The Lakers say they have returned a $4.6 million loan they received from a federal loan program intended to help small businesses weather the coronavirus crisis.
The team confirmed that they qualified for and received the loan from the Small Business Administrations’ Payroll Protection Program among the initial $349 million funding. But after the program’s initial budget ran out earlier this month — and after reports that several large companies took loans at the expense of a legion of small businesses being frozen out — the Lakers said they returned their loan.
“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 team said in a statement first reported by ESPN. “The Lakers remain completely committed to supporting both our employees and our community.”
The program — funded as part of the $2.2 trillion CARES Act — offers forgiveable loans to businesses that spend the money on payroll and don’t fire or quickly rehire employees during the COVID-19 lockdown. Congress approved an additional $310 billion for the program this week, with a wider distribution among lenders and banks and slightly more stringent language discouraging larger, publicly traded companies from applying for and taking on loans.
Several large companies have come under criticism after taking on the loans that were originally envisioned to help small businesses survive. Ruth’s Chris Steakhouse, Shake Shack and Potbelly are among the companies who have decided to return multimillion-dollar loans in the last week.
The Lakers are considered one of the most valuable franchises in American sports, but the uncertain future of the season has forced the franchise to consider its bottom line, with the potential of returned ticket sales, lost television revenue and other streams drying up.
The franchise has so far not laid off employees, and has asked its highest paid executives to defer 20 percent of their pay. The team has also contributed to a fund with Staples Center and its other tenants to support arena and game night staffers.
The NBA is taking cost-cutting measures at large in the midst of a season hiatus, which is verging on two months. The league announced a week and a half ago it would withhold 25 percent of player salaries, preparing for the possibility that the remainder of the season is canceled. The league extended its line of credit to $1.2 billion earlier in the crisis, allowing teams to borrow at favorable rates if they are struggling financially.