Why Professional Gamers Are Getting Loans From the Government

In case you've been at a wildlife retreat without your phone since late February: the economy is in the shitter. To say that the United States government has tried to offset these issues would be a generous description but one of the more visible and robust examples of that effort is the Paycheck Protection Program, colloquially referred to as PPP Loans. PPP Loans are meant to ensure that businesses can continue to pay their employees even if they're losing money, and many different kinds of businesses applied for and received them—including some esports organizations.

The United States Small Business Association, which is the agency that governs the Payment Protection Program, defines these loans as "a direct incentive for small businesses to keep their workers on the payroll." Although there are various criteria that one must meet in order to be eligible for the program, the definition of "small business" has been a little bit squishy in practice. The Los Angeles Lakers applied for and received over four million dollars from the program, though they returned the money. While professional sports may not be back to normal for a long, long time, it's hard to consider the Lakers a small business.

The perception that the money for PPP loans is being drained by large businesses rather than Mom and Pop stores has led to backlash to companies who have received them. This information is all public on the Small Business Associations' website, and the companies receiving loans over $150,000 are listed by name. After some people on Reddit discovered that a few esports organizations like Faze Clan received loans over $150,000, they became the target of ire, just as the Lakers had been. A YouTube video about the news with over 200,000 views was called "Faze Clan hits a new low," saying that Faze Clan "took advantage" of the program. Some of the other recipients of PPP loans include esports organizations Team Envy, Super League Gaming, and Hard Carry Gaming, which is the legal name of NRG Esports.

It might seem ridiculous that an esports organization, essentially built around a group of people who play video game for a living, would receive a PPP loan, but these companies are being hit by the economic downturn as well. While esports has been growing in popularity, it's not as established as the NBA. Team Envy, the organization that owns the Overwatch team Dallas Fuel told Motherboard that they used their loan to pay for "fixed costs like salaries," as its finances have been hit by the pandemic.

"The cancellation of live events was a significant shift in business strategy for Envy Gaming in 2020," Greg Miller, PR manager for Envy Gaming Inc. told me in an email. "The organization had planned to host seven multi-day events at arenas in North Texas as was able to host only one of those events before esports competition moved entirely online."

Motherboard reached out to Faze Clan, Super League Gaming and Hard Carry Gaming for comment on their PPP loans. Faze Clan declined to comment. Super League and Hard Carry Gaming did not respond to a request to comment.

That esports is dependent on live events to create revenue isn't a huge surprise—the NBA similarly makes money through merchandising and ticket sales. Although esports has been able to continue online, unlike traditional sports, those events do not have a monetary barrier of entry. The Overwatch League Summer Showdown was slated to be a splashy live event, but was instead streamed to the League's YouTube channel. Given that the financial situation in esports is more precarious than traditional sports as well, the idea of the organizations that handle teams in the Overwatch League getting PPP loans seems a lot more reasonable than the Lakers.

The global coronavirus pandemic has hit industries in ways that might not immediately be obvious. The restaurant industry's struggle was on everyone's minds from the start; tattoo artists have many of the same issues as restaurants do with regards to the virus, but aren't as obvious a casualty. You can count esports among that list as well.