The latest business to give back the aid they received from the coronavirus relief fund, just so happens to be an NBA team.
The Los Angeles Lakers revealed that they gave back the $4.6 million they got from the federal government, which was money that was granted to the organization as part of a $349 billion program aimed at keeping small businesses alive throughout the COVID-19 pandemic. The only problem is the Lakers aren’t exactly a struggling small business. In fact, according to Forbes, the franchise is worth $4.4 billion, making it the second most valuable team only behind the New York Knicks.
We’re not going to get into how a team like as seemingly dysfunctional as the Knicks always reigns supreme on the Forbes list, but we can question why the Lakers decided to give back the free money from the government.
“The Lakers qualified for and received a loan under the Payroll Protection Program,” the team 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.”
However, it’s worth noting that the only companies who get a piece of that $349 billion pie, are those who apply for it in the first place.
The Small Business Administration’s Paycheck Protection Program launched on April 3 and allowed businesses to ask for loans so they could cover employees’ salaries. The loan is entirely forgivable if a qualifying company spends at least 75 percent and doesn’t layoff any of its employees. While the Lakers may be a wildly popular franchise, they only have 300 employees, which qualifies them as a small business. To be considered a bigger business, a company must have more than 1500 employees.
Whether or not the franchise qualified for the loan, the offering is meant for small businesses that are actually struggling… which the Lakers aren’t. A lot of the loans were given to companies that are in good standing with banks, which made the application process much simpler. While this gives organizations like the Lakers, a nice cushion, the actual small, local businesses that really needed money from the bill were left out in the cold as funds dried up.
“I never expected in a million years that the Los Angeles Lakers, which, I’m a big fan of the team, but I’m not a big fan of the fact that they took a $4.6 million loan,” Treasury Secretary Steven Mnuchin said on CNBC. “I think that’s outrageous, and I’m glad they returned it or they would have had liability.”
The Lakers avoided a PR nightmare by returning the money, and continue to do their part after asking their top brass to take a 20 percent pay cut a few weeks ago. Other successful companies that have taken the PPP loan include burger franchise Shake Shack and major car dealer AutoNation while some refuse to return the millions they received.