By Marcus Thompson
Monday, March 22nd, 2010 at 4:40 pm in Uncategorized.
By now you’ve heard the Warriors are actvely looking to sell. They have hired Galatioto Sports Partners to sell the franchise (think of it like a real estate agent hired to sell a house). This has been in the works for some time. But it came out today because Street & Smith’s Sports Business Journal broke the story, prompting the Warriors to send out this release.
WARRIORS RETAIN GALATIOTO SPORTS PARTNERS TO CONDUCT SALE OF TEAM
Leading Sports Advisory and Finance Firm Has Participated In More Than 70 Major Sports Transactions
OAKLAND, Calif. – The Golden State Warriors of the National Basketball Association (NBA) have retained Galatioto Sports Partners (“GSP”) to conduct a sale of the Team, it was announced today. GSP, acting as the Club’s exclusive financial advisor, will manage all aspects of the sales process. As such, all related inquiries should be made directly to GSP.
Neither the Warriors nor GSP anticipate making any further public comments regarding the sales process until and unless a definitive agreement on a transaction is reached.
The Warriors, currently majority-owned by Christopher Cohan, are a premier NBA franchise located in the San Francisco Bay Area, the fifth-largest market in the NBA. The team plays its home games in Oakland, California, at Oracle Arena.
Galatioto Sports Partners, the leading sports advisory and finance firm, specializes in providing investment banking and innovative financing solutions to the global professional sports market. GSP was established in early 2005 by Salvatore Galatioto. The principals of the GSP have acted in a variety of capacities on more than 70 transactions in the major North American and European sports leagues.
Obviously, information about this is flying around. The first name on every one’s tongue is Larry Ellis, the Oracle billionaire who has been linked to the team forever. (One team source told me they are absolutely convinced Ellison will buy the team and is determined to. Was even willing to bet.) But the game has changed a bit, as the Warriors’ confession today has shown.
I’ve been told by multiple people that $400 million is actually low in regards to what the Warriors want. Banking on the fact that this is the fifth-largest market and it’s really unknown how big the Warriors could be if they ever win, Cohan is looking at possibly getting upwards of $500 million. Sounds crazy, right? Well, I keep hearing he’s going to at least come close. That would require Ellison upping his price, which I have always heard at $350 or below (though hasn’t made an official offer, the Warriors once contended).
That seems ridiculous, considering a few things: the economy; they are 31 games under .500 and up against the cap; they have been the postseason once in 15 years; Forbes just placed the value of the franchise at $315 million back in December, before the Warriors’ season went completely awry; it is known Cohan wants to say, which figures to take leverage away from him; it is going to take a lot of work to turn this thing around (lot of firings and hirings, and buyouts and image building).
With that said, there is definitely confidence that Cohan – who bought the team for $119 million in 1995 – will cash out at some fairly surprising number.
I’m told 24-Hour Fitness founder Mark Mastrov has thrown his name in the mix. My colleague, Tim Kawakami, who was all over this a long time ago, said there are as many as six interested parties. That helps Cohan’s cause tremendously. All he needs is a bidding war to drive the price up. Just the hint of other buyers figures to drive the starting price up. (If you want to buy the owners, how does knowing Ellison is the front-runner influence your initial offer.
Another surprising element: some in the front office this thing can be done immediately. Obviously, it is all contingent upon Cohan getting the price he likes. But if that happens, the Warriors can at least come to an agreement with someone soon. Why does that matter? Because a pending ownership change impacts the moves the Warriors make this offseason.
From what I’m told, the Warriors are carrying on as if the ownership stuff is not happening. But if the new owner is pegged before the draft or July 1, when the free agency period begins, the Warriors will be maneuvering with the new boss looking on, no doubt consulting. So, if the new guy loves Monta Ellis and doesn’t want him to be traded, then that probably wouldn’t happen.
But what if no deal is reached by then? Can you take on another contract? Can they draft for Nellie’s system though the reality is that Nellie ball and his style of play may not be here?
Obviously, this is all speculation. No one knows what Cohan is thinking or what he really wants. Not even the guy he hired to run his franchise.
For your perusal, here are some excerpts from the article by John Lombardo, which can be read in full on Sports Business Journal’s website:
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.
… 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.
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.