Apparently the Los Angeles Lakers fancied themselves as a small business in need of a government bailout during the coronavirus pandemic. Now the NBA franchise is returning the taxpayer money it received, ESPN reported Monday.
One of the highlights of the $2.2 trillion stimulus package was the $349 billion Paycheck Protection Program. The PPP was created to help small businesses stay afloat in the midst of massive economic turmoil thanks to the coronavirus pandemic that saw millions of layoffs across the country. The program allows the Small Business Administration to give loans to U.S. businesses that can be forgiven, as long as the businesses remain their staff on payroll through June.
The fund was emptied just days after it was opened, and Congress was forced to authorize more funds for it last week.
Part of the reason the funds ran dry so quickly was because companies and organizations that didn't need the money were approved for PPP loans. Shake Shack famously returned $10 million after public outcry. Harvard University was browbeat into returning $8.6 million in PPP funds. A report posted last week revealed nearly $250 million was allocated to large, publicly traded companies.
The L.A. Lakers — one of the nation's most recognizable and profitable sports franchises — felt they needed millions of dollars from the federal government to help them make it through these tough economic times. And the federal government agreed — granting the Lakers a $4.6 million PPP loan.
After days of negative press for wealthy companies and organizations that took PPP money, leading to the quick depletion of funds, the Lakers sent a statement to ESPN announcing that the team returned the millions of dollars intended for struggling small businesses.
The team's statement to ESPN reportedly said:
The Lakers qualified for and received a loan under the Payroll Protection Program. 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.
ESPN pointed out that the Lakers didn't need to apply to the PPP for a loan anyway. They already had access to the NBA's credit line:
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.
As a tentpole NBA franchise, the Lakers have the capacity to borrow at favorable rates. For instance, the NBA extended its credit line to $1.2 billion soon after it suspended the season. Teams in need of cash can tap the league's credit facility program, so long as they abide by the NBA's $325 million debt limit. Sources say at least one team has pursued this option.
According to Forbes, the Lakers are No. 2 on the list of the NBA's most valuable teams. The magazine said the Lakers' 2020 value was $4.4 billion.