Executive Compensation at the PGA (2020)

The Professional Golfer’s Association of America (PGA) is always a headline grabber but recently for all the wrong reasons. Seems the PGA is being investigated by the US Justice Department for anticompetitive behavior in their battle with the new Middle East start up, LIV Golf circuit.  Apparently, the PGA has suspended players who have chosen to play the for LIV Golf (who is offering vast sums of earnings for players who join and play golf on their circuit).

The PGA is a tax-exempt non-profit 501 (c) 6 – a professional business association –  that is set up and operates differently than most other professional business organizations:

• The PGA has 2 related tax-exempt related organizations: PGA Foundation, a 501 (c) 3; and PGA Financial Assistance Fund, Inc, also a 501 (c) 3.  Both operate out of the same office as the PGA in Palm Beach Gardens, Florida.
• The PGA has 2 related organizations taxable as a partnership:  PGA SIF LP (for investments); and Valhalla Golf Club Limited, a golf club.  Both operates out of the same office as the PGA in Palm Beach Gardens, Florida.
• The PGA has 10 related organizations taxable as a corporation or trust:  PGA Corporation, PGA Golf Development Inc, PGA Golf Enterprises Inc, PGA Golf Properties Inc, PGA Golf Partners Inc, PGA Management Services Inc, PGA Reserve Inc, PGA St Lucie Inc, PGA Tournament Corporation Inc, and PGA Valhalla Inc. All operate out of the same office as the PGA in Palm Beach Gardens, Florida.
• The PGA claims to have no employees yet the PGA reports paying for first class or charter travel, travel for companions, health or social club dues or initiation fees, personal services (maid, chauffeur, chef), gross up payments or the provision of tax indemnification.  The Form 990 reports that the PGA Corporation (a for profit and taxable corporation listed above) is the direct employer for most of the related organizations and shares employees.
• In the most general terms, the PGA is a non-profit that raises about $100 million annually and spends most of this revenue on management and other fees (television rights and tournament sponsors generally provide the purse winnings).  In other words, the PGA uses revenue to primarily pay related or affiliated organizations for management services.

In 2020, revenue totaled $94 million (compared to $128 million in 2019), most of which came from tournaments ($68 million), investments and gains ($15 million), education ($6 million), and membership dues and assessments ($3 million).

Expenses totaled $133 million in 2020  with most revenue used to pay management and professional fees.  However, because a related organization (appears to be PGA Corporation, a taxable corporation) pays employee compensation, the 11 most highly compensated employees are reported to be:

• $2,248,454:  Seth Waugh, CEO
• $1,222,908:  Darrell Crall, COO
• $1,100,863:  John Easterbrook, CMO
• $  902,101:  Jeffrey Price, CCO  
• $  831,814:  Kerry Haigh, CCO
• $  607,340:  Kevin Ring, CRO
• $  587,752:  Henry Smokler, General Counsel
• $  531,966:  Rhona Aime, CFO
• $  425,110:  Arjun Chowdri, CIO
• $  373,122:  Michael Quirk Jr, Senior Director
• $  351,266: Sandra Cross, CPO

The 11 most highly compensated employees received $9 million in compensation (or about 10% of total revenue).  9 of the 11 most highly compensated employees are male while 2 of the 11 are female (note:  the Form 990 does not report gender; determinations were made based on name and google searches).

10 independent contractors received more than $100,000 in compensation with the five (5) most highly compensated reported to be:

• $2,087,142:  Huge, LLC, of Brooklyn, NY for professional services
• $  913,750:  NBC Universal, of Orlando, FL for broadcast services
• $  812,500:  Evolution Media Capital, of NY, NY for professional services
• $  573,750:  Ideas United, of Decatur, GA for creative services
• $  300,000:  Plus & Play, of Sunnyvale, CA for consulting services

In closing, it is unclear how many employees the PGA has since most employees appear to be compensated through the PGA Corporation, a for-profit organization.  What we do know is that most revenue received by the PGA is spent on management and professional fees from related or affiliated organizations (for profit and not for profit).  What we also know is that PGA paid for first class or charter travel and although we know $5 million was spent on travel, we do not know how much was for economy travel, business class, first class, or charter travel.

To read the Form 990 (2019 for the year ending March 30, 2020), click here.