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High Court Sides With Ex-Athletes In NCAA Compensation Case

Cover image for podcast episode

CREDIT: ASSOCIATED PRESS

Above: In this Nov. 5, 2020, file photo the Supreme Court is seen in Washington.

The Supreme Court has decided unanimously that the NCAA cannot enforce rules limiting education-related benefits that colleges offer to student athletes — things like computers and paid internships. Plus, San Diego affordable housing advocates are applauding Mayor Todd Gloria's decision this week to restart the process of redeveloping the Pechanga Arena in the Midway District. And the KPBS Investigates podcast explores the difficulties San Diego businesses faced accessing the loans and resources aimed at helping them survive the brutal cycles of shutdowns and reopenings.

Speaker 1: 00:00 The U S Supreme court gives a wind to college athletes over the NCAA.

Speaker 2: 00:06 And when your arguments are mocked by the Supreme court, you've had a bad day in court.

Speaker 1: 00:10 I'm Maureen Kavanaugh with Andrew Bowen. This is KPBS midday edition. Yeah. The big plans for San Diego sports arena district are forced back to the drawing board.

Speaker 3: 00:31 You should start from the premise that it needs to be developed for the public good.

Speaker 1: 00:37 And our podcast KPBS investigates focuses on the struggles of San Diego businesses through the pandemic. That's ahead. On mid day to day, the days of nationwide limits on the educational benefits offered to college athletes are over the U S Supreme court has sided with the athletes over the NCAA in a unanimous ruling. The court ruled that the agreement among schools to limit the benefits they extend to student athletes amounts to price fixing, and a violation of antitrust laws. California has already taken on the issue of compensation for student athletes, with a state fair pay to play law. And my guest Lynn Simon helped craft that legislation. Len Simon is an attorney and an adjunct law professor at USD specializing in sports and law. And Lynn, welcome to the program.

Speaker 2: 01:44 Thank you very much for having me.

Speaker 1: 01:46 This case was specifically about the educational benefits offered to student athletes. What are those benefits? Can you give us an example?

Speaker 2: 01:55 The case is about something small, but it's also about something big, which is the MCA is power. So on the small side, I would say the educational benefits could be providing tuition for the student to come back and finish his education. After his athletic eligibility was over, it could be for traveling to a foreign country during his four years on campus. It could be awards for high educational attainment that were available only to athletes. So it's little goodies here and there that schools are not permitted to provide athletes right now because the NCAA is very, very, very strict in what you can give an athlete on the theory that people will somehow cheat and get the best athletes. That way. Supreme court was not excited about that position by the NCA. Does

Speaker 1: 02:38 This ruling apply to any sort of licensing agreements for the athletes

Speaker 2: 02:43 Not directly, but it's a, it's a sign in the, in the direction of the athletes having licensing rights and other rights, easiest way to understand this case, really Maureen, it was that it was an opportunity for the NCA to have a big win and to trim back all of pressure, to provide licensing rights and provide salaries and provide other things. And, uh, the NCAA had high hopes at the beginning. They were gonna have a very large victory and walk away with a big prize and they got just the opposite. They got a loss and they got no benefit out of it at all. And the door is open for the lower courts to decide how far the courts can go in forcing the NCAA to give benefits.

Speaker 1: 03:25 How does this ruling differ from California's fair pay to play law? It's

Speaker 2: 03:29 Very different because national in scope in California's is only about California. And it's broad in theory, it's about all kinds of benefits, uh, rather than being only about licensing benefits. Uh, but also it's, it's a different source of power. Uh, the California law is a decision by the California legislature to tell California schools how to treat their students and legislatures can do that. Congress can do that as well as yet, but it could, the courts enforce laws that are already written such as the antitrust laws. And so this case, as you said earlier, says, this is an illegal price fix. It is no more proper for USC, UCLA, Berkeley, and Stanford, to agree how much athletes can get in the way of benefits than it is for Walmart and Kmart to decide how much they're going to pay their employees in salaries or fringe benefits. It's illegal, it's a conspiracy. So you really different sources of power, both giving the students something that they want.

Speaker 1: 04:33 As you say, the NCAA might have been expecting a big win here. What was their argument in defending these nationwide standards in limiting benefits to players? They

Speaker 2: 04:44 Have two arguments. Really one is it's reasonable. Under the antitrust laws. You can agree with your competitors to do things. If you can convince the courts that they are good for society, good for the world, and even more important, good for competition, they create more competition. So the NCAA argue that this creates better competition on the field and on the courts because the schools are more even, but of course they're not working very well. We have the same powerhouses in football and basketball every year. It's really a rejection of the NCA's core argument that this is good. The other argument the NCA made was we are entitled to define our product. You know, the little league says it's for little kids up to 12, and they're entitled to have a league with kids up to 12. The NCAA said we are entitled to have sports for amateurs and amateurs don't make any money. And the NCA that the Supreme court flatly rejected, the argument that you could define your product and thereby not compensate people that they mocked it. They said that that would be like letting, uh, retail stores say we're defining our product as a product created by underpaid workers and therefore we can under pair workers. So when your arguments are mocked by the Supreme court had a bad day in court,

Speaker 1: 05:59 Uh, practically speaking though, what does this ruling allow NCAA athletes to do now that they couldn't do before?

Speaker 2: 06:06 It allows them to ask their universities, to provide them benefits beyond tuition board room books, all the usual basic athletic scholarship items and to provide them almost anything else they can ask because they don't have to give it to them. It's an antitrust case. So what it really means is let competition bloom. If UCLA wants to provide those benefits to its student athletes and USC, doesn't, they're both in the clear under the law because what the law prohibits is them agreeing not to do it again, price fixing.

Speaker 1: 06:39 Let me ask you, how do you see today's ruling affecting the world of college athletics? Well,

Speaker 2: 06:45 It takes away a big tool from the NCAA. They have fought hard against all kinds of benefits for student athletes beyond pure scholarships on the basis that they were running amateur sports and amateur sports did not permit any of that. You know, there's a consideration now of the licensing issue that you mentioned of just letting it go, let the athletes make as much money on the side as they can make and just leave it alone and forget about it. Just like they don't worry about whether our music majors or art majors in college are making money on the side. It's not a concern of the university. It's a private deal the students are making. So that may start to happen quite soon.

Speaker 1: 07:21 In speaking with Lynn Simon and attorney an adjunct law professor at the university of San Diego and Len thank you so much for speaking with us. You're very welcome.

Speaker 4: 07:35 San Diego has been eyeing redevelopment of the Pachanga arena in the midway district for years. The 48 acres of city owned land is strategically located close to downtown and the old town transit center, but the plans have hit a snag after state officials determined the process used to select a development team violated state law. Now, mayor Todd Gloria says he has to restart that process all over again, here to unpack what this means is Andy Keats, assistant editor and senior investigative reporter at voice of San Diego. Andy, welcome Andrew. Thanks for having me. Let's start with why San Diego wants to redevelop this land in the first place. What's wrong with what's on this property right now?

Speaker 2: 08:19 Well, the, the, the arena's old, uh, for one, and they'd like to have a nice new arena. Uh, that's a little bit more competitive. And I think that the, the shortest way to understand it, easiest way to understand it is that redeveloping all the land around it, uh, offers a good way to pay for the cost of either renovating or rebuilding the arena. You've got all this public land, it's in a pretty good area. We're in a housing crisis and we need quite a bit of housing. And if you can get some of that housing and allow a developer to make money by doing so, and then using some of that profit pay for a new arena that you need any way, that, that the city would look at that as a good situation for them.

Speaker 4: 09:02 Former mayor Kevin Faulkner had selected a development team, Brookfield housing and ASM global to lead this project, or what was the vision for the arena property that they had put forward?

Speaker 2: 09:14 It was pretty straightforward. It was a mixed use development. There'd be some, some commercial, a little bit of an entertainment district, some public spart, a public park space. They would use the success of that redevelopment to, uh, renovate the stadium. And I do stress renovate their, their plan did not commit them to building a new arena. Uh, they kind of came back after the fact and said, well, if you really wanted a new arena, we could look into that. Maybe that'd be something we'd be interested in if you are. Uh, but there was no commitment to that

Speaker 4: 09:45 You reported earlier this year, that talks between the city and that development team had hit a snag or stalled because of a change to a state law called the surplus land act. Now, what is the purpose of that law and how did the city manage to overlook it?

Speaker 2: 10:00 Yeah, so the, the purpose of the law, and it's not new, it's a, it's a decades old law is that when, when a public entity owns land, if it goes into private ownership, it's probably never going to go back into public ownership. And that there's certain things you can do with public land that, that you, that you can't with private land. I think that the logic of the law is that you want to be very careful whenever you allow property in California to go from public ownership to private ownership. And so they created a process by which if you're, if a city or a transit agency or a county is going to sell land, that they need to first give all the other public agencies in the area, an opportunity to say, well, Hey, hang on. We think we could use that. We think we could do something good with that.

Speaker 2: 10:49 That would benefit the public. And so that had been the case for a long time, that law was recently changed and the most crucial change that, that, that, uh, that happened within it was that it became, uh, something that applied to public leases. So the city of San Diego, his understanding had been, if you were going to sell public land, sure. You had to offer that up to other public agencies. But if you were going to do a 99 year lease of public land, that that wouldn't count. And so that was really what tripped them up here is that, uh, they were, they were going to lease the land to this developer and the Lea and the developer would build all this stuff on top of this new land that they were leasing. Uh, and the state based on a recent, uh, legislative change said, no, no, no, that, that, that long-term lease is essentially the same as a sale for our purposes.

Speaker 4: 11:41 No fast forward to last week, mayor Todd Gloria announced that he is restarting the process of selecting a developer and a new plan for this property. What will that new process involve? And will it differ from how the former mayor Kevin Faulkner handled this last year?

Speaker 2: 11:58 Yeah. So when the mayor, when mayor Faulkner former mayor, Faulconer put this up, he basically just put out a very bare bones request for proposals from developers said, Hey, development community. We've got this land. Uh, here are some of the broad strokes of what we'd like to see, send us your ideas. And then they had a little competition to pick which of those ideas they liked best. They only received two of them. So it wasn't much of a competition this time around what the, what mayor Gloria's, uh, team will have to do is first offer up the land to all public agencies, formula formerly. And when they do that, they'll also have to offer the land to all, uh, affordable housing developers. And so there will be a 60 day period during which the affordable housing community and public agencies have an opportunity to, to step in and say, Hey, we think we could do something good with that land.

Speaker 2: 12:53 And if they, if they do then the city has to immediately begin negotiations with those respondents. Now, if that doesn't happen, if, if, if no one thinks to come forward and, um, and offer up or suggest that they have an idea for the property, I think it would be a slight surprise if a public agency or affordable housing developer jumped at this much land. Um, if no one does that, then the mayor would basically be able to start the process over from where former mayor Faulkner did a year ago, which is put out a request for proposals from all private developers and pick among those

Speaker 4: 13:32 Okay, affordable housing advocates, uh, as, as you kind of hinted that don't necessarily see this restart as a bad thing, what is their vision for this land and, and what will affordable housing? Absolutely definitely be a part of whatever happens there. Yes, it

Speaker 2: 13:49 Will absolutely definitely be a part of this change to this state law was pushed by affordable housing advocates and their thought was basically, you've got public land when you develop it, you should start from the premise that it needs to be developed for the public good.

Speaker 4: 14:04 The San Diego union Tribune editorial board wrote last week that this, uh, problem or snag, uh, that the city has hit with his property was an example of former mayor. Kevin Faulconer his quote, stunning and competence when it comes to real estate deals, of course, Faulkner also led the disastrous attempt to lease and purchase the asbestos Laden building at 1 0 1 Ash street. What is the likelihood that these missteps will have any impact on Faulkner's current campaign for governor?

Speaker 2: 14:35 I think the political world is, is, uh, so, so strange right now that this actual resumes that the former mayor of the second largest city in the state doesn't actually seem to be especially important in his bid for governor.

Speaker 4: 14:49 I've been speaking with Andy assistant editor and senior investigative reporter at voice of San Diego. Andy, thanks for joining us. Thanks Andrew.

Speaker 1: 15:03 This is KPBS mid day edition. I'm Maureen Kavanaugh with Andrew Bowen Jade Heinemann has the day off. You can see the signs all over San Diego, the boarded up windows of businesses that didn't make it through the pandemic shutdowns today. We'll bring you an in-depth examination of one San Diego business owners struggle to make it through the disruption and uncertainty of the past year, how she and others face the difficulties of adhering to changing pandemic guidelines of navigating brutal cycles of shutdowns and reopenings, and the challenge of accessing COVID stimulus funds. The story is told in the KPBS investigates podcast where our news team is able to dive more deeply into the stories we cover. And joining me is the host of this episode of the KPBS investigates podcast, KPBS, investigative reporter, Claire Traeger, Sarah and Claire. Welcome.

Speaker 5: 16:00 Thank you, Maureen.

Speaker 1: 16:02 What the effects of the pandemic on San Diego, small businesses seemed like a good subject for an in-depth podcast. What were the facets that you wanted to explore?

Speaker 5: 16:14 Right. Well, I mean, as you mentioned in the introduction, there were just signs of businesses closing everywhere, and it felt like every week there was news about, you know, this beloved business, this, you know, this favorite restaurant we're closing, but there didn't seem to be any quantitative data about it. And so, you know, I kind of set out just trying to find out exactly, um, how many small businesses or how many local businesses had closed during the pandemic and whether it really was more than in previous years before the pandemic. Um, as you'll hear in the, in the podcast episode, it was trickier than I thought it would be. Um, but it also, you know, I just wanted to know where were these businesses closing? Were there certain parts of the city or the county where businesses were struggling more? We talk about PPP loans, the paycheck protection loans, and, um, weather assistance was doled out an equally. And so I, I just really wanted to look into all of that because businesses impact everyone who lives here and, and our neighborhoods and the economy there's, you know, so many different, different parts of it to explore Claire,

Speaker 1: 17:30 What do you differentiates long investigative stories from the ones KPBS reporters produce in a day or over the course of a few weeks?

Speaker 5: 17:40 Well, I think one part of it is looking for that, that data, no matter what story I'm doing, I'm saying, you know, can I find data that, that will back this up, or that will illustrate what's going on here? And that can sometimes take a while to, to find the data, um, get it from the people who have it, who don't always want to share it and then get it into a way that we can analyze it, look at it and see what the trends are. Um, and so that's really, you know, some of it is like research, like maybe even a scientist would do where you're, you're looking for original sources of information. Um, and then kind of talking to people to illustrate what, what that information should,

Speaker 1: 18:25 And the podcast format can round up a lot of disparate information that we hear when an issue goes on for a long period of time, for example, the deep problems with the us asylum system.

Speaker 5: 18:39 That's right. So the next episode that's coming up is by max rebel and Adler. And it's about the asylum system, which he's been covering for weeks and months and months. Um, you know, people from central America, from Africa, from the Caribbean have been waiting, uh, as the U S restores its asylum system along the Southwest border. Um, first there was the, you know, the Trump administration really turned the system on its head, then it was stopped by the pandemic. And so now the question is what is the Biden administration going to be doing? And even Kamala Harris on a recent trip to central America addressed that by saying, don't come. And so he's been covering this for so long, and then he's able to kind of round up, what's been happening into one episode so that you can listen and fully understand what's been going on

Speaker 1: 19:35 Now at the beginning of the story that we're about to hear you introduce us to Veronica Densi, who owns a massage business in downtown San Diego. What was it about her story that really represents the struggle that business owners have faced in the last year just to stay afloat?

Speaker 5: 19:53 Right. Well, so she owns a massage business, as you mentioned, and there is just so many different parts of her story. She has kids. So she was dealing with childcare, the school system, um, she's a black woman. And so she was, you know, one of those businesses owned by people of color, um, that that was struggling and wasn't able to get the same resources that, uh, businesses owned by white people were able to get. Um, so part of the story goes into her attempts to get PPP loans, the paycheck protection program loans, um, and, and how she was able to, to keep her business going. Um, and even there was a part, part of the story that really surprised me about the impact of the, um, racial protests last summer and how that impacted her business. So there's just so many different, different parts of the story of the last year that, um, fit into her story. And as you'll hear, she's a fun, fun woman to talk to has a lot of stories. Um, and so I, I was really happy to be able to talk to her multiple times and, and have her kind of guide us through the story of the pandemic.

Speaker 1: 21:04 Well, let's get to it then. Here's Claire Tresor host of the KPBS investigates podcast episode when the world stopped.

Speaker 5: 21:13 Okay. So to start, I'm going to introduce you to a woman named Veronica Densi. She owns a massage therapy business called NOLA in the east village, but she didn't have a straight path to get there.

Speaker 6: 21:24 There's a Marine. My dad is in the Navy and, um, I just knew, I always wanted to be like a GI Joe kind of a tomboy, you know,

Speaker 5: 21:32 Veronica is half black, half Filipino, and she says her parents wanted her to go into the Navy, but she's scared of water. So she settled on the army instead.

Speaker 6: 21:42 I was in and I was doing great. And I was like, fast-tracking, high-speed all that stuff. And, um, during a deployment, I was injured and, um, that injury pretty much ended my career. I was med boarded out of the military, not too long after that. Um, so I came home and, um, I was an angry person.

Speaker 5: 22:08 She decided to try yoga. Lots of people deal with stress or anger with yoga, but during her first class, she just could not handle it

Speaker 6: 22:18 Well through the entire class. And I was upset and angry and, um, the yoga instructor comes outside and he was like, you know, I'm also a massage therapist. He's like, I feel like you should try massage. He was like, massage has the same healing powers that yoga does.

Speaker 5: 22:36 She tried it and loved it. And basically her career in massage therapy was born. She started out working at a hotel chain giving massages, but she says, she's not good at working for other people.

Speaker 6: 22:49 I was seven and a half months pregnant. And I came home one day and I looked at my husband and I'm like, we're starting a business. And he was like, what, when, where? And I was like, now I'm finding a place today. And I think I did. And he thought I was crazy. And I think he was kind of angry too, but he got over it.

Speaker 5: 23:08 And for a while, things were going really well. Veronica kept building up her business and her family. She ended up having another daughter and eventually a third. She went from renting a room for her massage therapy at an acupuncture business to finally renting her own space in the east village. Things were looking up, we got

Speaker 6: 23:30 All our stuff in here. We moved in here, everything was perfect. And then the world stopped.

Speaker 5: 23:39 It was March, 2020. The pandemic came and everything was shut down.

Speaker 6: 23:47 So that first shutdown, you know, no debate from me, you know, on it. No problem, not a big deal. I mean, it ended up being a really big deal. It was like seven or eight months, right.

Speaker 5: 23:59 Then all summer and fall going through the openings and closing cycle, she could open for a bit, get some clients in, but then the state would shut businesses like hers back down again. And she started to reach a point where she thought she might lose her business. I

Speaker 6: 24:16 Was considered self-care with nail studios and stuff, but, um, I was trying to find a way my, my clients were suffering. A lot of them are suffering

Speaker 5: 24:31 So many businesses across San Diego county had to deal with so much uncertainty. This past year, restaurants could open at limited capacity than they had to close indoor dining. Then they had to go back to take out only, and everything was always changing all the time for salons and other beauty businesses. For part of the time, they could only operate outside. In fact, I even heard about a waxing salon that was trying to do bikini waxing outside, which yeah, it would be hard to convince customers to do that. Veronica's business NOLA did end up making it through the first shutdown, but lots of businesses like project Rio, collective didn't.

Speaker 5: 25:18 So for the past three months, I've basically been on this mission to find out exactly how many businesses in San Diego county have closed. You would think this would be an easy question to answer. I mean, honestly, you can just Google a business and see it's permanently closed. So it seems like Google would be able to produce some data that says here all the businesses that closed in San Diego county, and I'm sure they could do that, but they won't. At least for me, I also asked the city, the county, the chamber of commerce, the restaurant association, no one really had a set list of all the operating businesses that closed down. Finally, I found that the state economic development department has a list. Yay. Right, finally, but they couldn't give it to me because the list it's actually owned by this private company called data axle. So I gave them a call. Hi, Claire, how are you? How are you? Good, thank you. So I got on zoom with Chris Frueh Wald, he's the vice president of data operations at data axle. He explained how his company even got this data in the first place.

Speaker 7: 26:34 We gather it from thousands of different sources and we use a lot of automation as well, but a lot of these sources are public sources, you know, including like secretaries of states or business, registrations, county, courthouses, other trade journals, uh, other business publications that we use as well.

Speaker 5: 26:50 So they're looking for signals across the internet that a business might be closed. And then they route those signals to a giant call center to check on them.

Speaker 7: 27:00 We have an automated dialer. So if we find that the health of a phone line is disconnected and that's a good indicator that the business is probably closed.

Speaker 5: 27:13 So yeah, they collect all this data and then sell it. We opted not to buy the data, but Chris did give me some information. He said that in 2020, there are about 2,400 businesses in San Diego county that they have confirmed or closed. That sounds like a lot, but it's actually down from previous, non pandemic years. That was a surprise. But Chris cautioned, that's not a final number. It will likely increase as they confirm more businesses actually closed. Uh, that number

Speaker 7: 27:46 Is closer to 10,000 out of around 200,000 businesses and the entire county, which accounts for about 5%,

Speaker 5: 27:55 5% of all businesses. That's a lot. Chris also gave me some stats on what kinds of businesses were closing in 2020, mostly restaurants, food carry out businesses, physicians and dentists. And he told me where businesses were more likely to close. For example, zip codes in national city in Oceanside lost half of their businesses since 2019. Meanwhile, some north county zip codes, like one near San Clemente actually increased businesses by more than 10%.

Speaker 8: 28:40 [inaudible]

Speaker 1: 28:43 This is KPBS midday edition. I'm Maureen Kavanaugh with Andrew Bowen, Jade Heinemann has the day off. We learn more about how San Diego businesses struggled to survive the pandemic as our KPBS investigates podcast continues. The host for this episode is KPBS investigative reporter Claire Tresor.

Speaker 5: 29:05 Okay. So Veronica made it through the summer barely.

Speaker 6: 29:11 And then we got like a glimmer of hope around Thanksgiving,

Speaker 5: 29:16 But she was still looking for ways to try to keep her business afloat. And one of the things many businesses were looking to work paycheck, protection, program loans, or PPP loans. This money came from the federal government through the small business administration, but was administered by banks. And they weren't actually loans they're grants that don't have to be paid back as long as the business meets certain criteria. So right away, Veronica started looking into it. She called the local small business administration office.

Speaker 6: 29:50 The way that it was explained to me was that if I did the PPP loan, I would have to pay my therapists for like a month or two months or something like that. Um, and they couldn't get unemployment.

Speaker 5: 30:04 This is true. But when Veronica's business had to be closed, when stay at home orders meant she wasn't operating at all, her employees could get unemployment. And then when stay-at-home orders were lifted, she should have been able to get PPP funds to bring back staff or hire new employees. But Veronica didn't know that. So instead she applied for and got another loan called an economic injury disaster loan, which she does have to repay.

Speaker 6: 30:34 So then I took the E D I L loan because, you know, I was like almost $30,000 behind in rent. Um, so I did it and the E D I L got eaten up by rent and Christmas alone.

Speaker 5: 30:53 And then right after Christmas, there were new stay at home orders due to surgeon COVID-19 cases. And so she was shut down again.

Speaker 6: 31:02 And so now I'm like, this is like a lot of money. It's just like how much I make in a year. And I owe that back to the government and I didn't even get the chance to use it for what it was for.

Speaker 5: 31:19 Okay. So it sounds like Veronica may have gotten some bad advice, and this was a consistent problem during the pandemic, especially for minority owned businesses or businesses in lower income areas that didn't have good relationships with banks, they didn't get as ready access to PPP loans. Didn't get advice from banks or financial experts. And so they missed out on these opportunities in San Diego county. When you look at the share of businesses receiving loans, there is a stark divide between north and south county. And remember the data about businesses closing that tracks with this divide as well. The success rate for applicants from census tracks in low-income areas with large minority populations, mainly south county was 5% or less, but travel north to affluent, mostly white census tracks in places like Carlsbad, Powan and Sanitas, and the success rates are 96% or above lenders here gave just under 12% to businesses in majority Latin X census tracks. But in majority white census tracks, 61% of businesses received loans, businesses like the one owned by Molly Boyd. So,

Speaker 9: 32:43 Yeah, we've been in business for eight years now. Um, and through one pandemic. So that's wild. Um,

Speaker 5: 32:54 Molly owns Brill hair lounge in Carlsbad. And the beginning of the pandemic was a shock for her too. She like hairstylists everywhere had to close her salon. Her clients didn't take it well,

Speaker 9: 33:08 It's like everybody started panicking, not only like health wise, but like I have to look good. I mean, we are in California, it's between social media and all those social platforms. Like people have to still look good.

Speaker 5: 33:23 We applied for a PPP loan from her usual bank and was put on a waiting list. But instead of just waiting, she used her network of other Carlsbad business owners.

Speaker 9: 33:36 So my other friends and people that I know that own small businesses were getting funded all around me. I was kind of like, okay, what are you doing? What do you know? What's the secret?

Speaker 5: 33:49 Her friends told her about a bank that had no waiting list. And she quickly got funding that bank C3 bank and Encinitas gave 84% of its loans to businesses in white majority census tracks. But Molly doesn't see inequity in that process.

Speaker 9: 34:07 You were a small business struggling during a pandemic. Yeah. That sucks. Like big time I feel for you because it's not easy. Um, but I also think you didn't put in the time and the work and the extra that you needed to in order to stay afloat, then you're just complaining.

Speaker 5: 34:24 So I have to admit, this was pretty wild for me to hear someone who just doesn't seem to be aware at all about her own privilege and the inequities, other people in other parts of the county face. I even asked her pointedly about these inequities. For example, business owners who don't have ready access to technology, don't speak English as a first language, or maybe don't have good internet access, but Molly wasn't having it.

Speaker 9: 34:54 It's hard to say like, oh, you didn't have internet. Like it's twice 20, 21. Like everybody has internet. And if you don't have it, then he better get a new phone or go to a place that has it. Like, I think that's a little unfair.

Speaker 5: 35:11 So back to Veronica, there's no doubt that she put in the time and the work and the extra to stay afloat. But she says her network of business owners weren't any help.

Speaker 6: 35:22 My friends and my colleagues, other business owners, hell, they're just as confused as I was.

Speaker 5: 35:29 And it wasn't just the PPP loans, business owners who are people of color and run businesses in lower income neighborhoods just overall had a harder time getting resources, keeping customers pretty much everything. A nationwide study found that since the start of the pandemic black and Latino business ownership dropped by 41% and 32% respectively, meanwhile, white business ownership dropped by just 17%. And this business failure trend could have really long lasting impacts on neighborhoods.

Speaker 7: 36:06 Businesses owned by, uh, minorities tend to have less resources. So in a moment of prices, they're less likely to survive.

Speaker 5: 36:13 It's Juan Pablo Padro Garah and associate professor of sociology at UC San Diego. He says family businesses are a big source of generational wealth, particularly for immigrants and ethnic minorities,

Speaker 7: 36:27 Better at spanning local networks. So they're better at communicating with people inside the neighborhoods, for example, and attracting customers on the basis of the connections that families have made. And they do not require massive capital investments. Part of the, the advantages of small businesses is that they become assets. Um, and they can be passed on to other generations at as assets.

Speaker 5: 36:53 He says, if a business like a restaurant in city Heights or the sporting goods store in north park, or Veronica's massage space closes shop, there's a bigger impact on the neighborhood.

Speaker 7: 37:05 So this is something that will and can possibly fundamentally reshape the way we experienced the city neighborhoods that have more small businesses that are owned by black and Hispanic owners. We'll likely see more businesses that fail because of how the crisis is affecting them. And that means less revenue generation in those particular neighborhoods. It means less services for people who live in those neighborhoods, also less availability of local employment and all these negative economic outcomes in the long run translates into or lead to, um, sort of worse educational outcomes, worse career prospects,

Speaker 5: 37:49 But here's an irony. Veronica did see one small business surge over the summer in part because she is a black woman. This was right after George Floyd was murdered by Minneapolis police. And there were massive protests across the country. A so-called racial reckoning and a big push on social media to support black owned businesses. I'll just let Veronica tell one story about this experience.

Speaker 6: 38:20 I had a, a client come in and she was so she was so excited to find, I mean, she was a, um, a white, a white lady. She was just so you know, and she came in here and she had like her on with like the Afro girl with the pick and, you know, and she was so like, she was so excited and she was hugging me and I was like, we're not supposed to be hugging right now. Like, here's my elbow, you know? And she just, she loved it. And she was like, hi. She was like, yes. She's like, yes. And she just kept saying like, yes, queen and, you know, she was so excited and, um, and I loved having her, you know, cause she's just, she's so she's so light and so awesome. But it was, it was strange too, because you know, like I know that if I was not blocked, she probably would not have been here, but it's awesome.

Speaker 5: 39:24 Big push to buy black faded out after a few months, Veronica got some new customers, but they didn't last and she's lost a lot of money this year.

Speaker 6: 39:37 I'm a disabled veteran. Right. So using my disability to try to pad, you know, just so that I wasn't like $20,000 in background, you know, um, because I had the hope of being able to open back up one day and I'm doing that. I can't lie. I was dying a little loose side every time I wrote that check because I was wondering if I was throwing this money away. And, um, I didn't even know if we would ever open again. And then, um, it got to a point where maybe once or twice I had to like dip into like my kid's college fund, I've got three daughters, you know, and I had to like dip into their college fund a little bit. And I'm just like, okay, well this has to stop. Um, because I can't bankrupt my family with no other answers.

Speaker 5: 40:40 Now let's visit another business, not too far away from Veronica NOLA where bankrupting, the family doesn't seem to be in the cards. It's the middle of the day on a Tuesday and Queenstown public house on the outskirts of little Italy is hopping groups of families with toddlers girls and pretty sun dresses are seated outside in the dining areas set up on the street. Queenstown is owner PJ Lamont says the constant changes during the pandemic made things really difficult. And there were times where he thought he might have to permanently close one of the five restaurants he owns. But now not so much

Speaker 3: 41:20 Since people were allowed to sit down and dine again, it's almost been like summer every single week. Like it doesn't matter which restaurant it is. It just seems like have been so, you know, stuck inside their cage for so long that everyone wants to be out. And now that it's acceptable to be out, I mean, people are out, people are continuing to stay out and it's, it's a good vibe,

Speaker 5: 41:55 Good vibe. This sort of boom time is being felt in a lot of businesses. That's according to the UC San Diego sociology professor, Juan Pablo, Pedro, because

Speaker 7: 42:06 Also many households received additional funds from the government. Those that did not need the funds. For example, those that were still employed throughout the pandemic now have an additional few thousand dollars. And we are seeing, uh, a, a heating up of the economy in certain areas.

Speaker 5: 42:28 People have compared it to the roaring twenties after world war one. And of course after the 1918 flu pandemic, but he says, it's important to remember that not everyone is feeling this roar in the same way.

Speaker 7: 42:42 It's something that we have to be mindful of because in those moments of growth, um, growth also tends to be something that is not necessarily equalized. So one of the issues with the businesses that were left out is that, of course they're in a worse position and, uh, catching up is much more complicated because they have to compete with businesses that are now perhaps in an, in a relatively better footing.

Speaker 5: 43:14 Veronica was hoping to catch up hoping for a big surge in customers, as restrictions were lifted and people got vaccinated, but it hasn't happened as much as she'd like, I'm still

Speaker 6: 43:25 Getting the clients that are like, do I need to wear an effin mask? Yes. Licensing still says you have to wear masks. So yes. Wow. I'll just freaking call back in a month. Okay. Like I don't, I don't know what to do with that.

Speaker 5: 43:46 Also having trouble, bringing back staff and struggling with childcare, like many others.

Speaker 6: 43:51 I had a client call because they were wanting to know if we had a therapist that could be available to do massages for their evening crew. I wasn't working. I was done for the day and I could have easily went and did that.

Speaker 5: 44:06 But her three daughters ages five to 12 weren't back in San Diego, public schools full-time so she needed to spend more time at home and that hurt her business. So I've talked to Veronica repeatedly during the past year. And the last time I saw her, she was vaccinated just like me and lots of people these days. But while there seems to be this around some vaccinated people or they're reemerging doing things they love again, and feeling hopeful, Veronica seemed more down than I've ever seen her and more fearful about her business.

Speaker 6: 44:46 I'm so tired of crying about my business. Like this was never supposed to be something to cry about, you know? Cause like the truth is, is that I I'm living my dream. Like, you know, I'm doing something that I love. I'm really, really, really helping people just talk to my clients and I'm making a positive change. I, I can be there for my kids. Like I'm doing everything right. And it's just like nobody plans for a global pandemic.

Speaker 5: 45:21 That is certainly true. But as we've seen some businesses were able to keep their heads above water and come out of this pandemic with well, a good vibe, especially those in the right place with the right connections. And for now, Veronica is really trying to hold on to our business for herself to keep this thing going, that she worked so hard to start. And for her clients who rely on her for stress and pain management and who feel more comfortable visiting a black owned massage business and for her daughters, if she can keep the business going, it will be an investment in their futures as well. When I last talked to Veronica, she was sitting in front of a giant banner that hangs on the wall in her office. Its message is not really safe for radio. The public radio translation would be something like don't mess with a fricking powerful woman. And that's Veronica's mantra that she's not going to give up.

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KPBS Midday Edition

KPBS Midday Edition is a daily talk show hosted by Maureen Cavanaugh and Jade Hindmon, keeping San Diegans in the know on everything from politics to the arts.