SBJ/20100322/This Week's News
Owner will put Warriors on the market
Published March 22, 2010
Golden State Warriors owner Chris Cohan has retained Galatioto Sports Partners to sell the franchise.
While the offering memorandum won’t be completed for a few weeks, experts said the Warriors, playing in one of the NBA’s largest and most demographically attractive markets, may attract enough bidders to drive up the price despite the lingering recession and the team’s poor on-court performance.
Recent NBA team sales cannot be considered robust deals. The Charlotte Bobcats just sold for roughly $275 million, less than the $300 million Bob Johnson paid for the expansion team in 2003. But the Warriors’ price could surpass the NBA-record $401 million sale of the Phoenix Suns to Robert Sarver in 2004, said Marc Ganis, president of SportsCorp Ltd.
“It has the potential to go over $400 million if there is a bidding war,” Ganis said. “There are enough people in the local market who can put down serious equity. This is not the Bobcats.”
The strength of the region’s economy also makes the team desirable to potential investors.
“The market has the Silicon Valley belt of wealth, and there will also be some people from the Los Angeles area that want to own a basketball team,” said Rob Tilliss, a former sports banker who now runs advisory firm Inner Circle Sports. “It also has a very strong middle market corporate base, which is the lifeblood of some of these teams.”
Cohan does not own the 19,596-seat Oracle Arena. He leases the facility, which was renovated in 1997, from Oakland-Alameda County. The lease was signed in 1997-98 in exchange for arena upgrades, and the Warriors are committed to playing in the arena through the 2016-17 season. Terms of the lease call for the Warriors to pay a base rent of $1.5 million and about $700,000 a year from the team’s $30 million, 10-year naming rights deal with Oracle Corp. that expires in 2016. In addition, the Warriors pay a share of parking, premium seat and concessions revenue to the county, up to a maximum of $7.4 million a year. SMG manages the facility.
The Warriors would not comment for this story.
Sal Galatioto, president of Galatioto Sports Partners, confirmed that the company has been retained by the team, but would not comment further. Galatioto Sports most recently represented Johnson in his deal to sell the Bobcats to Michael Jordan. The company also represented the Ricketts family in its recent purchase of the Chicago Cubs for $845 million and is representing Tom Hicks in his sale of the NHL’s Dallas Stars.
Cohan bought the Warriors in 1995 for $119 million. In 2004, he sold a 20 percent stake in the franchise to a group of four investors for an undisclosed sum.
The franchise has just one playoff appearance under Cohan’s ownership and this year has one of the NBA’s worst records at 19-48 through March 17. Two seasons ago, the Warriors led the NBA in new full-season-ticket sales and ranked among the league’s top 10 in season-ticket holders, with sales exceeding 10,000 full-season-ticket plans.
But this year’s on-court struggles have begun to show up at the gate, with the team’s average attendance down 5 percent to 17,930 fans a game through March 16, the 13th-best gate in the 30-team NBA. The drop in ticket sales is reflected in the team’s decision to slash prices for current season-ticket holders next season, with some lower bowl prices dropping by 24 percent.
Speculation that the team will be sold has been swirling, with published reports of interest from Oracle Corp. CEO Larry Ellison, who in a late January public appearance reportedly said that he wanted to buy the team but couldn’t because it wasn’t available.
Now that Cohan has made the decision to sell, Ellison will have his chance, along with other suitors.
“There is upside into bringing new life into the franchise,” Tilliss said. “It will get a fair amount of interest, but people are taking less risk these days, so the price will depend on the number of bidders.”
|NBA Team Sales|
|Sale date||Team||Cost||Principal buyer||Seller||Note|
|2004||Phoenix Suns||$401 million||Robert Sarver||Jerry Colangelo||Included WNBA Phoenix Mercury and now-defunct AFL Arizona Rattlers|
|2005||Cleveland Cavaliers||$375 million||Dan Gilbert||Gordon Gund||Gund retained a minority stake|
|2006||Seattle SuperSonics||$350 million||Clay Bennett||Howard Schultz||Deal included the WNBA Seattle Storm|
|Sept. 2009||New Jersey Nets||$200 million||Mikhail Prokhorov||Bruce Ratner||Prokhorov’s Onexim Group, which has offered to acquire 80% of the club and 45% stake of Barclays Center, estimates deal could be worth up to $700M|
|March||Charlotte Bobcats||$275 million||Michael Jordan||Bob Johnson||Approved Wednesday by the NBA board of governors|
|Note: Excludes transfers of ownership among family members, which occurred last year for the Utah Jazz and Washington Wizards
Compiled by SportsBusiness Journal research