Will sports-and-entertainment arenas get federal grants as "Shuttered Venue Operators"? Unlikely, but...

Live-event businesses will be able to apply for a relief grant program starting April 8, the New York Times recently reported, which made me wonder: will operators of sports-and-entertainment arenas like Barclays Center and Madison Square Garden apply for the Shuttered Venue Operators Grant (SVOG) program?

I have no information either way--stay tuned--but the answer is.... unlikely but not impossible, at least for venues like Barclays which are not operated by publicly-traded corporations.

According to the Small Business Administration:

The Shuttered Venue Operators Grant (SVOG) program was established through the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act and amended by the American Rescue Plan Act to provide over $16 billion in economic relief to target industries. The SVOG application is slated to open April 8, 2021.

For an eligible entity in operation on January 1, 2019, grants will be for an amount equal to 45% of their 2019 gross earned revenue or $10 million, whichever is less. 

Priority will go to the entities that suffered the largest greater revenue loss between April 2020 through December 2020 due to the COVID-19 pandemic. Funds may be used for specific expenses, including payroll, rent, utilities, maintenance, and debt.

Who's eligible?

According to the SBA, eligible entities include "Live venue operators or promoters."

According to the FAQ, those disqualified include entities (like MSG) that are publicly traded corporations or majority owned and controlled by a publicly traded corporation. Also excluded are those that operate in more than one country or more than ten states and also had more than 500 employees as of Feb. 29, 2020. 

"Is a sports stadium or venue used for concerts and other live, non-sport performances eligible to apply?" The answer does not shut the door:

It is not likely. While sports are not a form of performing art, if the operator of a sports stadium or similar athletic arena can meet the statutory definition of an eligible entity under the Economic Aid Act, including the requirement that its principal business activity must be the organization, promotion, management, or hosting of live concerts, comedy shows, theatrical productions or other events by performing artists, it should be eligible to apply for an SVOG. 

(Emphases added) 

You'd think that, with the Brooklyn Nets as anchor tenant, the Barclays Center defines itself as presenting professional sports events.

That said, historically concerts and family shows make up more than half (or nearly half) of the non-NBA (and non-NHL) events at the arena.

So, depending on the year chosen--including the pandemic year, with the full schedule of events never announced--it might be possible to argue that the Barclays Center's "principal business activity" was hosting performing artists.

How is "principal business activity" defined? The answer:

To determine a given firm’s principal business activity, the SBA will consider the distribution of an entity’s receipts, employees and costs of doing business among the different lines of business activity in which its business operations occurred for the most recently completed fiscal year. An entity's principal business activity will be the one in which it has the greatest combined amount of revenues, expenses, employees and work hours, assets, contracts, and other business activity as compared to all its other lines of business. The SBA may also consider other factors, such as the distribution of patents, contract awards, and assets, as appropriate.

That said, presumably the Brooklyn Nets represent a disproportionate amount of revenues and expenses, given that, unlike performing arts events, the arena is more likely to be filled.