revenue of $1.6 billion in 2021 against liabilities of $3.3 billion, with a notable share going toward player payouts and charity. The proposed merger aims to “unify the game of golf” globally by creating a new commercial entity encompassing the golf-related businesses of both the PGA Tour and the PIF, including LIV. However, the precise impact on the nonprofit’s operations remains uncertain, particularly given the substantial investment promised by the PIF, even though the PGA Tour is set to appoint the majority of the new entity’s board, with its current commissioner, Jay Monahan, expected to become the CEO. Overarching concerns about the merger raise serious questions about the susceptibility of American and other international sports leagues to sport-swashing efforts by countries with poor human rights records.