You know that the PGA Tour is a nonprofit, don't you?*
I'm also sure you've heard the news that the Saudi government (via its public investment fund, with $600+ billion in assets) launched a new tour (called LIV) which has announced a merger with the PGA Tour. Details are being worked out (and investigated.)
Why does this deal stink so much? Sport washing by a country with a dismal human rights record is pretty obvious - especially as the country is unabashadly trying to buy soccer talent also. Certainly, families of people who were killed on September 11, 2001 are disgusted (my own included). There's a lot of media on this story about the players, the fans, the public, the sport-washing, human rights, and, of course, Trump Sr., Kushner Jr., and Mnuchin. I'll let you read all that elsewhere.
Let's go to back to the role of the Tour as a nonprofit organization. If you check on Candid.org (screenshot above) you'll find the PGA Tour with its $4 billion in assets as well as about a dozen other PGA-named nonprofits, including a 501 (c) (3) foundation with$10,000 in assets and an organization for and by the wives of PGA players.
This comes along as the United States has lost control of our system for financing campaigns and the regulatory body in charge (the FEC) is hogtied by politics. Money flows from individuals and corporations to nonprofits, where the names of the donors are "washed off" and the money is passed through to politically-active affiliated organizations. Sometimes, people just "move" nonprofit funds to their own pockets. As I predicted in 2010, when the Citizens United decision was handed down, large swaths of nonprofit organizations have become money laundering mechanisms for politics. This structure - foreign government "investment" in a nonprofit that holds extravagent and expensive events at properties owned by an indicted former president running again for office - looks and smells like the making of a money washing scandal from here, before the deal is even done.
The new entity ("NewCo" to be born from PGA + LIV) will be a commercial enterprise. Owned by the nonprofit PGA. I'm not a lawyer but I can read these signs - that means no conversion foundation or tax payback from the nonprofit. Massive commercial investments plus a nonprofit structure that will enable anonymous financial flows. A set of nesting doll organizations ripe for funding abuse by anyone, anywhere interested in political influence, but particularly convenient for foreign governments. Given the timing, expect big concerns about funding and influence in the 2024 Presidential election.
Given the cast of characters involved, I'll say it out loud now: this deal looks like the biggest money laundering machine yet to be carved out of the nonprofit tax code. I'll put my bet down now - If the deal goes through, this will become a story of campaign finance violations. And we're watching it being put together right in front of us. It may never happen due to antitrust and other reasons, but still, it's important to see what this deal intends, and realize if not this, then somewhere else.
*I'm sure you remember that the NFL was a nonprofit until 2015 - when it reorganized as a commercial entity. Happens under 501 (c) (6) of IRS Code.
