This is an important story that won’t be told anywhere near as much in 2024 as it was in 2023. It’s a story about the intersection between the massive business of professional sports and people who seek to clean up the unconscionable things they do by funding the sports we love.
On June 7, 2023, a bill, “H.R. 3908, - No Corporate Tax Exemption for Professional Sports Act," was introduced by Rep. John Garamendi (D - CA) as a response to concerns about Saudi Arabia's human rights abuses and the 2018 murder of journalist Jamal Khashoggi.
The Garamendi golf bill, as it’s informally known, aims to end the tax loophole that the PGA Tour and other professional sports leagues exploit to avoid paying federal corporate income tax. The bill would strip the PGA Tour of its tax-exempt status after its agreement to merge with the Saudi-backed LIV Golf league.
The bill is currently in the House Ways and Means Committee and has garnered attention from various members of Congress, with Rep. Garamendi also demanding a Justice Department investigation into the merger of the PGA Tour with Saudi-backed LIV Golf.
This is all about “sportswashing,” which is the practice of using sports to divert attention away from negative actions or human rights abuses. In the context of the Saudi golf issues, the term refers to the Saudi government's use of golf as a means to improve its international image and divert attention from its horrendous human rights record.
The Saudi government's significant financial investment in golf, including the acquisition of major golf events and tours, is seen as a way to "launder" its reputation through the positive associations of the sport. This is misuse of sports for political and reputational gain, rather than for the inherent values of fair play and integrity.
The current status of the Garamendi bill remains at “introduced,” seven months after its introduction. According to GovTrack, the bill has only a 1% chance of becoming law. As GovTrack explains, H.R. 3908 has a “2% chance of getting past committee, 1% chance of being enacted. Only 11% of bills made it past committee and only about 2% were enacted in 2021–2023.”
These are pretty terrible odds.
The opposition to H.R. 3908 has been primarily concerned with the tax-exempt status of the PGA Tour and its merger with Saudi-backed LIV Golf. The bill aims to end the tax loophole exploited by the PGA Tour and other professional sports leagues to avoid paying federal corporate income tax.
Republicans have been relatively silent on the issue, with some members avoiding the topic and shying away from previous positions. However, there are indications that some Republicans have expressed support for similar bills in the past, suggesting a potential divide along party lines regarding the legislation. Representative Steube (R - FL) noted that the PGA Tour would have paid $80 million in taxes from 2016 to 2019 if it had not been tax-exempt.
Florida lawyer and golf expert, Charlie Cartwright, puts the PGA issue in context:
“Not only the PGA Tour has enjoyed tax-exempt status; other professional sports organizations, such as the NFL and MLB (which relinquished this status in 2007 and 2015, respectively), have also benefited. Still, certain leagues, like the NHL and the PGA Tour, maintain their tax-exempt status as registered 501(c)(6) organizations, sparking ongoing scrutiny.”
And it gets even more interesting, as Cartwright adds:
“According to the law, these entities ‘may not be organized for profit to engage in any activity ordinarily carried on for profit’. Yet Commissioner Monahan of the PGA Tour, received overall compensation reported as $18.6 million for 2022.”
Fast-forward to today.
Never has the issue of Saudi sportswashing been more timely than this week. As Golfweek reported on Wednesday, the PGA Tour has finalized a $3 billion investment deal with the Strategic Sports Group (SSG) to create PGA Tour Enterprises, a new for-profit entity. The SSG will invest up to $3 billion, with an initial investment of $1.5 billion. This investment will allow players to have equity in the new company, which is a first in the PGA Tour's history.
Simply put, the most observers among us (raises hand) will see this investment by SSG as an end-run around the federal government regarding the Tour's possible over-reliance on certain sources of funding.
The agreement opens the door for potential collaboration with the Saudi Arabian Public Investment Fund (PIF), which may co-invest pending regulatory clearance. The Sports Strategy Group (SSG), a collective of investors and sports franchise proprietors boasting a net worth exceeding $60 billion and spearheaded by the Fenway Sports Group leaders, aims to alleviate the PGA Tour's financial burdens and enhance the sport's appeal to players, fans, and sponsors through this investment.
There’s no way to take the edges off this bit to just say it. While Saudi sportswashing was in the daily news last summer, that wave of momentum is palpably gone this winter. It’s not that public opinion has become pro-Saudi, it’s two distinct things that the Saudis correctly banked on.
The first is that sportswashing actually works. Putting huge amounts of money into sports makes some sports fans happy no matter the source of the funds. Sportswashing is a shiny thing and it’s called “washing” because it cleanses the wrongs for some people.
The second is the magic of good and bad timing. The Garamendi bill isn’t even in the news anymore. At all. When it was introduced, it was part of a vocal movement against Saudi involvement in professional sports. While that movement still exists, it’s smaller and far quieter. It won’t provide the necessary social fuel to help a bill like this become law.
If that all sounds depressing, it’s because it is.
That such a linear formula actually works - bad actors put tons of money into the sports we love and some of us complain but eventually pretty much give up - just primes us for more and worse sportswashing. What it doesn’t do is encourage our legislators to do their jobs and put the kind of effort into bills that are essentially window-dressing and won’t cross the finish line.
The lesson here is going to more than likely be that if there is a thorny issue at the intersection of sports and society in which we collectively ask whether the source of money aligns with our values, let’s just throw some bags of cleaner money on top. With this formula, sportswashing will always win.
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