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PGA Tour could be on the hook for millions because of Senate bill

By Kyle Porter | Golf Writer

Tiger Woods made $8 million in 2013 from the PGA Tour. (USATSI)
Tiger Woods made $8 million in 2013 from the PGA Tour. (USATSI)

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Senator Tom Coburn (R-OK) has introduced a bill in the US senate that challenges the PGA Tour's status as a non-profit organization.

The bill, according to Businessweek, is framed as a threat to large sports organizations in general that file as nonprofits.

"The PRO Sports Act proposed by the Republican lawmaker would prohibit professional sports organizations with annual revenue of more than $10 million from filing as nonprofit organizations."

The corporate tax fee is 35 percent, not a small amount for an organization that, according to its 2011 tax filing, generates nearly $1 billion in revenue every year (and it's likely over that number now).

Interestingly, the bill is aimed more at the NFL -- because the sports world is the NFL's and everybody else (read: golf) is just existing in it -- but the PGA Tour, NHL, and ATP World Tour were also named.

In this post by Ryan Ballengee he notes that this whole thing kind of comes down to semantics.

"Coburn's Senate office says these leagues do not promote 'the success of their respective sports—football, ice hockey, and professional golf—but these leagues are clearly organized for profit to promote their specific brands.' To qualify as a 501(c)6, these organizations must claim they are essentially a trade organization, looking to promote their sport at large, not just their respective brands."

I supposed I understand where both sides are coming from in this case and I think the PGA Tour does have more of a leg to stand on than, say, the NFL.

The PGA Tour released this statement via GolfDigest:

"As a 501(c)(6) membership organization that co-sanctions more than 100 tournaments on five professional golf tours, the PGA TOUR directs all net revenue either to benefit our members or charity. Players are compensated through tournament purses and performance-based retirement plans. While our tax exempt status does not require or depend on charitable activities in any way, giving back is a fundamental part of what we do."
"The vast majority of PGA TOUR co-sanctioned tournaments are organized for a charitable purpose, and all tournaments have a charitable focus with net proceeds being contributed directly to worthy causes in the communities where they are held. In 2012 alone, tournaments generated more than $130 million for over 3,000 charities across the United States, bringing our all-time total to $1.86 billion. This level of charitable giving is unprecedented in professional sports."

Senator Coburn's argument is that the money distributed to people involved in this organization are paid salaries that don't match up with most nonprofits.

"Working Americans are paying artificially high rates in order to subsidize special breaks for sports leagues," Coburn said in a release. "This would help give all Americans, not just athletes and owners, a break and pave the way for the kind of tax reform and job creation our economy desperately needs."

Also, I'm going to guess this video is going to get forwarded to the office of Mr. Coburn many, many times in the next few months.

For more golf news, rumors and analysis, follow @EyeOnGolf and @KylePorterCBS on Twitter or Google+ and like us on Facebook.

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