The Los Angeles Lakers, one of the richest NBA franchises, applied for and received $4.6 million in federal loans earmarked for small businesses affected by the coronavirus pandemic, the basketball team said Monday.
The Lakers have returned that money after learning that the pool of federal lending assistance from the Small Business Administration's Paycheck Protection Program's initial allotment of $350 billion had been drained of cash because of the huge demand for it, according to the franchise.
Forbes recently ranked the Lakers second on its list of most valuable NBA teams, with a valuation of $4.4 billion, slightly behind the New York Knicks' valuation of $4.6 billion.
The Lakers last year had $434 million in revenue and $178 million in operating income, according to Forbes, but the team also has fewer than 500 employees, which made the franchise eligible for the PPP.
"The Lakers qualified for and received a loan under the Payroll Protection Program. However, 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 told CNBC in a statement.
"The Lakers remain completely committed to supporting both our employees and our community."
A source familiar with the situation told CNBC that no other NBA team besides the Lakers received PPP loans, and was unaware of any other team applying for the assistance.
The National Football League on Monday said that none of its member teams have applied for PPP loans.
CNBC has asked Major League Baseball, the National Hockey League and Major League Soccer whether any of their respective franchises has applied for money from the PPP.
The Lakers currently have a payroll of more than $122 million just for the franchise's players for the current season, which is suspended because of the coronavirus pandemic.
LeBron James, the team's superstar forward, has a base salary this season of more than $37 million.
The PPP does not require recipients to identify themselves publicly, and the federal government is not revealing their names.
However, a number of publicly traded companies have disclosed that they received the loans in financial disclosures, because they are events that are considered material to their businesses.
The Lakers, as a private entity, do not have such requirements. The team had no immediate comment when asked if the franchise disclosed the loan for some other reason than what it stated.
News of the Lakers' loan comes a day after data from Washington, D.C.-based analytics firm FactSquared show that more than 220 publicly traded companies applied for at least $870 million from the PPP, which was supposed to help small businesses without access to other sources of capital.
Those applications included $126.4 million for three public companies affiliated with Texas hotelier Monty Bennett. One of those firms, Ashford Hospitality Trust, applied for $76 million in 117 separate loans, the most by a single company, according to regulatory filings.
Last week, AutoNation, a network of automobile sellers, said its board had voted to return more than $77 million in PPP loans to the company, which is valued at $3 billion.
The Washington Post, in an article about AutoNation, quoted an employee who was critical of the firm's decision to apply for the loans in the first place. AutoNation reportedly used separate tax identification numbers from some of its more than 300 locations to obtain the loans.
"Small businesses don't have investors or millions in cash and credit to weather this storm," that employee said. "AutoNation could have made it through without taking these loans out."
The employee added that the loans are "an obscene amount for any company to take out of this fund that was intended to help keep our communities intact."
On Monday, Sen. Amy Klobuchar and 21 other senators wrote Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza, urging them to disclose measures that would prevent PPP loans from "unjustly enriching" companies that are not suffering as badly as many small businesses are from the coronavirus pandemic.
NBA Commissioner Adam Silver, during a conference call with reporters last week, said that the league has not considered canceling the rest of its current season, which it suspended on March 11 after a Utah Jazz player tested positive for Covid-19.
"Our revenue, in essence, has dropped to zero," Silver said during the call.
"That's having a huge financial impact on the team business and the arena business."