Though beer sales are up more than 20% in the U.S. during the pandemic, Minnesota’s largest brewery received federal assistance worth at least $1 million through the federal Paycheck Protection Program, according to recently released data from the U.S. Small Business Administration.
The loan to August Schell Brewing Co. is just one of many surprises in the list of PPP recipients.
Elite private schools, well-heeled arts organizations and global law firms are among the Minnesota-based employers that received at least $1 million in assistance from the government’s largest program aimed at helping beleaguered employers survive the coronavirus. Even some of the Twin Cities’ most prestigious country clubs received six-figure help from the program, which has distributed $11.2 billion in assistance to more than 98,000 employers in Minnesota.
Hazeltine National Golf Club in Chaska, which says on its website that it is “one of only two golf clubs in the country to have hosted every premier championship offered by the USGA and PGA of America,” received $350,000 to $1 million through the PPP, according to the government. The private country club charges new members a $12,500 application fee.
“This is not so much about our members,” said general manager Eric Rule. “Our revenues are way down. We had no banquet revenue in March, April, May and June.”
Altogether, a dozen private country clubs each received at least $350,000 through the program, including Bearpath Golf and Country Club, Golden Valley Golf and Country Club, Mendakota Country Club and the Town and Country Club of St. Paul, federal records show.
Without the loan, Rule said, Hazeltine probably would have furloughed 125 employees. Employers can have the loans forgiven as long as they spend at least 60% of the money on payroll.
“We used all of the funds to keep our employees paid,” Rule said.
Employers say they shouldn’t be judged by appearances.
At Schell, President Ted Marti said that his brewery in New Ulm never experienced the double-digit sales growth that boosted the fortunes of the nation’s largest beer makers this spring. Marti said his PPP loan enabled the brewery to retain 95 jobs, despite an overall sales decline of 45%. Marti said Schell was hit hard by the state-mandated closure of all bars and restaurants, a higher-margin business for Schell that disappeared for nearly three months.
“We are now getting back to normal,” said Marti, adding that his PPP loan “means the difference between a not-very-good year and a disastrous year.”
Beer makers, top schools
Schell isn’t the only brewer in Minnesota to seek federal help. According to the SBA, another 17 beer makers received at least $150,000 through the PPP. That list includes some of the state’s most highly regarded craft breweries, including Bauhaus, Castle Danger, Fair State, Fulton, Indeed, Lift Bridge, Modist and Utepils.
Two of the Twin Cities’ premier private schools — the Breck School in Golden Valley and the Blake School with several campuses — each got $5 million from the PPP. Breck charges $28,690 a year for kindergarten and $32,920 for high-schoolers.
Top administrators at both schools cited significant hits to revenue that would have led to major layoffs without the PPP.
“It is completely fair to scrutinize how public money is used,” said Natalia Rico Hernandez, Breck’s head of school. “We met all the requirements. All of our revenue sources took a hit on this — tuition, charitable giving. If we had not gotten the loan, we could not have maintained salaries and programs.”
Blake charges as much as $34,000 for high school. The school offers need-based scholarships to roughly one in four students, according to Anne Stavney, Blake’s head of school. Stavney said Blake faced tuition defaults and a potential drop in enrollment in a business that depends on tuition payments for 87% of its revenue.
“PPP allowed us to continue to employ 350 employees without interruption,” Stavney said.
Arts organizations were also major beneficiaries of the program. The Walker Art Center, which had a “robust” endowment worth $225 million at the end of its most recent fiscal year, received $1 million to $2 million in federal assistance, according to the SBA. Other major institutions that collected at least $1 million include the Guthrie, the Minnesota Opera, the Ordway Center for Performing Arts and the Children’s Theatre Co.
More than 200 law firms collected at least $111 million through the program, including two of Minnesota’s biggest and most powerful firms: Fredrikson & Byron and Robins Kaplan. Each of the firms received a forgivable loan worth $5 million to $10 million.
Fredrikson & Byron is headquartered in Minneapolis but operates offices at seven other locations, including Mexico and China.
“Fredrikson & Byron has counseled our clients on how to access programs and funds available to them in order to preserve their workforces and prospects for the future during the COVID-19 pandemic, and we followed the same advice for our own business,” said firm President John Koneck. “The jobs of several hundreds of our employees have been dramatically disrupted due to the pandemic and we still do not know how long it will persist or how severe the economic impact will be.
On its website, Robins Kaplan boasts that what started as a two-person partnership in 1938 “has grown to a national powerhouse litigation firm with eight offices across the United States.”
Asked why the law firm felt it deserved a PPP loan, Robins Kaplan’s public relations strategist, Taylor Pentelovitch, told the Star Tribune: “The firm has no comment for this story.”