Salaries in non-profit golf organizations

Something which really gets me hot around the collar is seeing large salaries in non-profit, and thus non-tax paying, entities such as the US PGA Tour, the PGA of America, and the USGA. The whole purpose of non-profit entities, in the USA at least, is to provide good for its customers and the society as a whole. Non-profit entities are not given preferential tax treatment to enrich its employees.

Now, do not get me wrong, I do believe employees of any entity should get paid a good salary to live on. With for-profit entities that salary can be given very generously based upon what the compensation committee for the board of directors agrees to. However, non-profit entities should not have the luxury to pay their employees excessively high wages.

Some people agrue that salaries in non-profit entities should be in par with for-profit entities as it compares to a company's revenues, or better so its profits. I would agree with that argument if non-profits paid taxes and thus showed their REAL profit.

As well, it would be a suitable argument if non-profit entities really had the correct talent to compare to the for profit corporate world. How many times is it the 'good-ole-boy' network that gets non-profit executives hired, especially in the golf world? Most of the time the hiring decision is not based upon a person's talents or skill level in this industry.

I would buy that argument as well if other employee layers in a non-profit got paid a healthy amount as compared to the entity's executive level. But that is not the case. Employees below the executive level in non-profits get paid considerably less as it compres to the executive level. It is the executives that get a huge amount of the change as it compares to the overall salary costs of the non-profit entity. Look at all of the volunteers which the US PGA Tour uses on a weekly basis at their tournaments. They get $0 while Tim Finchem gets paid close to $3 million per year (including bonuses).

One of the reasons you see non-profit entities give huge salaries is that they are not suppose to show a profit. So non-profit entities increase their costs so to make their net profit line item on their tax return be $0. The easiest cost to increase is the salary line item, and they take advantage of that more often than not.

Executives in for-profit entities that make no profit for their companies are not rewarded with large salaries and bonsuses. A non-profit makes no profits. So why should they award their executives for making no profits? For-profit entities do not do so. Many times executives that earn no profit for their company and shareholders get fired shortly after reporting those results (note: the year-over-year trend also matters, not just one year's results).

That said, take a look at the highest salaries in the "non-profit" golf for 1998 and 2003.

Golf's Non-Profit Executive Wages

	Name	Title & Organization	1998
1	Tim Finchem	PGA Tour Commissioner	$2,180,913
2	Jim Awtrey	PGA of America CEO	$841,905
3	Charlie Zink	PGA Tour Exec. VP, CFO	$777,759
4	Ed Moorehouse	PGA Tour Exec. VP, Chief Legal Officer	$771,609
5	Paul Bogin	PGA of America COO	$676,800
6	Jesse Holshouser	PGA of America CFO	$519,303
7	Jim Ritts	LPGA Commissioner	$489,216
8	Ron Price	PGA Tour Sr. VP, Finance/Admin	$385,174
9	Donna Orender	PGA Tour Sr. VP, Television	$384,513
10	Bill Calfee	PGA Tour Exec. VP, Competitions	$338,126

Source: Golf Digest 1998 (1998 IRS Form 990s, filed by organizations)

	Name	Title & Organization	2003
1	Tim Finchem	PGA Tour Commissioner	$3,801,259
2	Charlie Zink	PGA Tour Exec. VP-Co COO	$1,156,308
3	Ed Moorhouse	PGA Tour Exec. VP-Co COO	$1,156,291
4	Donna Orender	PGA Tour Sr. VP-Strategic Development	$723,043
5	Ron Price	PGA Tour Sr. VP-CFO	$708,056
6	Jim Awtrey	PGA of America CEO	$662,751
7	Henry Hughes	PGA Tour Sr. VP	$571,138
8	David B. Fay	USGA Executive Director	$563,348
9	Bill Calfee	PGA Tour Sr. VP	$488,164
10	Jeff Monday	PGA Tour Sr. VP	$481,579

Source: Golf Digest - June 2005 (Alan P. Pittman)

Finchem's 2003 salary would have ranked him 6th in the US PGA Tour money leaders list for that year.

To understand the operational size of the US PGA Tour, they had revenues of $634 million in 2000, while it have profit of $0.

As Alan Pittman has said over the last couple of years in his Golf Digest articles, Finchem's salary is 1/3 of what the NFL Commissioner (Paul Tagliabue) and NBA Commissioner (David Stern) earn. However, that does not make the executive compensation structure of the US PGA Tour right. In 2001 the median pay for a non-profit CEO with a budget greater than $50 million is over $250,000 (source: 2001 GuideStar Nonprofit Compensation Report). That is less than 1/10th of what Finchem made in 2001.

Now ask yourself, do these executives in golf's non-profit entities deserve that much compensation when the entities they work for are not paying taxes?