Playing “small ball” might be en vogue in the NBA, but the Los Angeles Lakers may have taken things too far.
The Lakers have returned approximately $4.6 million in loans received through the Small Business Administration’s Paycheck Protection Program, the NBA team told ESPN on Monday. Despite being one of the most valuable teams in American sports (with an estimated worth exceeding $4 billion) and one of the most profitable in the NBA, the Lakers were still able to apply for and receive millions in aid through the PPP.
The news will raise further questions about the integrity of the federal government’s flagship program for assisting small businesses through the economic shutdown prompted by the coronavirus pandemic. A surge of initial applications saw the $350 billion program quickly depleted of funds, which prompted Congress to approve additional funding for the PPP last week.
The likes of AutoNation and Shake Shack—large companies valued at billions of dollars—were among those to initially receive PPP assistance, leading to negative scrutiny of the program’s oversight and prompting those companies to return millions of dollars in loans.
“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 said in a statement to ESPN. “The Lakers remain completely committed to supporting both our employees and our community.”
The NBA franchise—which is owned by the Buss family and counts superstar LeBron James among its players—employs around 300 people, according to ESPN. That made the team eligible for a PPP loan, so long as it spent 75% of the funds on payroll and did not lay off any employees.
While the coronavirus pandemic has brought the NBA (and virtually all major profressional sports leagues) to a halt, the Lakers appear to remain on solid financial footing. In addition to carrying an enviable valuation as one of the league’s flagship franchises, the team’s lucrative local broadcast rights deal generates more than $150 million in revenue annually, per ESPN.
The identity of the financial institution through which the Lakers received their PPP loan is not clear. Representatives for the team did not immediately return a request for comment.
With the oversight of the PPP being called into question given the number of large businesses able to secure funds, the government has looked to take a more diligent approach in advance of the second round of loan disbursements set to begin this week. On Thursday, the SBA issued a new guidance discouraging large, publicly-traded, and well-capitalized companies from applying for the program.
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