Last month, the United States federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which established a $349 billion forgivable loan program intended to help small business called the Paycheck Protection Program (PPP). The Los Angeles Lakers applied for and received a loan worth approximately $4.6 million through the PPP, according to a report by Kevin Arnovitz of ESPN on Monday.
Now, if you’re thinking to yourself, “The Lakers aren’t a small business — they’re one of the most profitable teams in the NBA,” you’re not wrong. However, they qualify for the loan because they have less than 500 employees. Shake Shack and Ruth’s Chris were granted multi-million dollar loans for the same reason.
Like Shake Shack and Ruth’s Chris, the Lakers reportedly made the decision to return their loan. The public backlash that large entities have received for applying for loans through the PPP over the last few weeks was undoubtedly a motivating factor for them to do so:
“The Lakers qualified for and received a loan under the Payroll Protection Program,” the Lakers said in a statement to ESPN. “Once we found out the funds from the program had been depleted, we repaid the loan so that financial support would be directed to those most in need. The Lakers remain completely committed to supporting both our employees and our community.”
According to CNBC Sports Business producer Jesse Golden, the Lakers were the only team that applied for a loan through the PPP, and they’ll likely be the last due to the Small Business Administration’s revised guidelines:
In preparation for a second round of PPP funding that begins Monday, the SBA last Thursday issued new guidance that discourages applications from wealthier businesses that have access to liquidity and credit markets. The Lakers are considered one such organization.
When the season started, the Lakers were valued at $4.4 billion — second only in the NBA to the Knicks, who were valued at $4.6 billion. The team also gets almost $200 million annually from the $4 billion TV deal they signed with Time Warner (now Spectrum) in 2011.
In other words, the Lakers will be fine — the same can’t be said for all small businesses.