USGA Approached North Carolina For Help With Pinehurst Deal To Grow The Golf Industry While Delaying Distance Decision

As a 501(c)3, and also the organization started to run national championships, protect the amateur game and make rules, I continue to struggle with this notion of the USGA moving into the business of growing the business of golf while tabling a decision on distance.

Besides giving a huge gift to Pinehurst Resort—which at least provides an elite tournament venue and is an American institution any golfer can appreciate—they’ve secured future U.S. Opens and new office space in a temperate climate. All good. (Well, except when when put in this carnal manner by a USGA ambassador.)

But it’s a bit odd to be reading how an amateur golf organization is actively looking to expand a role into areas that might include businesses they also regulate for the good of the game (alongside the R&A).

In Mike Stachura’s GolfDigest.com piece about Wednesday’s ceremonial signing in North Carolina, he quotes the USGA’s Chief Brand Officer Craig Annis, a former candy bar executive who positioned Mars as a leader in health and well being.

Annis explains the timeline of the deal announced today and suggests the USGA pursued government assistance, not the other way around.

But while Annis noted the appeal of the region’s one million annual visitors in helping golf’s governing body to “drive engagement with the history we have responsibility for,” he also said that the state of North Carolina provided compelling incentives to involve more than a commitment of a handful of U.S. Opens. Those discussions intensified over the last year.

“We started thinking if we’re going to work on a larger deal between the USGA and Pinehurst, well we’re hearing that North Carolina is a state that’s known for thinking long term, thinking big picture, their intent on really growing the golf industry within their state, not just in Pinehurst but also beyond. And so we started to engage them in conversation and really started to talk about the potential incentives that would be available should we think about this longer term, bigger picture relationship,” Annis said. “That’s where we learned from a research, science, and innovation perspective, North Carolina is very focused on attracting organizations and corporations in that space so that there would be this potential for incentive.”

To recap: Annis says the USGA approached the state of North Carolina, which then delivered re-written legislation with significant economic incentives for the USGA and in the hope of attracting golf companies.

As this explanation of a 501(c)3 notes, tax exempt status comes with plenty of restrictions for these charities, with plenty of reminders about the no-no that is lobbying and “legislative activity”…

501(c)(3) organizations are highly regulated entities. Strict rules apply to both the activities and the governance of these organizations. No part of the activities or the net earnings can unfairly benefit any director, officer, or any private individual.

In addition, all assets are permanently dedicated to a charitable purpose.  In the event that a 501(c)(3) organization must cease operations, all assets remaining after debts are paid must be distributed for a charitable purpose.

Further, lobbying, propaganda or other legislative activity must be kept relatively insubstantial.

I’ll leave the line-blurring of “relatively substantial” for the tax lawyers to grapple with. The really strange part involves how the USGA and R&A delayed, for another year, any serious action on distance and a key notion to ensuring sustainability, due to the pandemic.

Yet a project centered around new office space, some job creation and a U.S. Open 21 years down the road —with a corporate hospitality tent for the folks delivering the state money—was okay to pursue and announce in a time of pandemic?

One could almost get the sense golf governance falls a distant second these days.