Joe Lacob’s collegial model for running the Golden State Warriors has sports franchise roots directly across San Francisco Bay.
In 1992, a group of some two dozen Bay Area businessmen — including Walter Shorenstein, Charles Johnson, Peter Magowan and Larry Baer — pooled their resources to buy the baseball Giants from Bob Lurie and prevent an impending franchise move to Tampa.
The Giants investors could hardly have been more different than the venture capitalists and private equity investors who fill the Warriors’ Bridge Club. These were old-guard San Francisco businessmen who had paid a total of $100 million for the team. Most contributed around $1 million, money they might have gifted to the art museum or the symphony. Instead, they stepped up to save another civic institution: a baseball team.
Return on investment was hardly on their minds. Neither was worrying about how the team would be run. Even today, the perks that the Giants offer limited partners mostly involve fun and baseball access. They include annual meetings with field manager Bruce Bochy and general manager Brian Sabean, road trips to games, and other events. Not long ago, the team held a special owners-only ceremony at a Tiffany location, where World Series rings were distributed.
But the Giants have also turned out to be a phenomenal investment. If you bought 5 percent of the team in 1992, your $5 million share would probably command close to $100 million on the open market today.
Because the original investment by most shareholders was made decades ago, the Giants don’t have the pressure to be transparent or accountable that new ownership groups do. “I came in thinking this was not about the investment per se,” said David Schnell of Prospect Venture Partners, one of the newer investors in the team who bought his share in 2005. “But that kind of mindset will definitely change if people start looking at these as cash-flow-positive businesses. A new group that comes in for a $2 billion total investment has to be thinking very differently.”
Yet these days, despite very little investor turnover in recent years, Baer runs the team in strikingly similar fashion to how the Warriors are run. He even compares his board of directors to that of a public company. And when he describes the “state-of-the-art ownership group” as “maybe six to 10 investors of some size who have areas of expertise,” he sounds like nobody so much as Lacob.
“Sophisticated investors understand that we’re in a lot of businesses,” Baer said. “We encompass sports, entertainment, media and real estate. When you buy in, it’s a diversified investment. Is that different from 23 years ago? Yes, it is.”
He notes that more wealth is being created within 25 miles of AT&T Park than anywhere else in the world. “We’re not running out of people who have a huge paper net worth from the economic drivers in this country,” he said. “Someone who was employee No. 24 at Google or No. 61 at Facebook, they could easily buy a $75 million chunk of this team.”
Despite that, Baer said the Giants haven’t taken on a new minority partner in more than five years. Recent transactions have involved elderly partners selling shares to existing partners. “There’s a tremendous demand for shares in the Giants,” he said. “And there’s absolutely none for sale.”
