The Golden State Warriors are getting back to business.
After two years of pandemic challenges, the NBA franchise has resumed its plan to become the most valuable sports franchise in the world. The Warriors are valued at more than $5 billion, up from a $3.5 billion value before the pandemic, and projected to eclipse $700 million in revenue this year, according to people familiar with the team’s financials.
The club has a plan for driving growth that includes a new cash stream in the recently launched Golden State Entertainment division. The venture follows similar efforts in rolling out an in-house ticket exchange, a partnership with a cryptocurrency company, and leveraging the blockchain sector to cash in on NFTs, or non-fungible tokens.
All just two years after the Warriors moved into the $1.4 billion Chase Center in San Francisco, where the team monetizes surrounding real estate and maintains a tenant and equity partner in Uber.
The team’s President and Chief Operating Officer, Brandon Schneider, says the projects are key to becoming a force off the basketball court like it is on.
“Disney started as a theme park,” Schneider told CNBC. “The Warriors started as a basketball team. Look at what Disney has become, and look at what the Warriors are becoming.”
Schneider spoke to CNBC on April 14, a day removed from his first anniversary of being announced Warriors president. He took over the position from longtime executive Rick Welts who retired last year.
He said the Warriors goal is to transform into “global leaders in experiences and entertainment.” And he added the organization would “leverage the strength of the brand” and innovate around technology “because we’re in the Bay Area, the technology epicenter of the world.”
Taking on the Knicks
If the Warriors’ strategy pans out, it could position the team to surpass the New York Knicks as the most valuable NBA franchise.
The Knicks are valued at $5.8 billion and ranked third on Forbes’ most valuable sports team list behind the NFL’s Dallas Cowboys, worth $6.5 billion, and MLB’s New York Yankees, worth $6 billion. The Warriors rank sixth.
“With the trajectory that they are on, and the effort that they put into the franchise, that wouldn’t surprise me,” said sports valuation expert Bryce Erickson, a senior vice president at advisory firm Mercer Capital. “I certainly think it’s possible.”
Sports valuations are often inflated and largely hypothetical — barring formal and public sales. Pundits use multiples of revenue and add in operating income, adjusted for revenue sharing, and any other assets tied to the club that could include real estate to arrive at a number.
But lofty valuations aside, the Warriors are already edging out their competition: In 2021, the Warriors led the NBA in basketball-related revenue with $474 million in 2021, according to Forbes. Meanwhile, the Knicks’ revenue dropped to $421 million from $472 million, likely the result of pandemic-related losses.
Add in revenue from other events at Chase Center and the Warrior’s other nascent revenue streams, and the team’s revenue stacks up much higher.
Andrew Lustgarten, president and chief executive of Madison Square Garden Sports – the holding company behind the Knicks – said the company is eyeing sports gambling as an opportunity to drive revenue.
The team struck deals with Caesars and MGM after New York cleared sports gambling. California has yet to legalize the practice.
“MSG Sports has numerous growth opportunities across its businesses and brands,” Lustgarten said in a statement to CNBC. “The Knicks portfolio has tremendous upside in a number of key areas, including ticketing, premium hospitality, our jersey patch sponsorship, expansion of sponsorships in international markets, and our new mobile sports betting and crypto partnerships.”
Erickson said “locational benefits and market size benefits” could help the Warriors take on the Knicks in revenue. He referenced the HBO series “Winning Time,” which chronicles the Los Angeles Lakers’ rise to prominence in the 1980s on the back of innovation.
“Things change,” Erickson said. “Prior to (Jerry Buss) buying the team, what were the Lakers? They were a struggling franchise in a struggling league. And their timing was impeccable. So, whose to say that more than 40 years later, the Warriors can’t have the same effect? There’s nothing there to say they couldn’t, particularly from an economic vantage point.”
Asked if the Warriors are aiming for the top valuation spot in sports, a humbled Schneider downplayed the mission.
“We think a lot bigger than that,” he said. “I understand why people focus on that and why it’s interesting, but (owners Joe Lacob and Peter Guber) – they’re never going to sell the Warriors. So in terms of what a third-party wants to value our organization, that’s not our focus.”
‘Just scratching the surface’
The Warriors’ new GSE division is expected to create in-house content in a partnership with Mandalay Entertainment, a company founded by Guber. GSE will produce documentaries, release a new single featuring K-pop star BamBam, and explore music festivals.
But most importantly, GSE aligns the Warriors with future licensing revenue from streaming giants like Apple, which this year welcomed sports content onto its platform, and Netflix, which will need to get creative to solve a subscriber issue.
“We’ve been in the content business for many years,” said Schneider. The Warriors already help the NBA break TV viewership records. “We’re thinking a lot about direct-to-consumer.”
In February 2022 the Warriors launched SuiteXchange, a ticket exchange platform for luxury suites inside the Chase Center. It leverages blockchain technology and allows the team to capture data and transaction fees.
“We think Suite Exchange can become the Stub Hub or Ticketmaster of suites,” said Schneider. “This is just scratching the surface.”
Schneider said the Warriors are in discussions with other clubs to use the service but didn’t reveal the teams due to privacy concerns.
“This is just the beginning of the beginning,” said Schneider, referring to a motto used by the team’s owners. “That’s become a mantra for us.”
The team has also surpassed $2 million in NFT sales and, earlier this month, deepened its partnership with crypto platform FTX, which agreed to a $10 million global sponsorship deal with the club back in December.
FTX unveiled a collection that features 3,000 NFTs, one of which includes two tickets to every home playoff game. The NFTs sell for $499 each.
Schneider said as long as the Warriors get creative and include “the right experiences, the revenue comes.”
Investing in basketball
Under Welts’ 11-year tenure, the Warriors surpassed the Los Angeles Lakers as the second-most valuable team in the NBA.
Welts said at least some of that success is due to franchise star Stephen Curry, who has led the Warriors to three championships since 2015 and become the face of the NBA.
“When your best player is not only the athlete and talent that he is but also the person that he is, you’ve got a heck of a head start in trying to create something special,” Welts told CNBC in 2019.
Schneider has vowed the organization would protect and continue to enhance its main attraction – the basketball team.
The Warriors have the highest payroll in the NBA, spending more than $180 million on its 2021-22 roster as it seeks a fourth NBA title in the last eight years. The club welcomed back co-franchise star Klay Thompson this season. Draymond Green is still wreaking havoc. And it appears the Warriors have a rising star in Jordan Poole.
In 2021, the Warriors agreed to a four-year extension with Curry. The deal starts next season and pays the 34-year-old an average annual value, or AAV, of $53 million per season, according to Spotrac, a website that tracks sports contracts.
“We have a plan and want to be consistently good, want to invest,” said Schneider. “And we’re lucky to have the ownership group that’s willing to invest so much in what we do on the court and off the court. That’s critical and gives us a competitive advantage.”
And with Curry locked in, the team’s jersey patch media asset could be on the verge of breaking another NBA sponsorship record.
The Warriors’ deal with e-commerce company Rakuten expires in 2023 and reportedly pays the team roughly $20 million annually. It’s unclear what the Warriors are seeking for a renewal price but for comparison, the Brooklyn Nets landed a league-high $30 million-per-year deal for its patch in 2021 with online trading platform WeBull.
Asked where the Warriors want to be in 2030, Schneider said, “Winning championships, doing great things in the community and continue to grow our global fanbase.”
“When we were building Chase Center, we talked about transforming into a sports and entertainment company that happened to have a pretty good basketball team as the centerpiece,” he said.