Stephen Curry #30 of the Golden State Warriors leads the basket during the game against the Washington Wizards on March 14, 2022 at Chase Center in San Francisco, California.
Noah Graham | National Basketball Association | Getty Images
The Golden State Warriors are back in action.
After two years of pandemic challenges, the NBA franchise has resumed its plan to become the world’s most valuable sports franchise. The Warriors is valued at more than $5 billion, up from $3.5 billion before the pandemic, and is expected to exceed $700 million in revenue this year, according to people familiar with the financial statements.
The club has a plan to drive growth that includes new cash flow into its recently launched Golden State Entertainment division. The project follows similar efforts in rolling out an internal ticket exchange, partnering with a cryptocurrency company, and leveraging the blockchain sector to take advantage of NFTs, or non-fungible tokens.
Just two years after the Warriors moved to the $1.4 billion Chase Center in San Francisco, the team is investing in surrounding properties and retaining an Uber tenant and partner.
The late president and chief operating officer, Brandon Schneider, says the projects are key to becoming a force off the basketball court as it is now.
“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 have become.”
Schneider spoke to CNBC on April 14, a day removed from the one-year anniversary of his proclamation as President of the Veterans. He took over the role from executive Rick Welts, who retired last year.
He said the Warriors’ goal was to become “worldwide leaders in experiences and entertainment”. He added that the organization would “leverage on the strength of the brand” and innovate in technology “because we are in the Gulf region, the technology center of the world.”
Take on the Knicks
If the Warriors’ strategy ends, it could position the team to overtake the New York Knicks as the NBA’s most valuable franchise.
The Knicks are valued at $5.8 billion and ranked third on Forbes’ list of the most valuable sports teams behind the NFL’s Dallas Cowboys, with $6.5 billion, and the MLB’s New York Yankees, with $6 billion. Warriors are ranked sixth.
“With the path they’re taking, and the efforts they’ve put into the franchise, it wouldn’t surprise me,” said sports valuation expert Bryce Erickson, senior vice president at advisory firm Mercer Capital. “I definitely think it’s possible.”
Sports and hypothesis ratings are often greatly inflated – except for official and public sales. Experts use revenue multiples and add operating income, adjusted for revenue sharing, and any other club-related assets that could include real estate to come up with a number.
But regardless of the high ratings, the Warriors are already outpacing their competition: In 2021, the Warriors led the NBA in basketball-related revenue with $474 million in 2021, according to Forbes. Meanwhile, Knicks’ revenue fell to $421 million from $472 million, likely as a result of pandemic-related losses.
Add revenue from other Chase Center events and other emerging revenue streams for Warrior, and the revenue stream stacks much higher.
Stephen Curry #30 of the Golden State Warriors celebrates after making a three-point basket to break Ray Allen’s record for the most time as New York Knicks #18 Alec Burks looks during their game at Madison Square Garden on December 14, 2021 in New York City New York.
Bello | Getty Images
Andrew Lustgarten, president and CEO of Madison Square Garden Sports — the holding company behind the Knicks — said the company is looking at sports gambling as an opportunity to increase revenue.
The team struck deals with Caesars and MGM after New York legalized sports gambling. California has yet to legalize this practice.
“MSG Sports has numerous growth opportunities across its businesses and brands,” Lustgarten said in a statement to CNBC. “The Nyx portfolio has a huge upside in a number of key areas, including ticketing, premium hospitality, shirt patch sponsorship, expanding our sponsorship into international markets, and our new partnerships in sports betting and cryptocurrency.”
Erickson said “domestic benefits and market size advantages” could help the Warriors take on the Knicks in revenue. He noted the HBO series “Winning Time,” which chronicles the Los Angeles Lakers’ rise to prominence in the 1980s on a backdrop of innovation.
“Things change,” Erickson said. “Before (Jerry Boss) bought the team, what were the Lakers? They were a struggling franchise in a struggling league. And their timing was impeccable. So, who says that after more than 40 years, the Warriors can’t have the same effect? There is nothing There he says that they cannot, especially from an economic point of view. ”
When asked if the Warriors aim for the highest rating point in the sport, the humble Schneider downplayed the task.
“We think it’s much bigger than that,” he said. “I understand why people are so focused on that and why it’s so interesting, but (owners Joe Lacope and Peter Guber) — they’ll never sell Warriors. So in terms of what a third party wants to value our organization, that’s not our focus.”
Just scratching the surface
The new GSE division of Warriors is expected to create in-house content in 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 more importantly, GSE is working to align the Warriors with future licensing revenues from streaming giants like Apple, which this year welcomed sports content on its platform, and Netflix, which will need creativity to solve the subscriber problem.
“We have been in the content business for many years,” Schneider said. The NBA Warriors are already helping break TV viewing records. “We think a lot about direct-to-consumer.”
Brandon Schneider, Golden State Warriors, speaks next to a model circuit at the Warriors sales office adjacent to the Chase Future Center on Tuesday, March 14, 2017 in San Francisco, California.
Leah Suzuki | San Francisco Chronicle | Hearst Newspapers via Getty Images
In February 2022, Warriors launched SuiteXchange, a ticket exchange platform for luxury suites within the Chase Center. It takes advantage of blockchain technology and allows the team to capture data and transaction fees.
“We think Suite Exchange could become a Stub Hub or Ticketmaster for Suites,” Schneider said. “This is just scratching the surface.”
Schneider said the Warriors were in discussions with other clubs to use the service but he did not disclose the teams due to privacy concerns.
“This is just the beginning of the beginning,” Schneider said, pointing to a logo used by stand owners. “This has become a mantra for us.”
The team also topped $2 million in sales in NFT, and earlier this month cemented its partnership with crypto platform FTX, which agreed a $10 million global sponsorship deal with the club in December.
FTX has unveiled a set of 3,000 NFTs, one of which includes two tickets to each home ground playoff game. NFTs sell for $499 each.
Schneider said that as long as warriors innovate and include “the right experiences, the returns are coming.”
Investing in basketball
Under the Walts’ 11-year tenure, the Warriors overtook the Los Angeles Lakers as the second best team in the NBA.
The Wilts 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 has become the face of the NBA.
“When your best player is not only the athlete and the talent that he is but also the person that he is, you have a head start trying to create something special,” Willets told CNBC in 2019.
Schneider pledged that the organization would protect and continue to strengthen its main attraction – the basketball team.
The Warriors have the highest payroll in the NBA, spending more than $180 million on their 2021-22 roster as they pursue a fourth NBA title in the past eight years. The club has welcomed the return of co-star Klay Thompson this season. Draymond Green is still wreaking havoc. And the Warriors seem to have a rising star in Jordan Ball.
In 2021, the Warriors agreed to a four-year extension with Curry. The deal kicks off next season and pays the 34-year-old an average annual value, or AAV, of $53 million a season, according to Spotrac, a website that tracks sports contracts.
“We have a plan and we want to be consistently good and we want to invest,” Schneider said. “And we are fortunate to have an ownership group that is willing to invest a lot in what we do on and off the field. This is very important and gives us a competitive advantage.”
And with Curry locked in, the revered jersey patch media assets could be on the verge of breaking another NBA sponsorship record.
The Warriors’ deal with e-commerce company Rakuten expires in 2023 and is said to be paying the team nearly $20 million annually. It’s unclear what the Warriors are seeking for the renewal price, but for comparison, the Brooklyn Nets took a $30 million-a-year deal for their 2021 update 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 continuing to grow our global fan base.”
“When we were building Chase Center, we talked about turning into a sports and entertainment company that happened to have a very good basketball team,” he said.