Tax breaks power PGA Tour giving

Nonprofit status likely to remain as leagues lobby

Sen. Coburn's bill -- the PRO Sports Act -- has not made it out of committee, has no co-sponsors and is a long shot to even make it to a Senate vote. But the PGA Tour last year poured a half-million dollars into lobbying Congress regarding its tax exemptions. The NFL spent about $60,000.

Coburn thinks the basic structure of such leagues is simply unfair.

Pro sports leagues are categorized as 501(c)(6) nonprofit business leagues, the same designation as Rotary clubs, chambers of commerce, and the American Bar Association. According to data pulled by nonprofit analysts at Guidestar, NFL commissioner Roger Goodell's $11.5 million base salary in 2011 was the highest among all nonprofit business league officers, with PGA Tour commissioner Tim Finchem coming in at No. 5 with $4.1 million.

The PGA Tour's nearly $1 billion in revenue ranks second among all similar nonprofits and is far above the almost $200 million reported by the NFL, whose individual teams and for-profit divisions are separate from the nonprofit league office, Guidestar figures show.

"You know any rotaries that run hundreds of millions of dollars through their organization every year? And that the people who participate in it make salaries in excess of millions of dollars every year, the best members of the Rotary club?" Coburn said. "No, we don't."

Many people take the "nonprofit" designation an organization has as meaning it cannot keep any money it makes above expenses. But that's not true. The PGA for years has carried over profits -- to the tune of $700 million as of 2011. A feature on Finchem this year in Forbes magazine cites the tour's savings as giving the tour a "competitive advantage" that preserved its TV contracts even as corporate sponsors wavered in a shaky economy.

That $700 million is likely what the tour would have paid taxes on were it not structured as a nonprofit, said Brad Borden, a tax law professor at Brooklyn Law School in New York, who reviewed the tour's finances for "Outside the Lines."

"It seems very unfair ... at a time when [the government is] cutting services, they are also providing a subsidy to professional athletes who are playing a game. And this is very troubling."

He and other tax law experts estimated that the PGA Tour was responsible for up to $200 million in lost tax revenue over the past 10 to 20 years. That's based on applying a corporate tax rate to the PGA Tour's retained earnings with some reductions figured in, a similar methodology a Congressional tax estimator used to determine the future impact of Coburn's bill at $109 million over 10 years for all nonprofit sports leagues.

Eliminating that exemption is not going to solve the $17 trillion federal deficit, but Coburn said it's an important step in ending pro sports subsidies, which include tax breaks and public financing for stadiums and sporting events, and low-interest loans.

"We shouldn't be getting entertained at the expense of our kids and the middle-income and lower-income in this country," Coburn said.

The PGA Tour's individual tournaments, which are structured as tax-exempt charities themselves, also are free from paying sales and property taxes in some states.

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