As a dental CPA, consultant, and tax advisor, this post is a bit out of my wheelhouse, but this PGA Tour/LIV Golf drama is too good to pass up. Now there is a tax angle.

If you have been following the world of golf over the past year, you know that there has been significant controversy over the formation of a new league, LIV, that is funded by the Saudi Arabian Public Investment Trust (PIF). Players who defected from the incumbent leagues, the PGA Tour and the DP World Tour, were expelled from those leagues, spawning lawsuits galore.

In a wild plot twist, the warring leagues recently agreed to drop their lawsuits and go into business together. (This sounds like a professional wrestling storyline, right?) Not so fast, says Congress. The US Government has long studied sports leagues and, from time to time, has weighed in on anti-trust concerns. There is certainly that concern here as a “super golf league” could, in the eyes of various regulatory authorities, suppress competition.

Congress is also looking into whether this partnership breaches the not-for-profit status that currently shelters the PGA Tour from federal taxes. Sports leagues like the PGA Tour are commonly set up as not-for-profit enterprises and qualify as such if they promote a common interest while not engaging in for-profit business activities. You could reasonably question whether sports leagues regularly violate these rules, but the PGA Tour has invited extra scrutiny with its decision to partner with the Saudi Arabian enterprise given Saudi Arabia’s history of human rights violations. It will be interesting to see how Congress wields its investigatory authority and what will become of the PGA Tour’s tax-exempt status.

Losing its tax-exempt status may not be a big deal for the PGA Tour as it can (and probably currently does) push profits out to other taxpaying and tax-exempt entities. It is also worth noting that the National Football League (NFL) gave up its tax-exempt status in 2015, and, if you follow pro football, you know the NFL has been and likely will continue to be one of the most successful sports leagues in this or any other country. Stay tuned as this story promises to continue to entertain.