Sunday, June 2, 2013

Joe Lacob saved basketball in Northern California and made a killing in the process

By Justin Taylor

I don’t feel like I should be the first one to connect the dots on this topic but Joe Lacob hasn’t gotten nearly enough credit for saving the Sacramento Kings and making $100 million in the process. Not a single publication that I’ve seen has acknowledged the fact that if he hadn’t pushed one of his partners in the Warriors ownership group, Vivek Ranadive, to get into the Sacramento bidding war the Seattle Supersonics may be coming back to life already. It has nothing to do with his love of Sacramento and not nearly as much as he has stated it does with helping a friend.

 Despite the Maloofs best efforts this arena in Sacramento may finally become a reality

The fact is that the Warriors ownership group paid $450 million for the team in 2010. Now, a team that plays in a market nowhere near as lucrative and just happens to be 90 miles away has been sold for over $500 million. There is no scenario in which the Warriors aren’t 15-20% more valuable than the Kings and that is just one more feather in the cap of Mr. Lacob.

The Warriors ownership group had more to gain in this deal than any other team in the league. If you haven’t connected those dots yet let me help you out. Based on the size of the market there is a scenario in which the Seattle Sonics are equal in value to the Warriors. If the Kings sell to the Seattle group for $500 million it doesn’t do much to increase the valuation of the Warriors. If they sell for $500 million and stay in Sacramento the value of the Warriors instantly jumps $100 million dollars give or take a few million.

Vivek probably already knew this but I’m sure Joe finished connecting the dots for him the way I’m doing for some of you now. You see, by overpaying for the Kings, Vivek immediately boosted the value of both of their stakes in the Warriors. When the sale of the Kings was announced, anybody with an ownership stake in the Warriors must have been dancing in the streets because every dollar they spent back in 2010 is now worth a minimum of a $1.20 and they haven’t even broken ground in San Francisco yet.

 Something tells me this building will be worth more than the one being built in Sacramento

Think about it like this. Let’s say you bought a beautiful four bedroom three bath house somewhere in the East Bay for $450,000 just to throw out a number. One week later, another house on your street sells for $550,000. Great news right? Hold that thought cause it gets better. The house that just sold for an extra hundred grand is only three bedrooms, has less square footage, it sits on a smaller plot of land and still needs quite a bit of work. Now you’re ecstatic because you just guaranteed yourself a ton of extra cash if you decide to sell or refinance. It’s all about the comps in real estate deals and NBA franchise purchases.

While we’re talking about franchise values and comps; picture these two brand new arenas that sit just over an hour apart. One sits perched out on the water down the street from AT&T Park, in the shadows of the Bay Bridge and downtown San Francisco depending on the hour of the day. The other rises above the Sacramento River, Raley Field (a beautiful minor league ballpark) and downtown Sacramento. You tell me which owner is sitting on a bigger gold mine.

I don’t know what Vivek’s share of the Warriors was or what his share of the Kings is but I do know one thing. He parlayed his Golden State minority investment into a majority share of his own NBA team quicker than anybody since Joe Lacob went from minority Celtics owner to a majority share of the Warriors. I’ll be interested to see how much Vivek gets for his share of the Warriors in the coming days or months. That will be the clearest indicator of just how much the value of the team has gone up since Joe’s group bought it in 2010.

Love him or hate him for working his ass off to move the Warriors to San Francisco there is no disputing that Lacob knows exactly what he’s doing. Anybody that says they wouldn’t move their team 15 minutes down the road, picking up millions of dollars on the way is either lying or delusional. Lacob didn’t just see the valuation of his franchise get a huge boost with the sale of the Kings, he gained another ally in the power structure of the NBA.

 Whether it is in this building or in Oracle Arena I just want to see a championship banner

When the dust settles I only care about one thing; that the Warriors go from being an NBA doormat to one of the dominant franchises in the league. I never thought I’d see that day but the path to joining the NBA elite keeps getting clearer and clearer. For me, it’s not about money or power; it’s about seeing my team raise a championship banner at least one time before I die. Everything I’ve seen since 2010 tells me that it’s only a matter of time for the Warriors. For Sacramento, I’m not so sure. They would be playing catch up with us whether they stayed in the state capitol, moved to Seattle or back to Rochester.


10 comments:

  1. Not to be a grammar freak here but you spelled Excramento wrong a bunch of times. Otherwise great piece! Call me crazy but if the Giants can figure out their starting pitching, I can see a trio of chips in the Bay in a year! (Niners, Dubs, Giants.)

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    1. *****LOL! not in a year...in the coming years.

      a year. hah.

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    2. LOL...I only use Excramento when I'm talking about basketball. This was more about the city and money so I tried to use the formal spelling...

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  2. Joe Lacob is a generous God.

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  3. lol @ the giants winning another championship. we'll see if this arena actually gets built. from everything ive seen, its unlikely.

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  4. its coming. Lacob is doing everything right. Hiring SF union workers and other things. The person leading the charge is LGBT. The arguments of traffic are the same as they were with the Giant's stadium and people just changed their behaviors.

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    1. These guys know what they're doing for sure! Thing about SF is that even when you do everything right you can still get hosed. 2017 still seems ambitious to me but they are definitely making all the right plays.

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  5. I think your over-stating a small market team to a large market team. All the owners benefit from the sale. Bottomline is NBA franchises are a rare commodity and great investments because the whole league is soring financially. The Kings have proved their market works while Seattle has already lost one team. Add the arena and what it will cost in Seattle compared to Sacramento, so the league will get more bang for its buck when the owners have to give 150 million towards a staduim fund. The only way the Warriors benefitted is now they have a stronger case to keep a team out of San Jose with two teams already in Norther Cali. Lacob knows Larry Ellison is eyeing that exact scenario.

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    1. Like you said, every team benefits off of the comps. If the Warriors sold today they would go for $600 million minimum. That's $150 million, CRAZY jump in value 2 years after paying a record price. The Warriors will always be more valuable than the Kings.

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