Minor League Baseball Relief Act

To establish a grant program for shuttered minor league baseball clubs, and for other purposes. 1. Short title This Act may be cited as the Minor League Baseball Relief Act 2. Definitions In this Act: (1) Administrator The term Administrator (2) Covered grants The term covered grant (3) Covered law The term covered law (A) the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( Public Law 116–123 (B) the Families First Coronavirus Response Act ( Public Law 116–127 (C) the CARES Act ( Public Law 116–136 (D) the Paycheck Protection Program and Health Care Enhancement Act ( Public Law 116–139 (E) division M or N of the Consolidated Appropriations Act, 2021 ( Public Law 116–260 (F) the American Rescue Plan Act of 2021 ( Public Law 117–2 (4) Covered mortgage obligation; covered rent obligation; covered utility payment; covered worker protection expenditure The terms covered mortgage obligation covered rent obligation covered utility payment covered worker protection expenditure 15 U.S.C. 636m(a) (5) Eligible entity The term eligible entity (A) The Minor League Baseball Club or Independent Professional Baseball Club was operating in the ordinary course of business on February 29, 2020. (B) The gross revenues of the Minor League Baseball Club or Independent Professional Baseball Club in calendar year 2020 were not more than 25 percent of the gross revenues of the Minor League Baseball Club or Independent Professional Baseball Club in calendar year 2019, or, if the gross revenues of the Minor League Baseball Club or Independent Professional Baseball Club were negatively impacted by a natural disaster or weather disruption in 2019, not more than 25 percent of the average annual gross revenues of the Minor League Baseball Club or Independent Professional Baseball Club over the 3-year period from 2016 through 2018, as determined by the Administrator using the accrual method of accounting and excluding any amounts received any amounts received under the CARES Act ( 15 U.S.C. 9001 et seq. Public Law 116–260 (C) At the time the Minor League Baseball Club or Independent Professional Baseball Club submits the certification required under section 3(c), the Minor League Baseball Club or Independent Professional Baseball Club is open, or intends to reopen, for the primary purpose of conducting baseball games. (D) The Minor League Baseball Club or Independent Professional Baseball Club is not majority owned, directly or indirectly, by Major League Baseball, a Major League Baseball Club, or one or more persons who have a greater than 10 percent ownership interest in a Major League Baseball Club. (6) Independent professional baseball club The term Independent Professional Baseball Club (A) operates for profit or as a nonprofit organization; (B) is located in the United States; and (C) as of February 29, 2020, was a member of— (i) the American Association of Professional Baseball; (ii) the Atlantic League of Professional Baseball; (iii) the Canadian American Association of Professional Baseball; (iv) the Empire Professional Baseball League; (v) the Frontier League; (vi) the Pacific Association of Professional Baseball Clubs; (vii) the Pecos League of Professional Baseball Clubs; (viii) the United Shore Professional Baseball League; or (ix) the Western League. (7) Minor league baseball club The term Minor League Baseball Club (A) operates for profit or as a nonprofit organization; (B) is located in the United States; and (C) (i) as of February 29, 2020, was a member of a league that was a member of the National Association of Professional Baseball Leagues, Inc.; or (ii) has been offered and is operating or has agreed to operate under— (I) a Player Development License granted by MLB Professional Development Leagues, LLC; or (II) a license granted by Appalachian League, Inc. (8) Payroll costs The term payroll costs 15 U.S.C. 636(a)(36) 3. Grants for certain minor league baseball clubs (a) In general The Administrator shall, subject to the availability of appropriations, make covered grants to eligible entities in accordance with this section. (b) Authority The Associate Administrator for the Office of Disaster Assistance of the Small Business Administration shall coordinate and formulate policies relating to the administration of covered grants. (c) Certification of need An eligible entity applying for a covered grant shall submit a good faith certification that the uncertainty of current economic conditions makes necessary the grant to support the ongoing operations of the eligible entity. (d) Multiple business entities The Administrator shall treat each eligible entity as an independent, non-affiliated entity for the purposes of this section. (e) Grant terms (1) Number of grants (A) In general Except as provided in subparagraph (B), an eligible entity may receive only 1 covered grant. (B) Supplemental grant The Administrator may make a second covered grant to an eligible entity if, as of June 30, 2021, the gross revenues of such eligible entity for calendar year 2021 as of such date are not more than 30 percent of the gross revenues of such eligible entity for the corresponding period of 2019, or, if the gross revenues of the eligible entity were negatively impacted by a natural disaster or weather disruption in 2019, not more than 30 percent of the average gross revenues of the eligible entity during the first 6 months of 2016, 2017, and 2018, due to the COVID–19 pandemic. (2) Amount (A) In general Except as provided in subparagraph (B), a covered grant shall be in an amount equal to the lesser of— (i) the amount equal to 45 percent of the gross revenues of the eligible entity for 2019, or, if the gross revenues of the eligible entity were negatively impacted by a natural disaster or weather disruption in 2019, equal to 45 percent of the average annual gross revenues of the eligible entity over the 3-year period from 2016 through 2018, which shall include the gross revenues of all subsidiaries and other related entities that are consolidated with the gross revenues of the eligible entity in a financial statement prepared in accordance with generally accepted accounting principles for such eligible entity for such year; or (ii) $10,000,000. (B) Supplement grant amount A covered grant made pursuant to paragraph (1)(B) shall be in an amount equal to 50 percent of the first covered grant received by the eligible entity. (3) Grant aggregate maximum The total amount of covered grants received by an eligible entity may not exceed $10,000,000. (4) Use of funds (A) Timing (i) Expenses incurred (I) In general Except as provided in subclause (II), amounts received under a covered grant may only be used for expenses incurred during the period beginning on March 1, 2020 and ending on December 31, 2021. (II) Extension for supplemental grants If an eligible entity receives a grant under paragraph (1)(B), amounts received under a covered grant may be used for costs incurred during the period beginning on March 1, 2020 and ending September 30, 2022. (ii) Expenditure (I) In general Except as provided in subclause (II), an eligible entity shall return to the Administrator any amounts received under a covered grant that are not expended on or before the date that is 1 year after the date of disbursement of the covered grant. (II) Extension for supplemental grants If an eligible entity receives a grant under paragraph (1)(B), the eligible entity shall return to the Administrator any amounts received under any covered grant that are not expended on or before the date that is 18 months after the date of disbursement of the first covered grant received by the eligible entity. (B) Allowable expenses An eligible entity may use amounts received under a covered grant for— (i) payroll costs; (ii) payments on any covered rent obligation or other obligation to a public entity from whom the primary venue of the eligible entity is leased or licensed; (iii) any covered utility payment; (iv) payments of interest or principal due on any covered mortgage obligation; (v) payments of interest or principal due on any indebtedness or debt instrument incurred in the ordinary course of business that is a liability of the eligible entity and was in place or incurred prior to February 15, 2020; (vi) covered worker protection expenditures; (vii) payments made to independent contractors, as reported on Form-1099 MISC, not to exceed a total of $100,000 in annual compensation for any individual employee of an independent contractor; and (viii) other ordinary and necessary business expenses, including— (I) maintenance expenses; (II) administrative costs, including fees and licensing costs; (III) State and local taxes and fees; (IV) operating leases in effect as of February 15, 2020; (V) payments required for insurance on any insurance policy; (VI) settling existing debts with vendors; and (VII) advertising, production, transportation, and capital expenditures relating to the primary venue of the eligible entity or events held at such venue, except that a grant under this section may not be used primarily for such expenditures. (C) Prohibited expenses An eligible entity may not use amounts received under a grant under this section— (i) to purchase real estate; (ii) for payments of interest or principal for loans originated after February 15, 2020; (iii) to invest or re-lend funds; (iv) for contributions or expenditures to, or on behalf of, any political party, party committee or candidate for elective office; or (v) for any other use as may be reasonably prohibited by the Administrator. (f) Increased oversight The Administrator shall increase oversight of eligible entities receiving covered grants, which may include the following: (1) Documentation Additional documentation requirements that are consistent with the eligibility and other requirements under this section, including requiring an eligible entity that receives a grant under this section to retain records that document compliance with the requirements for grants under this section— (A) with respect to employment records, for the 4-year period following receipt of the grant; and (B) with respect to other records, for the 3-year period following receipt of the grant. (2) Reviews of use Reviews of the use of the grant proceeds by an eligible entity to ensure the compliance with requirements established under this section and by the Administrator, including that the Administrator may— (A) review and audit grants under this section; and (B) in the case of fraud of other material noncompliance with respect to a grant under this section— (i) require repayment of misspent funds; or (ii) pursue legal action to collect funds. (g) Oversight and audit plan (1) In general Not later than 45 days after the date of enactment of this Act, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives an audit plan that details— (A) the policies and procedures of the Administrator for conducting oversight and audits of covered grants; and (B) the metrics that the Administrator shall use to determine which covered grants will be audited pursuant to subsection (f). (2) Report Not later than 60 days after the date of enactment of this Act, and each month thereafter until the date that is 1 year after the date on which all amounts appropriated to make covered grants have been expended, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report on the oversight and audit activities of the Administrator under this subsection, which shall include— (A) the total number of covered grants approved and disbursed; (B) the total amount of covered grants received by each eligible entity; (C) the number of active investigations and audits of covered grants; (D) the number of completed reviews and audits of covered grants, including a description of any findings of fraud or other material non-compliance; and (E) any substantial changes made to the oversight and audit plan submitted under paragraph (1). (h) Tax treatment of covered loans (1) In general For the purposes of the Internal Revenue Code of 1986— (A) no covered grant shall be included in the gross income of the eligible entity that receives such covered grant; (B) no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by subparagraph (A); and (C) in the case of a partnership or S corporation that receives such a covered grant— (i) any amount excluded from income by reason of subparagraph (A) shall be treated as tax exempt income for purposes of sections 705 and 1366 of the Internal Revenue Code of 1986; and (ii) the Secretary of the Treasury (or the Secretary's delegate) shall prescribe rules for determining a partner's distributive share of any amount described in clause (i) for purposes of section 705 (2) Applicability Paragraph (1) shall apply to taxable years ending after the date of enactment of this Act. (i) Funding Notwithstanding any provision of covered law, from any funds appropriated under such a law that have not been obligated as of the date of enactment of this Act and are no longer being used to carry out the activities under such a law, the remaining funds or $550,000,000, whichever is greater, but in any case not more than $550,000,000, shall be allocated to the Administrator to carry out this section, of which not more than $50,000,000 shall be allocated to Independent Professional Baseball Clubs.

Summary: Minor League Baseball Relief Act This bill establishes a program for the relief of certain minor league baseball clubs and independent professional baseball clubs that experienced large business losses. The bill provides funding for the Small Business Administration to make grants to such clubs that experienced decreases in gross revenue in 2020 of at least 75%, as measured against revenues in 2019 (or, if revenues were negatively affected by a natural disaster or weather disruption in 2019, by the average of revenues over the prior three-year period). The source of funding for the grants shall be funds appropriated under enacted COVID-19 relief legislation that have not been obligated and are no longer being used to carry out activities authorized under those laws. Grant amounts provided to any club may not exceed $10 million.