[Paul OConnor]

From the 2011 Annual Report.

http://www.usga.org/Content.aspx?id=24042

In spite of having $250 million in cash and securities, $72 million of that invested in various hedge funds, (at 2 and 20 no doubt), the USGA continues to squeeze tournament host clubs for the $300,000-800,000 it costs to hold USGA events.  Why doesn't the not-for-profit USGA fully fund their own tournaments?  The obvious answer, because they don't have to!  By relying on the ego and vanity of private club's Board of Governors, and their ability to pass the costs to their Membership, the USGA can continue to stock it's treasure chest.  

What can be the legitimate purpose of a not-for-profit organization stockpiling this kind of cash?  Just curious.

[Patrick_Mucci]

LITIGATION

[Jud_T]

they could at least pay for all the dubious course changes they demand...

[Paul OConnor]

LITIGATION

Really? Who is suing them? I would think having $250 million would make one a larger target for litigation than if one had $0.

[PCCraig]

Paul,

I agree, it's a joke. The USGA is a "non-profit" which makes a profit, pays huge salaries, and yet still sends out a letter every year with their hand out asking for $15 from every golfer with a handicap.

Why organizations like the USGA, Hospitals (Northwestern Memorial historically is a horrible offender of abusing their tax-exempt status http://news.yahoo.com/blogs/chicago/three-illinois-hospitals-stripped-property-tax-exemption-123726351.html), large Universities, etc. aren't taxed is beyond me. If someone can explain to me the greater benefit to not taxing institutions such as these I'm all ears.

[Jason Connor]

It's one reason I no longer join each year.  I always look at the cash holdings for the charities I give to, and if they're taking in much more than they're providing, well they don't need me any more.

There's nothing wrong with saving, but if you have a mission, and a huge pile of cash doing nothing, it just means you could be doing more.

[jeffwarne]

LITIGATION

Really? Who is suing them? I would think having $250 million would make one a larger target for litigation than if one had $0.

Having clubs fund their events makes little sense to me.

If sued I'm pretty sure titleist would pay their defense tab.
Ooh, gotta go after those long putters rendering classic courses obsolete...

[Tom_Doak]

LITIGATION

Really? Who is suing them? I would think having $250 million would make one a larger target for litigation than if one had $0.

That is exactly right.

Back in the 1970's when there was a judgment against them in the Polara golf ball suit -- later overturned -- the damages of $1.3 million, tripled, were more than the USGA had.  That's when they got serious about stockpiling cash to fend off litigation.

Sadly, the more cash they've stockpiled, the more timid they've become about equipment rules, for fear of pissing off the manufacturers and potentially losing their nest egg.  Whereas if they didn't have any money, the manufacturers would have little recourse -- if sued, they'd just declare bankruptcy and start over.  [Of course, they'd need millions of dollars to defend themselves in the lawsuit -- welcome to America!!]

Also, of course, while the board of the USGA work aren't compensated, and just work for the perks, the staff of the USGA would be decidedly against sticking their necks out so far and not having that cash horde as a security blanket.

[Steve_ Shaffer]

How about 10M$ for the Cobbs Creek project? 

[Ken Moum]

They have a huge amount of revenue, but don't generally pay their staff THAT much compared to other nonprofits.

http://dynamodata.fdncenter.org/990_pdf_archive/131/131427105/131427105_201011_990.pdf

I do wonder why Rugge had the second-highest salary in 2010, however.  I guess they must think equipment regulation is more important than anything...

K

[SL_Solow]

Pat and Tom have it just about right.  I am acquainted with an outstanding trial lawyer who does much of the work for the USGA.  They are faced with suits on a regular basis; many don't make headlines.  They range from actions by individuals challenging eligibility rules for tournaments to suits by equipment designers and manufacturers challenging those regulations.  The Ping square grooves litigation was the one that really created the type of attitude that Tom alludes to.  But prominent people like Joe Braly and Dave Pelz have been involved as parties and witnesses over the years.  Should the USGA ever take the type of dramatic steps in the equipment arena that many have suggested, one might expect the equipment manufacturers to mount a legal challenge.  Given their size and the dollars at risk, the cost of litigation much less the possible damages could be astronomical.  This is the likely reason for the war chest and, paradoxically, the reluctance to take risk.

[Paul OConnor]

They have a huge amount of revenue, but don't generally pay their staff THAT much compared to other nonprofits.

http://dynamodata.fdncenter.org/990_pdf_archive/131/131427105/131427105_201011_990.pdf

I do wonder why Rugge had the second-highest salary in 2010, however.  I guess they must think equipment regulation is more important than anything...

K

I noticed that the Chicago District Golf Association gets only $6,000 from the USGA, which is about the smallest grant they give.  Heck, the Delaware Women's Golf Association got more than twice that at $14,200. 

[Brad Isaacs]

Litigation

This is the underlying realism of our society. I suspect many live on both sides of this litigation issue.

[Sean_A]

I have long since given up supporting the USGA.  There are plenty of other more worthy charities for me to be concerned with.

Ciao

[Terry Lavin]

I recognize that it's fashionable hereabouts to bash the USGA, but gimmeabreak. Are we supposed to believe it would be better if it was strapped for cash?  The proper way to run an organization like that is to have sufficient funds on hand to invest so that it can pay for operations and charitable giving.  The USGA seems to be doing a good job of that.

[Tom_Doak]

I recognize that it's fashionable hereabouts to bash the USGA, but gimmeabreak. Are we supposed to believe it would be better if it was strapped for cash?  The proper way to run an organization like that is to have sufficient funds on hand to invest so that it can pay for operations and charitable giving.  The USGA seems to be doing a good job of that.

Spoken like a judge, Your Honor.

But you ought to have an interesting perspective on this matter, Terry.  Don't you think that the USGA's approach to equipment regulation has been tempered by the threat of lawsuits, and of the desire to protect what they have?

[Dan Kelly]

If someone can explain to me the greater benefit to not taxing institutions such as these I'm all ears.

Someone? Anyone?

[Terry Lavin]

I recognize that it's fashionable hereabouts to bash the USGA, but gimmeabreak. Are we supposed to believe it would be better if it was strapped for cash?  The proper way to run an organization like that is to have sufficient funds on hand to invest so that it can pay for operations and charitable giving.  The USGA seems to be doing a good job of that.

Spoken like a judge, Your Honor.

But you ought to have an interesting perspective on this matter, Terry.  Don't you think that the USGA's approach to equipment regulation has been tempered by the threat of lawsuits, and of the desire to protect what they have?

No, I don't think that is what animates their business model.  I think they have really "gone corporate" over the past ten years and have figured out ways to maximize their holdings.  The more they have, the more income they can generate, the more income, the more charitable work they can do.  I think it's a facile, but incorrect, argument to suggest that they haven't taken on the manufacturers because they're worried about losing in court.  By the same token, it's probably in their shared interest to not be at litigious odds with manufacturers.  If we look at this issue in its simplest terms, the consumers who move the needle in the marketplace are going to be moved by players hitting the ball a mile; they're unlikely to be all fired up to buy equipment if players are playing a version of a cayman island ball or hitting with smaller drivers.  I understand and appreciate the arguments for bifurcation, but there's no question that the interest in the game and the interest in equipment buying would take a substantial hit if the usga or manufacturers took the kind of steps that the "let's preserve our classic courses for tournament play" crowd.  That cow is out of the barn.

I'm gonna run and take cover now.

[Dan Kelly]

That cow is out of the barn.

While the cash cow gushes on.

[JESII]

What can be the legitimate purpose of a not-for-profit organization stockpiling this kind of cash?  Just curious.

What would be an appropriate number?

[SL_Solow]

Paul;  I sit on the CDGA executive committee.  There is a simple xplanation why we don't receive significant grants from the USGA.  We don't need them.  Revenues from membership fees, tournament entries and the like allow us to perform our mission.  When the USGA needs our help, for example in performing field tests for the Greens Section under the supervision of Dr. Derek Settle, our in house plant pathologist, the USGA will issue a grant to pay for that work.  Grants to local associations are usually given to those who need the help.  Once in a while there is a blanket grant if the USGA is trying to institute or popularize a program which goes to all local associations.

[Peter Pallotta]

"This is the likely reason for the war chest and, paradoxically, the reluctance to take risk."

SL - I defer to you and others with knowlegde/experience/training in this realm, but it strikes me that in such paradoxical situations there is usually a true elephant in the room, and not the mirage of an elephant that those involved use (consciously or not) to frame the discussion.  In other words, for me the conventional (and seeming consensus) opinion on this somehow seems lacking. There is another force/agenda at work here, it 'feels' like -- but I have no idea what that could be. Does everyone want it to remain a not-for-profit? It sure seems to be run right now like most for-profit businesses.

Peter

[SL_Solow]

I know that the Ping litigation had a significant and long term impact on the thought processes of the USGA.  this is based on conversations with individuals involved with the USGA on a multitude of levels.  It may not be the only factor but it is certainly significant.

[Sean_A]

I recognize that it's fashionable hereabouts to bash the USGA, but gimmeabreak. Are we supposed to believe it would be better if it was strapped for cash?  The proper way to run an organization like that is to have sufficient funds on hand to invest so that it can pay for operations and charitable giving.  The USGA seems to be doing a good job of that.

Terry

I am not bashing the USGA.  Its a simple matter of not believing the USGA is a great charity - not run well enough for me to support.  On top of having strong ties (usually through personal experience) with a charity, I like to check out how well any possible charity I may support compares against other charities.  The USGA often only comes out as average and it has a fairly highly paid CEO.  I use the site below as a starter for checking charities out.   

http://www.charitynavigator.org/

Ciao

[Paul OConnor]

Not USGA bashing, just wondering why, with the size of their treasury, and their annual profitability, why do they stick USGA tournament hosts with big bills for hosting their tournaments?  They could easily cover those costs themselves, probably less than $3 million a year for all their tourneys.

I suppose I could make a $2000 donation to the USGA and it would qualify as a tax deduction.  But if I belong to a club and the USGA sticks the club with a $2000/member assessment, I don't get to write that one off.   

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