While I have often joked that the Lakers are a “family business” that is run like a mom and pop shop, it’s really just a running gag I use to describe an organization that is still controlled by the Buss family and not venture capitalist/big tech money that so many of the new NBA ownership groups.
What was not a joke, though, was applying for and then receiving a stimulus loan from the federal government meant for small businesses. But, that is exactly what the Lakers did, receiving $4.6 million from the government, per a report from ESPN’s Kevin Arnovitz. The Lakers ultimately returned the loan payment and offered the following statement to ESPN:
“The Lakers qualified for and received a loan under the Payroll Protection Program. 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 remain completely committed to supporting both our employees and our community.”
While giving back the money was the right thing to do, they only had to do the “right” thing because they did a wrong thing first. Taking the money was a mistake, plain and simple. While the Lakers are surely hurting from the loss of revenue related to the ongoing suspension of the NBA season — this not only applies to monies from games (tickets, concessions, etc), but also the risk of not meeting their contractual obligations of their local TV deal and all that comes with that — there’s really no excuse for applying for this type of relief in the first place.
Particularly not when, as Arnovitz notes in his piece, that the NBA “extended its credit line to $1.2 billion soon after it suspended the season” and that “teams in need of cash can tap the league’s credit facility program, so long as they abide by the NBA’s $325 million debt limit.” If the Lakers are hard up for cash and willing to take on loans, there are other avenues to do so while not crowding out other business who have much fewer means at their disposal to access these types of funds.
After all, the Lakers are one of the most recognizable brands in the world and even in these uncertain times it’s hard to see a world where their revenue streams won’t eventually reopen. It’s why some of their top executives are deferring 20% of their salary rather than taking a pay cut of 20%. The language difference is subtle, but meaningful when you consider that deferring, by nature, means they’ll get that money back one day.
Maybe, in the end, all’s well that ends well. The Lakers took some money they shouldn’t have, but gave it back. Hopefully those returned funds can go to businesses more in need than the Lakers are. Because even though the NBA (the Lakers included) are facing some financial hardship, it’s really not comparable to what so many other industries are facing around the country.