Accepting help
Sought aid after SEA denied rent deferral
The Penguins became the first North American major sports team to accept a loan through the federal Paycheck Protection Program.
The Penguins on Monday defended their acceptance of $4.8 million through the Paycheck Protection Program, the federal loan program created to help small businesses stay afloat amid financial losses during the COVID-19 pandemic.
The Penguins are believed to be the only team in the four major North American professional sports leagues to accept money through the program, although teams in lower-level pro sports leagues have applied for and received PPP funds.
The Penguins said through a spokesperson that they sought financial assistance after the Sports
& Exhibition Authority denied their request to temporarily defer their annual rent payment for PPG Paints Arena.
According to the Treasury Department, the PPP “provides
small businesses with funds to pay up to eight weeks of payroll costs, including benefits,” adding that the money “can also be used to pay interest on mortgages, rent and utilities.” The program was established on March 27 through the Coronavirus Aid, Relief and Economic Security Act.
“With our arena being ordered closed since March and without any event revenue, we requested that our landlord, the Sports & Exhibition Authority (SEA), consider a temporary deferral of our annual rent payment due in September,” the team said in a statement to the Pittsburgh Post- Gazette. “This request was denied. Accordingly, we borrowed $ 4.8 million under the CARES Act program in mid-August and applied the funds to our $6.1 million September rent payment to the SEA, which was used by the public agency to make its required bond payment.”
“The SEA indicated it is facing similar financial difficulties due to the closure of the SEA-owned Convention Center, and we are pleased that these funds were used to support an important public agency during these challenging times.”
The Penguins are obligated to pay the annual September payment to SEA as part of their lease agreement for PPG Paints Arena, which opened in 2010.
This SEA, which also owns the David L. Lawrence Convention Center, said earlier this month that it was receiving a $10 million contribution from the Pittsburgh Stadium Authority to help fund its operating budget for 2021. SEA said it is anticipating an $8.9 million shortfall next year from the convention center, which has had its business diminished due to the pandemic.
The Penguins have also taken a big financial hit over the past 10 months.
The team last hosted a home game on March 8. The pandemic halted the NHL’s 2019- 20 regular season a month early and forced the Stanley Cup playoffs to be held in neutral-site “hubs” in two Canadian cities, Toronto and Edmonton.
Citing lost revenue, the Penguins announced in May they would furlough about three dozen employees for four months. The employees, they said at the time, would receive full health benefits from the team and were also eligible for unemployment and stimulus benefits. Many of them have since returned to work.
The puck drops on the 2020-21 season Jan. 13, and the Penguins will be permitted to play games at home. But for the foreseeable future, no fans will be allowed inside PPG Paints Arena, keeping their game day revenue stream turned off.
Still, eyebrows were raised when it was reported Monday that the Penguins, who were recently given a $650 million valuation by Forbes, had accepted $4.8 million in PPP funds — especially after Penguins coowner Ron Burkle just shelled out $22 million to acquire the late Michael Jackson’s Neverland Ranch in California.
The Mario Lemieux Foundation also received a $90,000 loan, records show.
But the Penguins were certainly not alone in trying to tap into PPP funds.
In April, the Los Angeles Lakers of the NBA, one of the world’s most valuable pro sports franchises, returned approximately $4.6 million in PPP funds after public outcry about small businesses not getting needed financial help.
The Chicago Tribune reported in July that four Major League Soccer teams had received money from the program, as did the National Women’s Soccer League, the Big 3 Basketball League and a number of NASCAR and IndyCar teams.
The New York Post first reported that the Lemieux Group LP had received $4.8 million through the PPP.