This morning, this article about Tom Brady showed up on my Google Feed, and it made for some good discussion with my boys. The article brings up a good topic about whether rich people deserve stimulus. The basic premise is that Tom Brady’s company received a PPP loan, and then he went out and bought a yacht! I haven’t followed Football, much less Tom Brady, but I think there’s still a point to be made.
USA Today: Tom Brady purchased a multi-million-dollar boat after company received $960K PPP loan
Let’s unpack this a little…
What is a PPP Loan?
According to the SBA, the Paycheck Protection Program is “An SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.” It is a loan with a 1% interest rate that must be paid back in either 2 or 5 years, but if certain conditions are met, the loan might be forgiven where nothing is paid back.
According to the Temporary Changes document, “The intent of the Act is that SBA provide relief to America’s small businesses expeditiously.”
What is Tom Brady’s Company?
According to Yahoo Sports, it looks like his company is called TB12 Sports. From their website, it looks like they sell some apparel, exercise supplements, equipment, and personal training equipment.
I believe it is significant to note that most likely he is marketing to people who would use his products in a gym setting. If gyms are closed, I can definitely see how it would be impacted by the Coronavirus restrictions.
Did Tom Brady Deserve a Stimulus Loan?
At first reaction, especially the way the article was written, I would say no way! According to Clutch Points, Tom Brady’s net worth is about $200 million and if you include his wife’s, that brings it to $600 million. According to the original article, Brady just signed a $50 million contract for two years. It’s tempting to say, he’s rich; why does he need any stimulus or help?
But, if you look at the details, Tom Brady didn’t receive that money. His company did. His company must have employees and expenses. Should we expect him to pull money from his personal account or personal salary to finance his company through this time? We don’t know how that money is invested or committed.
The Temporary Changes document says about the load program, “These measures, some of which are government-mandated, are being implemented nationwide and include the closures of restaurants, bars, and gyms. In addition, based on the advice of public health officials, other measures, such as keeping a safe distance from others or even stay-at-home orders, are being implemented, resulting in a dramatic decrease in economic activity as the public avoids malls, retail stores, and other businesses.” I would consider TB12 closely related to a gym.
I think the big question is, how many people would he have laid off without that money? If that money kept those people employed and spending money elsewhere in the economy, it did its purpose. (That’s not a judgment call I can make, and I don’t think the article addresses that at all.)
Did Tom Brady Deserve a Boat?
You can check out a couple of pictures of the boat over on TMZ Sports. It looks like a nice boat, and the article alleges a boat like this would cost $2 million.
The original article claims his purchase is unjust: “But he shouldn’t be purchasing expensive boats after collecting nearly a million dollars in federal funds when so many people are struggling.” I say, that’s not where our focus should be.
What about the boating company? How many employees at that company are glad Brady spent $2 million on that boat. What if he had put the money into his company instead of into a boat? Would all of those employees be struggling or laid off?
There’s a good chance that maybe Tom Brady made a poor or selfish choice in accepting that PPP loan, but when we start focusing on how rich and undeserving people are, we are heading down the socialist road.
Bottom Line: A Rising Tide Lifts All Boats
This slogan comes from the New England Council: a rising tide lifts all boats. Just as water rising in a port makes both the large, rich ships and the small, poor boats float higher; a rising economy improves the lives of both the rich and the poor.
We have to be careful in limiting the wealth accumulation and especially the spending of the rich because it trickles down to poor. It may not seem fair, but it is better than the alternative.
Resources
- USA Today: Tom Brady purchased a multi-million-dollar boat after company received $960K PPP loan
- Yahoo Sports: Tom Brady’s company — TB12 Inc. — received nearly $1 million from PPP loan in 2020
- SBA: Paycheck Protection Program
- Federal Register: Business Loan Program Temporary Changes; Paycheck Protection Program
- CARES Act
- Clutch Points: Tom Brady’s net worth in 2020
- TMZ Sports: GOAT Buys a Boat
- Wikipedia: A rising tide lifts all boats
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