The U.S. Soccer Federation has applied and been approved for a loan via the Payroll Protection Program that is part of the Coronavirus Aid, Relief and Economic Security Act (CARES). The program is intended to provide small businesses (defined as having fewer than 500 employees) with a forgivable loan to pay employees during the current COVID-19 outbreak. The loan amounts will be forgiven provided it is used to cover payroll, mortgage interest, rent and utility costs over the eight-week period after the loan is made, and if employee compensation levels are maintained. Otherwise, the interest rate is 1%, with payments not due for six months.
The USSF announced last week that it was laying off and furloughing some staff, meaning that unless the organization restores those staffing and compensation levels, it would have to repay the loan plus 1% interest. The total number of people either laid off or furloughed was estimated to be around 50.
What makes the USSF loan approval so surprising is that they currently have cash reserves estimated to be well in excess of $100 million. While it is true that their revenues may be affected by the postponed and/or cancelled games as well as a potential eight-figure payoff as a settlement in the equal pay lawsuit brought by members of the U.S. Women’s National Team, their own internal estimate is that their reserves could drop to an amount as low as $40 million. And that would be a worse-case scenario.
With the most current round of PPP funds depleted and so many small businesses shut out of the funding process while fighting for their survival, one has to wonder if USSF should have received a loan while it has more than enough cash to sustain themselves during the current Coronavirus pandemic.