Los Angeles Lakers receives and returns COVID-19 small business loan

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Alice Lee

On April 27, the Los Angeles Lakers, one of the NBA’s richest franchises valued at $4.4 billion, received a small business loan of $4.6 million from coronavirus business relief funds. The Lakers applied for and received the loan under the Small Business Administration’s Paycheck Protection Program (PPP), a division of the federal government’s $2.2 trillion stimulus package. However, shortly after realizing the funds from the program were being depleted, the Lakers repaid the money, stating that the financial support should be addressed to those most in need. 

“I believe that what the Lakers did was morally wrong because even though the Lakers were somehow qualified to receive the loans, the club is known to be one of the valued sports teams in the world,” said Erin Ryu (9), a junior varsity basketball player. “Since its value is viewed to be in the billions, I believe it did not necessarily need the loan compared to all the other small businesses that were going through hardships during this coronavirus epidemic. Although the Lakers were eligible to receive the loans, I believe it would have been more appreciative for the Lakers to use their money on their employees than their players during this time instead of applying for the PPP. I feel like the Lakers would have made a better impression to the public as a club that supports the suffering small businesses if they hadn’t applied and received the loan in the first place.”

The Lakers were originally qualified for the PPP, which was a loan devised to provide a direct inducement for small businesses to keep their employees on the payrolls. The SBA was providing forgivable loans for businesses maintaining workers and salary levels and also guaranteed fully forgiven loans if the funds were used for payroll costs, interest on contracts, rents, and utilities. All businesses, including nonprofits, veteran organizations, and independent contractors with less than 500 workers were able to apply for this program. The Lakers, best known for their players on the court, had a full and part-time staff of just over 300 employees and had not fired any of their workers, making them eligible for a PPP loan. 

“In theory, I think it’s a great idea to boost aggregate demands, maintain people employed, keep wages up, and support smaller institutions to make sure that they don’t all disappear as results of the demands just going away,” said Mr. Miller, AP Economics teacher. “However, in reality, I feel like the program has been executed poorly, and there hasn’t been a good judgemental system making sure that companies that have a bunch of cash on hand are just applying for the loans. I think that if you believe that the government is supposed to assist times of crisis, and times of natural disasters or situations that are not under the control of the general, like this coronavirus, then yes, I feel like this system is necessary. Overall, this PPP has changed many people’s perceptions of large companies, such as the LA Lakers and Shake Shack, causing public shame and complaints concerning these businesses had received the loans.”

The Lakers faced public outcries from the large sum of money they had received from the government, and their decision to return the money arose amid complaints that claimed that many large businesses were unjustly obtaining a federal loan program dedicated to support the small businesses damaged by the coronavirus pandemic. As millions of companies applied, the money allocated to the program was gone within two weeks, benefitting most of the big companies and leaving out the hundreds and thousands of small businesses. The controversy intensified when other large companies, such as Shake Shack and AutoNation, received millions of loans, but both claimed to have returned the money as well.

“I don’t feel any different about being a Lakers fan because, being a basketball fan from California, I’m always going to support the Lakers,” said Bryan Kim (9), an avid fan of the LA Lakers. “The Lakers may make some disappointing or irresponsible decisions, but I will always see them as a successful franchise with 16 championships under their belt. The Lakers’ front office isn’t necessarily bad, but being that they aren’t one of the top front offices in the league, it’s understandable that they decided to take such a large loan from the government despite being a franchise valued at $4.4 billion. As a Lakers fan, I have witnessed numerous decisions by the Lakers’ front office that made the team worse, so I’m not totally shocked by this controversy.”