Report: Warriors ownership considering $250 million deal to raise capital amid pandemic
The Golden State Warriors‘ ownership group, led by Joe Lacob, is considering forming a partnership with investment bank Goldman Sachs to raise up to $25o million in capital to help the organization compensate for lost revenues due to the COVID-19 pandemic.
Lacob has informed his fellow owners of his plan, according to ESPN’s Brian Windhorst.
Owners are looking to recoup money after taking a financial hit in 2020 and projected steep losses for the 2020-21 season, which could be played without fans in attendance. Per Windhorst, some owners may litigate against insurance companies or sell real estate assets as avenues to earn back cash.
NBA Commissioner Adam Silver revealed that about 40% of league revenue comes from the gate and arena sponsorships. The league’s collective bargaining agreement will likely be adjusted before next season.
The Warriors derive about 80% of their revenue from the Chase Center — which the franchise owns — with the ability to earn millions more per home game than other teams. The Warriors haven’t laid off or furloughed any employees, and Lacob is investing in technology and testing methods in an attempt to get fans back in Chase Center next season.
Recouping capital would help Golden State cover its expected its $150-plus million payroll, and the franchise is positioned in a way to do this better than others:
“The Warriors have the ability to raise money that a lot of teams can’t,” a team president told Windhorst. “If our team was in that situation, we may have to trade players to deal with it.”
Another executive told Windhorst that he expects upcoming first-round picks to be shopped more than usual as teams look to save money:
“I may lose $50 million next season,” one owner said. “If that happens, I have three options: I could borrow the money, I could sell part of the team or I could do a cash call and me and my partners would have to write checks.”
As Windhorst specifies, the Warriors’ position highlights the discrepancy between the big-market owners and the small-market groups, and that divide could become a tricky issue as the league navigates the financial impact of the pandemic.