It could’ve been a lost season for the Golden State Warriors. On the court, their streak of five trips to the NBA Final is at an end. They won’t participate in the Orlando bubble tournament. Their injury-plagued 50-loss season is over.
Their first season in San Francisco’s new privately-funded $1.6 billion Chase Center also could’ve been a disaster. But the club is well funded and the arena largely paid for. As the Warriors head into next season, they’ll have the return of injured stars Steph Curry and Klay Thompson, plus a top-five draft choice.
“We think we have another run in us,” Rick Welts, the club’s long-time president, told Sportico in a recent exclusive interview.
When the NBA halted the season on March 11, the Warriors were slated to play the Brooklyn Nets in an empty arena the next night. San Francisco was the first league city to ban events in front of crowds larger than 250 people because of the spreading coronavirus.
Welts had just met with San Francisco Mayor London Breed and then returned to the practice court to address the players about the development, the day already in a scramble. He was met with stony silence. It was then that star guard Curry spoke up, Welts recalled.
“He wanted to know if the players could have their own playlists,” Welts said.
That night Utah Jazz center Rudy Gobert tested positive for COVID-19, the disease that at this writing has killed more than 126,000 people in the U.S. Commissioner Adam Silver immediately put a halt to the season.
“We never got to play that game without fans,” Welts said. “And frankly, our planning right now is that when we come back in December it’s to play with fans. All of our efforts are going towards making Chase Center the safest and cleanest arena in the world.”
The Warriors couldn’t play their last seven home games. The last event in the new arena was March 10, a lopsided loss to the Los Angeles Clippers, which is more than a subtle punctuation mark on the season.
With the next full NBA season not expected to commence until December, that will mean eight months off the court for a franchise that has won the league’s title three times in the past five years.
The arena was built to be sustained by 200-250 events a year. As of now, there hasn’t been a concert, basketball game or social event in the building for nearly four months. It’s Hooptopia, a multi-media and interactive space that was available at a separate fee, had already been permanently closed. The arena complex located down Third Street about a mile-and-half south of Oracle Park, the baseball facility where the San Francisco Giants have played their home games since 2000, has yet to reach its full potential.
Construction on new restaurants and a hotel complex came to a screeching halt under county orders. But now that construction is moving again, five new eating establishments are slated to open in the fall, Welts said, including a few breweries and an elite steak house under the guidance of renowned chef Tyler Florence and owned by the Warriors. By then, the hope is that in-restaurant dining will have resumed.
An expanded ferry terminal adjacent to the ballpark is being funded by San Francisco Bay Area bridge toll revenue, which has slowed considerably. A 5 1/2 acre park between the arena and the bay is still a pipe dream, snarled in hassles between city government and the contractors that weren’t able to move forward on the process.
Two nine-story office buildings, set to be on the campus by October, eventually will be home to Uber. And a 133-room boutique hotel in association with 1 Hotels is still on the drawing board and in the entitlement process.
With no revenue coming in, the Warriors are fortunate they have little debt on the arena save for a private loan funded by John Hancock. Thus, there’s been no need for a capital call to pay the loan, Welts said.
“So far, we’re fine on cash. We’re planning carefully for what the next months are going to look like. But we’re fine, we’re fine,” he said. “Our ownership has invested every dollar since they bought the team back into the organization. Most of that into the Chase Center.”
Welts, a long-time NBA executive finishing his ninth season with the Warriors, was most-recently on the season-restart committee. He’s 67 years old and says he’s working harder than ever.
Welts wouldn’t be specific about the terms of the loan, but the Warriors asked and received permission from the NBA to go above the league debt limit at the time of $325 million, he confirmed. There’s also the matter of a 20-year, $300 million naming rights deal as part of the financing structure.
“[The loan] was an essential part of it, but by no means a central part of the funding,” he said.
The Warriors were purchased in 2010 by Joe Lacob and Peter Guber from Chris Cohan for $450 million. They are now worth $4.3 billion, third on Forbes’ list of NBA teams in their most recent pre-COVID valuation. Lacob himself is worth $1.2 billion, Guber $800 million.
As of now, the Warriors haven’t had to lay-off or furlough any employees in their offices, which have moved from downtown Oakland to the Chase Center. Their old practice court and offices ultimately will be given to Oakland for community and non-profit use, “keeping one big foot for us in the East Bay,” Welts said. But the longer the pandemic transpires, those business office furloughs and layoffs could be forthcoming.
“That speaks well for our owners,” Welts said. “We wanted to wait until the NBA put a stake in the ground for how the end of this season, how the beginning of next season would look. We have a commitment to try to keep that intact as long as we can.”
The Warriors could have avoided all these problems by simply remaining in what was then called Oracle Arena, a nice little city/county owned building next to the ballpark in south Oakland where they had played since 1966.
“Actually, it’s just the opposite,” Welts said. “If this had happened a year earlier it would’ve been devastating to the project, while it was still under construction and before all our contractually obligated revenue had been secured.”
To that end, the Warriors have $2 billion in long-term revenue still coming into the new building on the sale of tickets, suites and sponsorships. Despite a season on the brink, Welts reported that 95-percent of season ticket holders had already renewed. The Warriors cap their season ticket sales at 12,000 in the 18,064-seat arena.
And despite it all, the Warriors are bullish on the future. Whatever the new normal happens to be, they have Curry, Thompson and Draymond Green returning healthy, plus a rare top-tier draft pick.
“We have the three core players who represented our first championship in 2015,” Welts said. “We have as good a chance as anybody for a No. 1 and we can’t go below No. 5. Our fans see that, too, and they’re voting by renewing their season tickets.”
Those fans just need to be back in the building. Otherwise, the financial losses next season could be catastrophic.
“When you have a business that’s completely built on live audiences, having no audiences doesn’t reduce your expenses, but it severely limits your revenue,” Welts said. “We’re going to do everything in our power to prepare for inviting fans back when the season opens next December. That’s our focus.”