The economic crisis that some NBA teams are already experiencing due to the coronavirus pandemic has so far not affected the Los Angeles Lakers, who, through a statement, reported on Monday that they had returned federal aid of $ 4.6 million.
The aid is framed within the program that the federal government has established to help small businesses cope with the economic burden that COVID-19 has generated.
The Lakers, one of the NBA’s most profitable franchises, requested relief through the Small Business Administration’s Payroll Check Protection Program (PPP), but after several reports that multiple large or highly Capitalized were getting help from the program’s $ 349 billion seed fund, while hundreds of thousands of smaller companies were left out, the Lakers said they returned the money.
“Once we found out that program funds had been depleted, we paid off the loan so that financial support is targeted to those most in need. The Lakers remain fully committed to supporting both our employees and our community,” they said in a statement. that they offered to the media
Established as part of the $ 2.2 billion CARES Act, the program was established on April 3, and allows small businesses to apply for and receive loans to cover employee salaries and other expenses.
As a company with approximately 300 employees, the Lakers were eligible for a PPP loan, which is non-repayable as long as the recipient spends 75% of the amount on the payroll and does not fire anyone.
The PPP ran out of money in less than two weeks, leaving many family businesses without the assistance they were looking for.
Some of those loans went to high-profile companies with strong bank relationships that were able to simplify the application process for their clients.
Those uneven results sparked considerable public outcry, especially toward brands that consumers know well.
Shake Shack, the specialty burger chain with a market capitalization of $ 2 billion, received a loan of $ 10 million.
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AutoNation, a Fortune 500 auto retailer, received $ 77 million from the PPP. Both companies have announced that they will return the funds.
Similarly, the Lakers chose to repay their loan of approximately $ 4.6 million in the days following the news that the PPP had exhausted its funds.
According to Forbes magazine, the value of the Lakers was estimated at more than $ 4 billion before the coronavirus pandemic occurred, second only to the New York Knicks ($ 4.6 billion).
The Lakers have signed the league’s most lucrative local streaming deal, which generates more than $ 150 million in annual revenue, but many will be at risk if the competition is not resumed, suspended since March 1.
In addition to the Buss family, which he presides over as majority owners, they have multi-million dollar minority partners led by Philip Anschutz, Patrick Soon-Shiong and Ed Roski Jr.
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The Lakers have vowed not to fire any employees, and in early April, senior officials agreed to a voluntary cut of 20% from their pay.
In preparation for a second round of PPP financing that began this Monday, the Small Business Administration (SBA) issued last Thursday a new guideline that discourages requests from the wealthiest companies that have access to liquidity markets. and credit and the Lakers consider themselves one of those organizations.
As an NBA franchise, the Lakers have the ability to borrow at favorable rates.
In fact, the NBA extended its line of credit to $ 1.2 billion shortly after suspending the season.
Teams needing cash can take advantage of the league’s credit program, as long as they meet the NBA’s $ 325 million debt limit and at least one team has requested it.