The US Senate introduced tax-exemption and sovereign wealth fund bills to target the PGA and LIV merger
The GIST: Targeting PGA and LIV’s recent merger, senate finance committee chairman, Ron Wyden, introduced tax-exemption and sovereign wealth fund bills on Wednesday. If passed, these bills will also affect the rest of the sports world.
The details: The main goals of these bills, bills, bills are to keep the PGA paying their taxes, limiting tax breaks and imposing taxes on currently exempted wealth funds. The PGA’s upcoming merger with the LIV — the Saudi Arabia’s Public Investment Fund (PIF)-backed former-competitor to the PGA — came as a shock after the U.S.-based league spoke out against LIV for over a year.
- This isn’t the first legal action taken against the PGA in response to the merger. In June, the league was hit with an antitrust review from the DOJ and a Senate Finance Committee investigation, followed by a hearing with the Homeland Security and Government Affairs Committees in July.
Tax Exempt Act: The Sports League Tax-Exempt Status Limitation Act (or Tax Exempt Act) would effectively eliminate a previous tax exemption for sports organizations with assets exceeding $500M. Though the bill targets the PGA, whose tax exempt status has reportedly saved it millions of dollars, it will also affect nearly every other sport.
- The NFL, NBA, MLB, MLS, and are all leagues carrying assets over that $500M mark. Individual teams could also be affected. And while there aren’t any women’s leagues there yet — WNBA’s reported current value is $475 million — we know it’s just around the corner.
Wealth Funds Act: The Ending Tax Breaks for Massive Sovereign Wealth Funds Act (or Wealth Funds Act) would require funds with more than $100B invested globally by countries without a free trade agreement or tax treaty with the U.S. to pay a 30% withholding tax on dividends, interest, and payments.
- The bill would affect more than the PGA. For example, the Qatar Investment Authority recently bought a 5% stake in Monumental Sports & Entertainment (Washington Capitals, Wizards, and Mystics), and the WTA (and Billie Jean King) is reportedly looking into Saudi-backing in order to achieve Equal Pay in tennis.
Zooming out: A major concern is the moral debate of accepting funding from countries with human rights violations. Billie Jean King believes the ends justify the means to achieve equal pay in tennis, but USWNT captain Alex Morgan called rumors of Saudi sponsorships at the 2023 FIFA WWC “bizarre.” Hmm.
- While fans debate the morality and politicians debate the legality, the fact that sports business is changing is undeniable. One way or another, the money (and the leagues) will still find a way — the only question will be “how?”