The for-profit aspect is interesting. Previously the PGA Tour was registered as a trade organization and the money was supposed to pass through and make it to the players after officer compensation and cost recovery, etc. This new company creates a huge siphoning opportunity for the company and PIF to keep as much of the money as they want and reduce the amount that makes it to the players.
Here's another question. Does NewCo pay taxes?
It's a newly formed entity funded by the PIF. Is it a Saudi entity or a US entity?
If it's a for profit Saudi entity paying taxes to itself...
That's quite clever.
Also, the PGA remains a charitable non-profit organization and the PIF will become a major corporate sponsor of the PGA, meaning they'll be investing money into the PGA, tax free:
Quote:
Monahan's memo to players indicated a strong Saudi Arabian presence. He said PIF would make a financial investment to become a “premier corporate sponsor” of the PGA Tour, the European tour and other international tours.
So there's going to be PIF ads all over the place on the PGA Tour.
The PGA has the means to wait out LIV as LIV is bleeding epic amounts of money. The only explanation is that they were afraid of the ramifications of the lawsuits. There was reportedly some heated disagreement about evidence for the discovery process. The PGA must have a lot to hide.
Yup:
Quote:
The PGA Tour found itself in a bad spot legally, whether due to the merits of the case or what might be uncovered by opening its books to the Department of Justice in discovery as the DOJ also considered antitrust allegations. (You can bet the PIF and its leaders had no interest in similar exposure.)
Perhaps Monahan realized the PIF could make the PGA Tour bleed money as long as it wanted given its endless reserves, and even if LIV Golf was without momentum or foreseeable growth, settling became a more attractive option.
Apparently the PIF was also claiming that they had diplomatic immunity which made them immune from disclosure laws. It was going to take the PGA years to fight that aspect alone.
The for-profit aspect is interesting. Previously the PGA Tour was registered as a trade organization and the money was supposed to pass through and make it to the players after officer compensation and cost recovery, etc. This new company creates a huge siphoning opportunity for the company and PIF to keep as much of the money as they want and reduce the amount that makes it to the players.
Here's another question. Does NewCo pay taxes?
It's a newly formed entity funded by the PIF. Is it a Saudi entity or a US entity?
If it's a for profit Saudi entity paying taxes to itself...
That's quite clever.
Also, the PGA remains a charitable non-profit organization and the PIF will become a major corporate sponsor of the PGA, meaning they'll be investing money into the PGA, tax free:
Quote:
Monahan's memo to players indicated a strong Saudi Arabian presence. He said PIF would make a financial investment to become a “premier corporate sponsor” of the PGA Tour, the European tour and other international tours.
So there's going to be PIF ads all over the place on the PGA Tour.
As a 501c6 they aren’t a charitable organization but a trade organization. From Monohans quotes he said the tour pension funds are the main assets under the old exempt PGA, while most everything else is going to be in the new for-profit entity. He also said that having the for-profit entity opens all sorts of new opportunities that weren’t available to them as a pass-through organization. What opportunities are there besides not being required to pass all the money through and instead being able to capture more of that money to stay with the entity.
The PGA has the means to wait out LIV as LIV is bleeding epic amounts of money. The only explanation is that they were afraid of the ramifications of the lawsuits. There was reportedly some heated disagreement about evidence for the discovery process. The PGA must have a lot to hide.
Yup:
Quote:
The PGA Tour found itself in a bad spot legally, whether due to the merits of the case or what might be uncovered by opening its books to the Department of Justice in discovery as the DOJ also considered antitrust allegations. (You can bet the PIF and its leaders had no interest in similar exposure.)
Perhaps Monahan realized the PIF could make the PGA Tour bleed money as long as it wanted given its endless reserves, and even if LIV Golf was without momentum or foreseeable growth, settling became a more attractive option.
The discovery process must have scared the PGA Tour so much that they would rather deal with the Saudis. That says a lot and vindicates what Phil Mickelson said all along.
As a 501c6 they aren’t a charitable organization but a trade organization.
Quote:
One such association, theProfessional Golfers’ Association (PGA) Tour is characterized as a §501(c)(6) tax-exempt charitable organization which entitles it to certain benefits that for-profit corporations do not enjoy.3 Recently, the PGA has been under the scrutinous eye of nonprofit watchdogs who criticize its tax-exempt status.
Skeptics of the PGA’s true intentions criticize the amount of taxes the organization has “evaded” compared to the dollar amount that each tournament brings in and the portion of that amount that is allocated for charitable giving.
The PGA Tour's nonprofit business model has allowed it to avoid paying up to $200 million in federal taxes over the past 20 years, and its tournaments -- designed to benefit local charities -- operate in ways that fall short of acceptable charitable practices, an "Outside the Lines" analysis of IRS data finds.
The tour's charitable giving is a centerpiece of its golf events, tournament telecasts and website. The professional golf organization touts nearly $2 billion in donations over 75 years.
.............
"Outside the Lines" analyzed the tour's U.S.-based tournaments that received charitable tax exemptions in 2011 (the most recent year available) and found they spent, on average, about 16 percent on actual charity. That figure is far below the minimum 65 percent that charity watchdog groups say makes for a responsible charity.
..............
But questioning the PGA Tour's nonprofit status and charitable giving is disingenuous considering how much it has donated over the years -- far exceeding any tax breaks it may get, PGA spokesman Ty Votaw told "Outside the Lines."
"It's as if no good deed goes left unpunished," he said. Votaw declined an in-person interview but answered some questions via email and on the phone.
Tour officials don't dispute that the percentage donated to charity is low, but they say it simply shouldn't matter. What's more important is the bottom line, Votaw said.
..................
Twenty-five of the tournaments on the primary PGA Tour circuit are arranged as 501(c)(3) public charities or private foundations, although not all of them account for tournament expenses in the same way. (The rest are either not run by a nonprofit, take place outside the United States or are run directly by the PGA Tour.) IRS rules loosely dictate how the money raised has to be spent, but charity watchdog groups have set standards to determine what a responsible charity is, and Charity Navigator says -- at a minimum -- 65 percent of the money raised should be spent on providing actual charity.
The 501(c)(3) tournaments average about 16 percent. Only one -- the AT&T Pebble Beach National Pro-Am -- run by the Monterey Peninsula Foundation, exceeded the standard. It's a private charitable foundation and it spent about 79 percent of its money on grants to various charities.
Joined: 10 Dec 2006 Posts: 52727 Location: Making a safety stop at 15 feet.
Posted: Wed Jun 07, 2023 8:07 am Post subject:
ChickenStu wrote:
DaMuleRules wrote:
Well, the good news is that I won’t have to worry about trying to work in watching professional golf into my schedule anymore.
Not even the majors, which are unaffiliated with the Tour, or whatever this new entity is going to be called?
The entirety of it disgusts me at this point. _________________ You thought God was an architect, now you know
He’s something like a pipe bomb ready to blow
And everything you built that’s all for show
goes up in flames
In 24 frames
As a 501c6 they aren’t a charitable organization but a trade organization.
Quote:
One such association, theProfessional Golfers’ Association (PGA) Tour is characterized as a §501(c)(6) tax-exempt charitable organization which entitles it to certain benefits that for-profit corporations do not enjoy.3 Recently, the PGA has been under the scrutinous eye of nonprofit watchdogs who criticize its tax-exempt status.
Skeptics of the PGA’s true intentions criticize the amount of taxes the organization has “evaded” compared to the dollar amount that each tournament brings in and the portion of that amount that is allocated for charitable giving.
The PGA Tour's nonprofit business model has allowed it to avoid paying up to $200 million in federal taxes over the past 20 years, and its tournaments -- designed to benefit local charities -- operate in ways that fall short of acceptable charitable practices, an "Outside the Lines" analysis of IRS data finds.
The tour's charitable giving is a centerpiece of its golf events, tournament telecasts and website. The professional golf organization touts nearly $2 billion in donations over 75 years.
.............
"Outside the Lines" analyzed the tour's U.S.-based tournaments that received charitable tax exemptions in 2011 (the most recent year available) and found they spent, on average, about 16 percent on actual charity. That figure is far below the minimum 65 percent that charity watchdog groups say makes for a responsible charity.
..............
But questioning the PGA Tour's nonprofit status and charitable giving is disingenuous considering how much it has donated over the years -- far exceeding any tax breaks it may get, PGA spokesman Ty Votaw told "Outside the Lines."
"It's as if no good deed goes left unpunished," he said. Votaw declined an in-person interview but answered some questions via email and on the phone.
Tour officials don't dispute that the percentage donated to charity is low, but they say it simply shouldn't matter. What's more important is the bottom line, Votaw said.
..................
Twenty-five of the tournaments on the primary PGA Tour circuit are arranged as 501(c)(3) public charities or private foundations, although not all of them account for tournament expenses in the same way. (The rest are either not run by a nonprofit, take place outside the United States or are run directly by the PGA Tour.) IRS rules loosely dictate how the money raised has to be spent, but charity watchdog groups have set standards to determine what a responsible charity is, and Charity Navigator says -- at a minimum -- 65 percent of the money raised should be spent on providing actual charity.
The 501(c)(3) tournaments average about 16 percent. Only one -- the AT&T Pebble Beach National Pro-Am -- run by the Monterey Peninsula Foundation, exceeded the standard. It's a private charitable foundation and it spent about 79 percent of its money on grants to various charities.
My bad I guess they do refer to a c6 as a charitable organization but they are not required or set up for charitable giving, they choose to give a lot to charity for public good will and philanthropy. A c6 organization is contemplated to primarily benefit its members who share a common business interest. A c3 has the purpose of serving a broader segment of the general public.
Edit: I missed your edit. I didn’t o ow they had any 501c(3) dealings. I’ve only seen them listed as a 501c(6)
My bad I guess they do refer to a c6 as a charitable organization but they are not required or set up for charitable giving, they choose to give a lot to charity for public good will and philanthropy. A c6 organization is contemplated to primarily benefit its members who share a common business interest. A c3 has the purpose of serving a broader segment of the general public.
Edit: I missed your edit. I didn’t o ow they had any 501c(3) dealings. I’ve only seen them listed as a 501c(6)
Gotcha. Yeah, I think I saw that outside the lines piece or something, cuz something in the back of my mind heard somewhere that they were a charitable non profit.
I got us derailed, my main point is that as non-profit they are still selling merchandise, selling tickets, TV rights, sponsorships, advertising…nothing changes about what they can sell but now instead of just lying executive salaries and player purses, they can also pay out investor ROI. I think part of the sports washing is that people think the Saudis are happy losing money in sports. I think they are in it to make a profit.
So I guess Rory will be retiring since he is too ethical to take Saudi money.
Did you not see his quotes? He said this is going to be good for the game of golf. Basically said the same stuff Monohan said. He’s a company man.
Yeah, I saw his quotes but he may want to ease up on the moral high ground stuff if he is going to wallow in the muck with everyone else.
Talk about hypocritical....
Yup.
He actually tried to clarify his stance as if it makes any difference. He says, to be clear, he's only against LIV. He still hates LIV and hopes it goes away.
This is PIF, which is different. He has no issues with the PIF and their money...
I got us derailed, my main point is that as non-profit they are still selling merchandise, selling tickets, TV rights, sponsorships, advertising…nothing changes about what they can sell but now instead of just lying executive salaries and player purses, they can also pay out investor ROI. I think part of the sports washing is that people think the Saudis are happy losing money in sports. I think they are in it to make a profit.
How do you think this pay out happens?
PGA moves all their commercial rights to NewCo. NewCo has only one investor, the PIF fund. So, on paper, the only investor ROI should be the PIF fund.
So, the only way I see the PGA getting their "investor ROI" is through the corporate sponsorship money that the PIF promises to pay the PGA.
So I guess Rory will be retiring since he is too ethical to take Saudi money.
Did you not see his quotes? He said this is going to be good for the game of golf. Basically said the same stuff Monohan said. He’s a company man.
Yeah, I saw his quotes but he may want to ease up on the moral high ground stuff if he is going to wallow in the muck with everyone else.
Talk about hypocritical....
Yup.
He actually tried to clarify his stance as if it makes any difference. He says, to be clear, he's only against LIV. He still hates LIV and hopes it goes away.
This is PIF, which is different. He has no issues with the PIF and their money...
Huh?
LIV was taking away talent away from the PGA Tour. They were costing the PGA Tour money in their effort to keep up with the LIV Tour. Now instead of them pouring money into beating the competition that money will instead go into his pocket books and to other PGA Tour players.
I got us derailed, my main point is that as non-profit they are still selling merchandise, selling tickets, TV rights, sponsorships, advertising…nothing changes about what they can sell but now instead of just lying executive salaries and player purses, they can also pay out investor ROI. I think part of the sports washing is that people think the Saudis are happy losing money in sports. I think they are in it to make a profit.
They are buying US political influence. Period. End of sentence.
I got us derailed, my main point is that as non-profit they are still selling merchandise, selling tickets, TV rights, sponsorships, advertising…nothing changes about what they can sell but now instead of just lying executive salaries and player purses, they can also pay out investor ROI. I think part of the sports washing is that people think the Saudis are happy losing money in sports. I think they are in it to make a profit.
How do you think this pay out happens?
PGA moves all their commercial rights to NewCo. NewCo has only one investor, the PIF fund. So, on paper, the only investor ROI should be the PIF fund.
So, the only way I see the PGA getting their "investor ROI" is through the corporate sponsorship money that the PIF promises to pay the PGA.
Going to be interesting.
At the end of the year the LLC wil have a profit or a loss, and if they have a profit, the board of directors will vote on what to do with those profits. They can keep cash on hand, reinvest, or distribute part of the profit to shareholders. Who knows maybe they don’t distribute to investors for 5 years, but as a private company it will basically be up to a bird vote each year imo.
Basically what I think is going to happen is all commercial assets get put in the LLC, tangible and intangible, and a valuation is put on the LLC. The Saudis then agree to give a cash infusion for a 20% ownership stake in the company (I’m just making up the share, it could be more or less).
The LLC then uses that cash infusion for growth initiatives. Then when they need more money for more initiatives, they give a proposal to the PIF and the PIF evaluates if they want to fund the proposal. This funding does not come for free, each time they fund a new proposal, more shares will be created in the LLC and the previous shareholders value will be diluted, so over time the PIFs ownership stake in the LLC will continue to grow. Just like you see in Shark Tank. Their return on investment can be as distributed profits or unrealized returns in the form of increased value of the company.
I don’t see a reason why profits can’t be distributed to PGA and DPWT.
I got us derailed, my main point is that as non-profit they are still selling merchandise, selling tickets, TV rights, sponsorships, advertising…nothing changes about what they can sell but now instead of just lying executive salaries and player purses, they can also pay out investor ROI. I think part of the sports washing is that people think the Saudis are happy losing money in sports. I think they are in it to make a profit.
How do you think this pay out happens?
PGA moves all their commercial rights to NewCo. NewCo has only one investor, the PIF fund. So, on paper, the only investor ROI should be the PIF fund.
So, the only way I see the PGA getting their "investor ROI" is through the corporate sponsorship money that the PIF promises to pay the PGA.
Going to be interesting.
At the end of the year the LLC wil have a profit or a loss, and if they have a profit, the board of directors will vote on what to do with those profits. They can keep cash on hand, reinvest, or distribute part of the profit to shareholders. Who knows maybe they don’t distribute to investors for 5 years, but as a private company it will basically be up to a bird vote each year imo.
Basically what I think is going to happen is all commercial assets get put in the LLC, tangible and intangible, and a valuation is put on the LLC. The Saudis then agree to give a cash infusion for a 20% ownership stake in the company (I’m just making up the share, it could be more or less).
The LLC then uses that cash infusion for growth initiatives. Then when they need more money for more initiatives, they give a proposal to the PIF and the PIF evaluates if they want to fund the proposal. This funding does not come for free, each time they fund a new proposal, more shares will be created in the LLC and the previous shareholders value will be diluted, so over time the PIFs ownership stake in the LLC will continue to grow. Just like you see in Shark Tank. Their return on investment can be as distributed profits or unrealized returns in the form of increased value of the company.
I don’t see a reason why profits can’t be distributed to PGA and DPWT.
Yeah, this is interesting.
So, the tournament starts off as a 501c(3) non-profit charitable tournament (25 of them per year). The PGA runs it.
NewCo controls all the commercial aspects of the tournament. NewCo takes all the proceeds, figures out the profits and distributes it back to the PGA (their fair share).
So, is the PGA now taxed for taking their ROI, or are they still exempt?
It depends on how they use the money. We don’t know the arrangement. a lot of revenues could go through the LLC or very little money could go through the LLC and it’s basically just a real estate holding of all the TPC golf courses and commercial buildings they own. If all the money goes through the LLC the PGAT is going to need the profits to pay their salaries and bills, and can put the rest towards player development and philanthropy and I don’t think that would subject them to tax. Although the profits would be taxed once on the LLC side.
I think there could be a set up where the tournaments are non profit, and the revenues from TV etc go through the non profits and the PGAT and DP World Tour just sell a portion of their ownership in the real estate each time PIF makes a cash infusion. We really don’t know.
The other thing to look out for is the board seats. PIF will have a minority of the board seats initially but after so many proposals being funded, they may ask for additional board seats to be created.
Look how fast Yasir Al-Rumayyan orchestrated his chess moves against the PGA to get to where we are today. The guy is a shark, I don’t think he’s going to stop sharking.
It’s been less than 1 year since the first LIV golf event and 10 month since the lawsuit was filed. The PGA was checkmated at lightening pace.
Jimmy Dunne outlines plan for PGA Tour loyalists, LIV players who want back
Golfers who remained loyal to the PGA Tour -- but not those who left for the LIV Golf League -- would receive equity shares in the new for-profit enterprise being formed by the PGA Tour, DP World Tour and Saudi Arabia's Public Investment Fund, Jimmy Dunne told ESPN on Friday.
Dunne, the PGA Tour policy board member who helped broker this week's stunning deal, said current tour members would receive equity in the new company based on a yet-to-be-determined formula. Several of the tour's top stars, including Hideki Matsuyama, Patrick Cantlay, Jon Rahm and Cameron Young, reportedly turned down guaranteed contracts worth as much as $100 million from LIV Golf League officials.
"The new [company] would grow, and the [current PGA Tour] players would get a piece of equity that would enhance and increase in value as time went on," Dunne said. "There would have to be some kind of formulaic decision on how to do that. It would be a process to determine what would be a fair mechanism that would be really beneficial to our players."
The players who left for the LIV Golf League, according to Dunne, would not be able to participate in the new company's equity plan.
Dunne, the vice chair and senior managing principal of the investment bank Piper Sandler, helped lay the groundwork for the PGA Tour's alliance with the Public Investment Fund (PIF), which is financing the rival LIV Golf League. A member of Augusta National Golf Club and president of Seminole Golf Club in Juno Beach, Florida, Dunne will serve on the new company's board.
The PGA Tour's surprising decision to do business with PIF has left many of its current members questioning why they were encouraged not to accept money from Saudi Arabia's sovereign wealth fund to join LIV and instead remain loyal to the PGA Tour.
"Obviously, for the guys that did turn down significant amounts of money, then that's probably a tough one to swallow, and I feel for them," reigning U.S. Open champion Matt Fitzpatrick said Thursday.
Bryson DeChambeau, who reportedly was paid more than $125 million to defect to LIV Golf, told CNN on Tuesday that he felt sorry for PGA Tour members who didn't take the money.
"The players that did go over, we did take a risk, and there was a reason for taking that risk relative to the capital that had to be paid out for that to occur," DeChambeau said. "I do feel bad for the PGA Tour players because they were told one thing and something else happened. On our side, we were told one thing and it's come to fruition."
Quote:
Dunne said PGA Tour commissioner Jay Monahan would also have oversight of the LIV Golf League under the new agreement, giving him the authority to determine whether the breakaway circuit will continue beyond this season.
While Norman has told LIV Golf's staff members that the league was making plans for 2024 and beyond, others at the highest levels of the sport don't seem convinced that the LIV Golf League will survive beyond this year. Multiple sources have told ESPN that if there's a team concept in future seasons, it won't be in LIV Golf's present form and won't include Norman as its CEO and commissioner.
Quote:
If the LIV Golf League folds, Dunne said a committee that includes current PGA Tour members and administrators would determine potential punishment for players who left for it but want to apply for reinstatement to the PGA Tour.
"I think we would form a panel, including tour players, that would evaluate what the terms would be," Dunne said. "Remember, they're coming back to compete on the tour, so they have to be confident that they would be good enough to continue to play, and they have to be willing to incur the penalty for having gone."
.............
Sources have told ESPN that the punishment would probably be considered on a case-by-case basis. The 11 LIV Golf League players who sued the PGA Tour in federal court might get stiffer penalties than those who didn't, while players who actively recruited PGA Tour members to the breakaway circuit could also be hit hard.
..............
"Players on the LIV [tour] that wanted to reinstate into the PGA Tour would go through a process [and] suspension," Dunne said. "Whatever the penalty was, they'd have to decide whether they wanted to do that or not and then they could play."
Quote:
The PGA Tour's policy board must still approve the alliance with PIF and the DP World Tour.
The potential deal is also expected to be scrutinized by U.S. Department of Justice antitrust regulators, according to experts.
"I thought it sounded brazen and sounded illegal because merger to monopoly is illegal under antitrust laws," said Tim Wu, a professor at Columbia Law School and former special assistant to President Joe Biden for technology and competition policy. "The two entities were in competition, and [they] somehow become one entity. If they're going to take two entities, become one, that's basically a straightforward violation of the antitrust laws."
Joined: 26 Apr 2004 Posts: 17286 Location: In a no-ship
Posted: Fri Jun 09, 2023 6:20 pm Post subject:
I can't imagine the LIV guys will accept being punished for wanting to continue playing under this arrangement. The PGA should probably be very careful.
I can't imagine the LIV guys will accept being punished for wanting to continue playing under this arrangement. The PGA should probably be very careful.
Yeah, this sounds so discriminatory. If it's one entity, how can there be 2 sets of rules for different players?
I can't imagine the LIV guys will accept being punished for wanting to continue playing under this arrangement. The PGA should probably be very careful.
Yeah, this sounds so discriminatory. If it's one entity, how can there be 2 sets of rules for different players?
Rory’s had the funniest comments. He said guys who chose LIV need to face some kind of punishment because there needs to be consequences for your choices. Then said the guys who chose not to go to LIV should be made whole for the money they gave up.
Joined: 25 Apr 2015 Posts: 32270 Location: Anaheim, CA
Posted: Fri Jun 09, 2023 8:15 pm Post subject:
F*@k the Tour. Punish the players for coming back? How dare they choose to play golf elsewhere! I mean, you're taking all that PIF money, and if you're folding the LIV Tour, what, now they are just out of luck? And I'll say it again, PGA Tour players should thank the LIV defectors for the eventual result of the PGA Tour players getting to play for far more money.
The PIF holds all the cards. I can't imagine the PGA has much leverage now. I have no idea how they can make the PGA loyalists whole, considering its the PIF's money. They can just refuse to pay and they can't do anything because they don't have an agreement in writing.
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