A proposed joint venture between the nonprofit golf league the PGA Tour and LIV Golf, a for-profit golf tour owned by The Public Investment Fund, a state-owned investment fund run by Saudi Arabia, has prompted proposed federal legislation. The bill, H.R. 3908, would strip nonprofit statuses of professional sports associations, leagues or organizations.
The bill’s introduction followed the June 6 announcement that Ponte Vedra Beach, Florida-based PGA Tour and LIV Golf would merge, creating a large golf-tour sponsoring organization. The agreement, which is still pending finalization, would also include DP World Tour, aka the PGA European Tour. As part of the merger agreement, PGA Tour and LIV Golf agreed to drop numerous lawsuits that alleged antitrust violations stemming from the PGA Tour banning players from participating in LIV Golf events.
H.R. 3908, also known as the No Corporate Tax Exemption for Professional Sports Act, would amend Section 501 of the Internal Revenue Act of 1986 by adding a new subsection to the end of the section. According to the bill’s text, the new subsection would read:
Special Rules Relating To Professional Sports Leagues. — No organization or entity shall be treated as described in subsection (c)(6) if such organization or entity —
“(1) is a professional sports league, organization, or association, a substantial activity of which is to foster national or international professional sports competitions (including by managing league business affairs, officiating or providing referees, coordinating schedules, managing sponsorships or broadcast sales, operating loan programs for competition facilities, or overseeing player conduct).
(b) Effective Date. — The amendment made by this section shall apply to taxable years beginning after the date of enactment of this Act.
If completed, the merger would link a U.S.-based nonprofit with an entity controlled by Saudi Arabia’s Crown Prince and de facto leader Mohammed bin Salman. The Saudi Arabian government has been at loggerheads with the American government over a number of issues, including Saudi government officials’ suspected links to the September 11, 2001 terrorist attacks, alleged interference in the 2016 presidential election and roles in the 2018 murder of journalist Jamal Ahmad Khashoggi.
The bill was introduced by Rep. John Garamendi (D-California) and cosponsored by Rep. Julia Brownley (D-California) and Rep. Rashida Tlaib (D-Michigan). It was referred to the House Committee on Ways and Means.
“Saudi Arabia cannot be allowed to sports wash its government’s horrific human rights abuses and the 2018 murder of American-based journalist Jamal Khashoggi by taking over the PGA Tour,” Garamendi said via a statement announcing the bill’s introduction. “PGA Tour Commissioner Jay Monahan should be ashamed of the blatant hypocrisy and about-face he and the rest of the PGA Tour’s leadership demonstrated by allowing the sovereign wealth fund of a foreign government with an unconscionable human rights record to take over an iconic American sports league and avoid paying a penny in federal corporate income tax. This merger flies in the face of the PGA Tour players who turned down hundred-million-dollar paydays from the Saudi-backed LIV to align themselves with the right side of history and human decency.
“We are confident that once Congress learns more about how the PGA Tour will lead this new venture, they will understand the opportunities it creates for our players, our communities, and our sport while protecting the American institution of golf,” a PGA Tour spokesperson told The NonProfit Times.
The PGA Tour reported just under $1.59 billion in revenue and more than $4.53 billion in total assets, including more than $1.25 billion in net assets, for the year ending December 31, 2021, according to the most recent federal Form 990.
