March 28, 2020
A March 27 memo written by Senior Vice President and Chief of Operations of the PGA Tour Tyler Dennis outlines a PGA Tour decision allowing golfers ranked No. 1-150 to take a cash advance of up to $100,000 in response to the coronavirus COVID-19 pandemic, Golf Digest announced Saturday morning.
“Players can take up to 50% of their projected” season-long earnings up to the six-figure limit, wrote Daniel Rapaport, a longtime industry watchdog.
The player ranked 150th at the end of last season, Martin Kaymer, earned $877,761 across 14 events last season for a total of $11,304,931 over nearly 15 years as a professional golfer. As of March 28, no player had taken advantage of the program.
Under current PGA Tour policy, professional golfers receive a bonus payment at the close of each season atop the prize money already won. The new arrangement allows players to receive that bonus early, with some qualifications.
The most significant of these ensures that, if “a player’s FedEx Cup bonus at the end of the season is less than what he received in advance, 50% of future earnings will be withheld until the advance is paid back in full.” In other words, players must perform well to avoid repaying the money.
That requirement, according to a story filed by Rex Hogarth of the Golf Channel after Golf Digest’s Saturday scoop, allows the tour to avoid “IRS regulations [that] prohibit the Tour from distributing unearned financial benefits to members,” making the sport’s professional arm much like seemingly dissimilar businesses, like that of transportation apps like Uber or Lyft.
For tax purposes, members of the PGA Tour are independent contractors rather than employees—the same use of labor classification that, according to a story in The Atlantic last year (“The New Servant Class”), is what “keep[s] these firms aloft” through “the strategic avoidance of laws like the Fair Labor Standards Act.” Although few professional golfers will likely experience the current and future financial pressures felt by drivers and other Americans nationwide, the two professions are on equal footing under the U.S. tax code.
Few Uber drivers, however, are likely to receive the bonus offered by the PGA Tour, a former Chicago Board of Trade floor executive who wished to remain anonymous pointed out to The Independent.
The payments effectively amount to an interest-free six-month loan, the source said—which, under volatile market conditions like those experienced over the past month, “could be turned into millions.”
According to Hogarth, the tour will allow players—nearly all showered with lucrative endorsement contracts in addition to on-course winnings—to “withdraw funds from their retirement plans based on financial need.” The tour also pledged to distribute money to caddies from both an endorsement program and a “Caddie Benevolent Fund.” For the purposes of tax law, it might be pointed out, caddies are also independent contractors.
Your donation will support the student journalists of Northeastern Illinois University's The Independent, either in writers' payment, additional supplies and other items of note. Your contribution will allow us to purchase additional equipment for writers/photographers/illustrators and cover our annual website hosting costs.