NBA Finals: How Golden State Warriors built a business juggernaut
For the Golden State Warriors, a victory over the Toronto Raptors in this year’s NBA Finals would only provide further validation of a culture that has translated on-court success into a booming off-court business.
Known for its record-setting offensive output and a superstar-laden roster that features Stephen Curry, Kevin Durant, Draymond Green and Klay Thompson, the Warriors embraced analytics and a new style of play to become the NBA’s most dominant franchise. A run of three NBA titles in four years drove a spike in sponsorship revenue and made it possible for the franchise to self-fund the brand new $1.4 billion Chase Center, which is set to open next season.
With appearances in five straight NBA Finals, the Warriors have emerged as a preferred destination for top-flight talent and established an international fan base. The front office has built on that success by pitching the franchise not just as a dominant basketball team, but as a financial vehicle by which players and would be corporate partners can expand their own brands through partnerships, according to David Carter, an associate professor at the University of Southern California’s Marshall School of Business.
“It almost always starts with winning, but increasingly, winning in and of itself is not enough,” Carter told FOX Business. “In this era of sports business, a team has to offer a destination players covet, whether for endorsements or access to other business opportunities such as those associated with Silicon Valley. Increasingly, it also requires demonstrated commitment from ownership, as well as the probability of ongoing competitiveness in a glitzy, revenue-oozing arena.”
Purchased by Lacob for $450 million in 2010, the Warriors are now worth $3.5 billion, according to calculations by Forbes. The team earned more than $400 million in revenue for the 2017-18 season, second only to the New York Knicks, and maintains the highest local television ratings of any NBA franchise. Golden State has attracted more than 300 consecutive sellouts at its current home, the Oracle Arena, since 2012, which ranks as one of the longest streaks in the NBA.
As Golden State has grown more competitive, the team’s ownership group has shown a willingness to spend to keep their roster intact. The Warriors’ total payroll of more than $145 million outpaced all other NBA teams for the 2018-19 season – and produced a hefty luxury tax bill. With Durant and Thompson due for free agency, the Warriors will have to spend hundreds of millions of dollars to secure their services for the long term.
While the Chase Center has yet to open its doors, the Warriors say it is already producing strong returns. Warriors President Rick Welts disclosed in March that the team has already disclosed an NBA record of more than $2 billion in revenue from season tickets, suites and sponsorships for the new facility. The 18,000-seat facility includes an outdoor courtyard with restaurants and stores, offices occupied by Uber, a concert venue – and a massive wait list for season tickets.
“The perfect market, perfect time — the Bay Area is on fire,” Welts told Bloomberg. “Couldn’t be a better economic time. Couldn’t be a better basketball team.”
The Warriors have built out their fan base by embracing social media, building the NBA’s second-largest following across all platforms as of last October. The team’s Instagram’s page alone has nearly 12 million followers, more than any other team. Golden State is also one of 21 franchises that currently invests in the NBA’s e-sports project, the NBA 2K League.
"The Warriors revolutionized basketball in a market known for disruption,” said Blake Lawrence, CEO of sports marketing firm Opendorse. “The franchise would be incredibly valuable regardless of market fit given its all-time run, but the team and its marketing tactics embody the innovation Silicon Valley has come to be known for."
CLICK HERE TO GET THE FOX BUSINESS APP
The Warriors will host the Raptors at Oracle Arena in Game 3 of the NBA Finals on Wednesday night. The series is current tied at 1-1.
Game 3 tips off a 9 p.m. ET on ABC.