An ESPN report has analyzed the PGA Tour’s tax exemption status, which along with the NFL and NHL’s nonprofit status is being challenged by a bill pending in the U.S. Senate.
According to the report, which aired on the network’s “Outside the Lines” show, the Tour’s U.S.-based tournaments in 2011 (the most recent year available) gave an average of 16 percent of their income to charity, compared to the industry norm of 65 percent.
“The lion’s share of the money is going to big prizes, cash prizes for athletes and all the promotion around it, so it's really pathetic, actually,” Charity Navigator president Ken Berger told ESPN. “Every single taxpayer in this country ultimately is bearing the burden of having to pay the taxes for this wildly inefficient organization that’s giving so little to charity.”
But Tour officials claim the circuit’s charitable contributions far exceed any tax breaks it gains from its nonprofit status, which are estimated to be up to $200 million over the past 10 to 20 years. The Tour donated $130 million to charity in 2012, bringing its overall total to $1.9 billion.
“It’s as if no good deed goes left unpunished,” Ty Votaw, the Tour’s executive vice president of communication and international affairs, wrote in an e-mail. “This isn’t a bake sale where there is no overhead and everything is contributed. A tournament is a major undertaking that requires significant planning, setup and operation, all of which requires significant expense beyond the time contributed by volunteers.”
Sen. Tom Coburn, R-Okla., has introduced a bill in the Senate that would strip the Tour, NFL and NHL of their nonprofit, tax-exempt status, but the report focuses more on the exempt status of each tournament.
In an analysis of the FedEx St. Jude Classic, the tournament’s income in 2011 was $15.3 million. The event spent $6 million in prize money, $5 million in TV promotion, $1 million on tournament production and $500,000 on food and beverages. Only $1.5 million, or 10 percent of tournament expenses, was given to St. Jude.
“People are surprised, ‘You mean there's a place in the tax code for the PGA or the NFL to hide and not pay money?’ And the fact is, is yes,” Coburn said.
In a breakdown of each event, the worst performance came from the Shriners Hospitals for Children Open. Over two years, the hospital’s charity actually lost $4.5 million running the tournament, according to an annual financial report.
But, like most charities interviewed for the story, officials with Shriners Hospitals said the event provides valuable media exposure, and Votaw contends that losing the tax-exempt status would have a “chilling effect on the PGA Tour’s ability to continue to contribute millions of dollars to charity.”
Coburn’s bill would not impact the exempt status of individual tournaments.