The Golden State Warriors are losing 70% of their expected revenue without live fans, according to billionaire co-owner Joe Lacob.
Lacob mentioned the loss while speaking at a SporticoLive event on Thursday. NBA commissioner Adam Silver has previously said that league-wide, about 40% of revenue comes from having fans at games.
The Warriors are more affected than others because the team doesn’t have a large local media contract while also facing expenses related to their new $1.6 billion arena. The privately-funded Chase Center, which opened in September 2019, was partially financed by a loan from John Hancock. Though the total amount borrowed is unclear, the team did successfully lobby for permission from the NBA to exceed the league’s then-debt limit of $325 million.
“Over 70% of our revenue are lost when we’re in this situation without fans,” said Lacob, who spent decades at venture capital firm Kleiner Perkins.
The Chase Center, sitting in the Mission Bay area of San Francisco, was meant to hold 200-250 events a year, including basketball games, concerts and other shows. It has 44 suites, 32 courtside lounges and 60 theater boxes. The team needs a lot of that premium seating full to break even, and that’s likely not happening any time soon; though California Gov. Gavin Newsom recently lifted regional stay-at-home orders, more local restrictions remain in place, especially in urban hubs like San Francisco.
The Warriors were purchased in 2010 by Lacob and Peter Guber for $450 million. The team is now worth $5.2 billion, second most in the NBA, according to Sportico’s NBA valuations.
Lacob would not get into hard numbers, but Sportico’s estimates pegged the team’s revenue last season, its first in the new building, at $434 million. That number was impacted by the COVID-19 pandemic, which forced the cancellation of the team’s final seven home games.
The Warriors have had a task force in place since March to evaluate its options for safely admitting fans into games. Late last year, the team proposed an ambitious plan to allow 50% capacity at the Chase Center—it involved a commitment to spend $30 million to give fans rapid PCR tests at the door and only admit those with negative results. It was rejected by the city’s department of public health for being too risky.
“We haven’t been able to activate that yet, but we hope to be able to do that sometime this season,” Lacob said. “It’s actually very costly, but the truth is, we feel that whatever we spend on it, we will get that much back if we can have fans in the building.”
The team is currently rapid testing all of the roughly 200 people who are in the arena during game days, Lacob said. That includes media members, team employees and others. It takes about 30 minutes to get a result, he said.
Though the NBA season runs through July, Warriors leadership is already focusing its attention on the 2021-22 season.
“I think we’re going to see masks for quite a while, maybe even all through next year,” he said. “And I think there’s a possibility, at least in California, that we will also need testing. It all depends on the vaccine rollout.”