As part of Forbes’ annual analysis of the NBA, staff writer Tom Van Riper put out a piece on our hometown heroes, the Golden State Warriors. Much of the info in the article has been dealt with elsewhere, such as the differences between Chris Cohan and the Joe Lacob/Peter Guber ownership group, or the latter’s interest in a new arena in San Francisco. More interesting and revealing is this tidbit about the new TV deal negotiated between the Warriors and Comcast:
That agreement paid the Warriors approximately $50 million up front—enough to take the sting off the purchase price—and roughly tripled the annual rights fee to over $25 million from $9 million. The agreement is for 18 years, with provisions to periodically renegotiate along the way.
Indeed, the $50 million probably did help pay down debt associated with the franchise purchase. Plus they didn’t take too much upfront, as $25 million per year is a healthy amount for an NBA team – though far less than the $150 million per year the Lakers are getting. No matter how bad the team gets (and they’re still bad despite a new coach this year), the Warriors remain an attendance and ratings bonanza. So hats off to Lacob and Guber for working the numbers. The TV deal runs well past the end of the new CBA, though it’s likely the team will option out and negotiate a new one before the decade is out.
When it comes to building a new arena, the obstacles are clear. It’s hard to build in this state. It costs 20% more to build than in most other markets. There is no redevelopment money available, let alone other public funds. The Bay Area won’t approve a stadium or arena tax. Yet it’s clear that ownership sees the gleaming lights of SF and wants to turn them into dollar signs. The only issue is the cost of a new arena, which Forbes pegs at up to $1 billion. That may be true, especially if the arena can’t open earlier than 2018. I think that $1 billion is the line of demarcation. Anything under that it and it would be worthwhile to invest in arena. Above that and it’s prohibitively expensive.
The actual raw cost to build at Mission Bay shouldn’t be more than $750 million even in 2017. Material and labor costs shouldn’t rise that high. The additional cost would be to furnish the arena, which would be co-owned and operated with the Giants, Burdened by a high construction cost (mortgage), both parties would be motivated to sell the arena for every kind of event from tiny to large, so the club areas, suites, and auxiliary spaces would be decked out to a degree never before seen in the Bay Area. And it’s likely that given the locale, the teams would attract a third party interested in fronting some of the construction cost in order to secure the operations contract for the venue. That could be AEG, Global Spectrum (a Comcast subsidiary), or even the Sharks, who operate HP Pavilion.
Right now the Warriors are a mere renter at Oracle Arena, and not for cheap at $4.7 million per year and little access to non-game revenues. They don’t have a say on who runs the arena, which has led to allegations that SMG didn’t try very hard to bring in events. Last summer, AEG and Live Nation were set to bid on the next deal to run Oracle Arena. Can’t exactly blame Lacob and Guber for trying to maximize their investment, though building in SF as opposed to staying in and improving Oracle Arena could prove a more cost-effective decision in the long run.
As the Warriors reach the end of their contract, SF and Oakland will be “forced” into a bidding war for the W’s. SF and the Giants will be ready with an infrastructure/development rights deal, probably at Lot C on the other side of Mission Creek. The lot measures 400′ x 514′ not including sidewalks, which should be enough for a typical roundrect or oval arena, though not wide enough for the circular bowl layouts utilized at Oracle Arena or Staples Center. (HP Pavilion is roughly 440′ square). If Lot C were used, only 800 parking spaces would be lost, which would be easily replaced by a garage and ancillary development on Lot A. Lot C has a T-Third stop right outside it, plus Caltrain is only a few blocks away.
Oakland and Alameda County’s pitch lies squarely in the Coliseum City concept. By the time the cities get to brass tacks, we should know where the A’s and Raiders will be playing in 2014 and beyond. The A’s have a long-term play, the Raiders have both short and long-term scenarios. If both teams were to sign onto Coliseum City, it’d be very easy for the Warriors to partner up with everyone else. If the A’s and Raiders are headed elsewhere, it would be difficult to convince W’s ownership to shoulder the load for Coliseum City, especially if a compelling offer were coming from across the bay. I’ve advocated in the past for a downtown Oakland arena or one at Victory Court, but the cost to make that happen would probably be higher than the already city-owned lots in SF, so that’s not happening.
All the while, David Stern (or his replacement) would be pumping up the “need” for the Warriors, just as he’s done in practically every other city. The Cohan-era Warriors were analogous to the Autry-era Angels, in that they were generally undervalued and have great potential. Lacob and Guber intend to make good on the potential, preferably both on and off-court, though they’ll settle for off-court at least in the near term. If that path leads across a shiny new east span of the Bay Bridge, so be it. At least they don’t have territorial rights standing in their way.