The Lakers got money from the loan program, gave it back
The Lakers, one of the NBA’s most profitable franchises, requested relief through the Small Business Administration’s Paycheck Protection Program and were among the businesses and nonprofits that provided the loans. during the first series of distributions. But after reports that several large and highly capitalized entities were getting help from the program’s initial $ 349 billion pool – while hundreds of thousands of small businesses were shut out – the Lakers said they returned the program. silver.
“The Lakers qualified and received a payroll protection loan loan,” the Lakers said in a statement to ESPN. “Once we found out that the program funds had run out, we repaid the loan so that financial support was directed to those who need it most. The Lakers remain totally committed to supporting both our employees and our community. “
The program, which was created under the $ 2.2 trillion CARES Act and launched on April 3, allows small businesses to apply for and receive loans to cover employee salaries and other expenses. As a company of around 300 employees, the Lakers were eligible for a PPP loan, which is forgivable as long as the recipient spends 75% of the amount on payroll and does not fire anyone.
The PPP ran out of money after less than two weeks, leaving many parent and pop companies without the help they were looking for. Some of these loans have gone to leading companies with strong relationships with commercial or private banks, which have been able to simplify the application process for their clients.
These lopsided results sparked considerable public outcry, especially towards brands consumers are familiar with.
Shake Shack, the specialty hamburger chain with a market cap of $ 2 billion, received a loan of $ 10 million. AutoNation, a Fortune 500 auto retailer, received $ 77 million from the PPP. The two companies have since announced that they will return the funds.
Likewise, the Lakers opted to return their roughly $ 4.6 million loan within days of the announcement that the PPP had run out of funds.
The Lakers were estimated to be over $ 4 billion before the virus outbreak. They have the league’s most lucrative local broadcast deal, which generates over $ 150 million in annual revenue. In addition to the Buss family, who preside as majority owners, the franchise has three billionaire minority partners – Philip Anschutz, Patrick Soon-Shiong and Ed Roski Jr.
But with the completion of the NBA regular season and the playoffs in doubt, tens of millions of dollars in revenue from a possible playoff race is at risk for the Lakers, from ticket sales to TV dates. local unfulfilled. The Lakers have pledged not to fire or leave any employees, and in early April, senior executives agreed to a voluntary 20% wage deferral.
In preparation for a second round of PPP funding that begins Monday, the SBA last Thursday released new guidelines that discourage applications from richer companies that have access to the liquidity and credit markets. The Lakers are considered one of those organizations.
As an NBA tentpole franchise, the Lakers have the ability to borrow at great rates. For example, the NBA extended its line of credit to $ 1.2 billion shortly after suspending the season. Teams in need of cash can use the league’s credit facility program, as long as they stay within the NBA’s $ 325 million debt limit. Sources say at least one team has pursued this option.
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