The New Golden State

 

This year the Golden State Warriors made the playoffs for the first time in over 5 years.  The time before that was 1994.  The Warriors have been struggling with fan attendance as well as performance in the last 20 plus years. Last year before the 2011-2012 season the team was sold to Larry Ellison the CEO of Oracle and Joe Lacob. With brand new ownership and team attitude, the Warriors have shown to be one of the premier teams in the Western Conference this year.  Ticket sales are up to an all time high and the fan following is also some of the most passionate in the league.  It has been confirmed that the franchise will build a brand new arena right on pier 32 in San Francisco.  The construction will start in the next couple years and it is expected to be completed by the 2017 season.  This construction will be personally financed by the two owners and will not need any funding from the city of San Francisco.  From a financial standpoint, is this a smart investment for these two owners? Does one successful year justify the construction of a brand new 500 million dollar arena?  Ellison and Lacob feel like this is the new direction for The Warriors.  Their current stadium is over 40 years old and is located in Oakland.  The Warrior organization believes the economic opportunity is far greater in San Francisco then it would ever be across the bay in Oakland. The state of California really loves basketball because it houses 4 NBA teams.  Golden State in the past has taken a back seat to both the LA Clippers as well as the LA Lakers.  With this  move in the upcoming years, will that propel them to be one of the most popular NBA teams in California.  The new facility will also have space open for restaurants and other businesses just a few steps from the arena.

Right now they are in the planning stages and it seems like  they are a far way from the actual construction of the arena.  They have a few obstacles such as building permits standing in their way.  The owners must have forecasted that the teams popularity will keep growing throughout the next few years.  If the ownerships forecasts are not as high as they predict then this new stadium could end up being a huge disappointment.  A similar situation is happening to the Miami Marlins and there new ballpark where attendance is the lowest in the league.  Do you think the construction of this arena is a smart decision? Will the planning stages take longer than they anticipate? This new arena will definitely bring a lot of revenue to the city of San Francisco, but will it ever make the Warrior organization any money?

 

http://www.sfgate.com/bayarea/matier-ross/article/Warriors-to-build-new-arena-move-back-to-S-F-3575560.php#photo-2968422

 

14 thoughts on “The New Golden State

  1. You definitely raise the $500 million question! These forecasts showing an upward swing in attendance and popularity based on more recent actual data follows the concept that more recent numbers are more significant for forecasting future years. Building a brand new stadium could also boost fan moral and lead a self-fulfilling prophecy. I think it will be really interesting to see how this plays out, not to mention the OM obstacles that will be faced in our recovering economy.

  2. Great article and you raised a couple thought provoking points. One thing you mentioned is the Marlins are in a similar situation. This true on the broad perspective but when taking a more in depth look, we can see it is a different situation. San Francisco is a huge market and has a great potential for it to become a great basketball town with high fan attendance. The Miami Marlins , on the other hand, have had record low attendance, sales for years and do not have a big market and I do not see anything potential in their market. It will be interesting how this situation plays out.

  3. I think this will be a good investment! If records show that popularity is indeed increasing why not build the team on a positive level! Maybe if the team see that their fans are attending the game then I’m sure the money they will make back from tickets sales hopefully they can expand more! Forecasting is a hard concept to relay upon I think!

  4. Very interesting post, the Warriors have definitely emerged as a top team in the NBA this season and their popularity seems to be growing with every win. They have a talented, young core and the team appears as if it will be a contender for the foreseeable future. I think now would be a smart time to build a new stadium as long as it is completed fairly quickly. Timing is everything in this case, as you mentioned the Marlins built a fantastic stadium, but their losing season completely washed away any benefits they could have gained from the stadium. If the Warriors can get this new stadium built and continue the play the way they currently are playing, then I think they will profit from the sale of tickets, concessions and merchandise.

  5. I don’t know if this would be a good investment idea; however, I do know that it doesn’t take a good team in order to bring in the money. Those who pay even a little attention to sports know how bad the Cubs are year after year, and haven’t won a World Series since 1908. But Forbes (linked below) recently revealed that the Cubs are the fourth most valuable team in the MLB, while being the most profitable team based on operating income. I think a good marketing strategy and perhaps some good branding would significantly help Golden State raise revenues. Research of what is going on at Wrigley Field could help the Warriors’ management identify how to raise revenues without solely depending on the performance of the team.

    http://articles.chicagotribune.com/2013-03-28/sports/chi-chicago-cubs-forbes-value-20130327_1_valuable-franchise-toyota-sign-media-rights

  6. This is interesting! I don’t know if construction is such a good idea after finally coming up after being down for so long. It can go either really good, or really bad. It might take a little longer than anticipated just because it will be a huge stadium and such. It might bring revenue into the city of San Franscisico, but how high is the profit margin for the Warrior organization to make any money from it. They have to map out the pros and cons of this and see what will work best.

  7. As earlier commentators have pointed out, it all comes down to projections for future seasons. I feel like the new owners are taking a huge risk with the current team as this is the first time that they have made the playoffs in the last five years. In order to even propose a plan like this, it must be obvious that the owners have strong faith in the team’s performance in the upcoming years. The only concern is that the stadium will be finished by the 2017 season. It is incredibly difficult to forecast a NBA team’s success that far ahead. The Golden State Warriors will go through contract deals with current players, injuries, and newly drafted players. NBA team wins do not necessarily translate over consecutive years; case in point, Chicago’s own Bulls. I feel like this arena should double as a venue (similar to the Staples Center in Los Angeles), to guarantee future income if the team is not as successful in the future.

  8. Terrific post! I started hearing rumors of this new arena and now I know they are in fact legitimate plans. I was really excited to see the young Warriors develop and mature over the regular season and there finally seems to be some excitement coming from this city when it comes to basketball, at least not since the Run-TMC Warriors (Hardaway, Richmond, Mullins) were lighting up the scoreboard in the early 1990’s. I definitely think construction of a new stadium is a good idea because the city of San Francisco is known to be passionate about their sports teams. Especially when it comes to the Warriors when they are playing well because their arena is one of the loudest and most difficult to play in for a road team throughout the NBA. The organization certainly seems to be making steps in the right direction when it comes to not only making their fans happy, but possibly bringing in a new flow of revenue streams for the city and team. Hopefully the process goes smoothly and avoids any potential delays.

  9. With anything in sports…it is always up to debate how a new facility will do for a city and franchise. Looking in the past there has been success such as with the OKC Thunder. The Thunder have prospered immensely from the new team arena. As with the Dallas Cowboys, however they were already popular, but still their new arena is groundbreaking. I think this new stadium in San Fran will be good for the Warriors organization and is a right step to help increase popularity with the fans. I can almost bet the Warriors will do fine in the bay area market.

  10. This is a great post. I believe that the owners are using the naive approach because as mentioned, this is the first time that the Warriors made the playoffs in over five years. I think they should wait a few more years to see if the growth in attendance and revenue continues. If that is the case, then the Warriors franchise can have great success, seeing as how San Francisco is a big city and can potentially be a big market.

  11. The reason that this plan is an amazing idea is for a few reasons. First of all, these young players on the Golden State Warriors are here to stay. Stephen Curry is unanimously considered one of the best shooters in the NBA. This year he broke the all-time regular season 3 point record. Secondly, these players like Curry and Lee are so exciting that they bring in people and sell out the arena every game night. This is why Golden State is one of the worst places to play if you are the away team. And lastly, it is the perfect timing for them to this considering the last two facts along with where we are positioned with the economy on the uprise. Why wait and lose the opportunity to rebuild when all signs say go!

  12. I agree with the comment above me. The Warriors are a very young team that has a lot of potential and they are making an amazing run in the playoffs right now. Having ticket prices increase and having a successful team, I believe that it is a smart move to build a new stadium. It is not like the Warriors are just a team that has been lucky, they are here to stay are can play with the elite teams. Building a new stadium will not only bring up the moral of the team but having it located right off the pier is a great location. The two owners are forecasting it to be build in 4 years and I believe that they have hired the best to make sure that it will be enough time for it to be completed. This move will benefit both the city and organization.

  13. I agree with many of the comments and this post itself. By having a new arena, it would help out both the Golden State Warriors and the city of San Francisco. Yet, devil’s advocate, where’s the money going to come from? The incident that happened with the Marlins could happen here. They could tax the city of San Francisco for a new arena and then if the team does bad and no one shows up, then it could a waste of money. Then again, if the team does good then there shouldn’t be a problem. Also, there could be concerts offered there, then at least the arena can be used in more ways than one, and the fans can be looking forward to see this arena be completed. This is going to be risky, but there are many benefits that would be sold short if the city didn’t go through with building this arena.

  14. Sports forecasting is an extremely difficult business. We all know that one good year does not mean another one is coming. Injuries, trades, and poor management can turn a championship team into a bottom tear team extremely fast. However, I do not think this investment was made based on team performance. I believe the new owners are trying to rebrand the Golden State Warriors, and to do so they are moving them from Oakland (not a nice area) across the bay to San Francisco (extremely nice city) This move will give the team a much needed facelift and help them appeal to a new market. If everything goes through, I think this will be a great investment as long as the citizens of San Francisco embrace their new basketball team. It might even be a good idea to change the name of the team to the San Francisco Warriors.

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