Blog Entry

Two key questions about Warriors sale

Posted on: July 15, 2010 3:08 pm
 
LAS VEGAS -- The Warriors going to Peter Guber and Joe Lacob instead of Oracle CEO Larry Ellison can certainly be viewed as an upset. But not nearly as upsetting to Warriors fans as something else that could result from the transfer of power from Chris Cohan: A decision by the new guys to leave bad enough alone and keep the decision-making tandem of Don Nelson and Larry Riley in place.

Immediately upon approval of the NBA's Board of Governors, the easiest and best decision Guber and Lacob could make would be cleaning out the Warriors' dysfunctional front office and starting over again. There are plenty of good candidates for both jobs available.

The coaching position would be easy to fill. The Warriors have been grooming assistant coach Keith Smart to replace Nelson for a while now, and he'd be the perfect choice to finally get the job.

As for GM, this summer has been open season on general managers in the NBA, so the list of qualified people to replace Riley is lengthy: Kevin Pritchard, Rod Thorn, Danny Ferry, Jeff Bower and David Griffin are all free agents. Jerry West, whose name has long been associated with a possible takeover of the Warriors, would be a home run -- if he's willing to get back into the grind. Even if he isn't, a tandem of West and Griffin, who worked together in Memphis, would be a solid 1-2 punch. West would restore class and vision to the organization, and Griffin -- who has a keen eye for talent and a deep understanding of the salary-cap and CBA, at least in its current form -- would be an ace in the day-to-day GM role.

Pritchard and Ferry haven't aggressively pursued any of the numerous GM openings to this point, leading to speculation that they're waiting for a more prestigious job to come along. Despite the aimless wandering of the Warriors in recent years under Nellie and Riley, there are few NBA locales more desirable than the Bay Area and few jobs with as much potential to make a meaningful imprint. From that standpoint, reviving the Warriors has West's name -- and logo -- written all over it. But it's not entirely clear if West, 72, wants to return to a front-office role. Sources familiar with Thorn's decision to step down in New Jersey said the longtime Nets boss was under the distinct impression that West, a relentless workaholic during his glory days as an NBA team executive, finally had come to enjoy retirement. Seeing West finally embrace being out of the spotlight appealed to Thorn, 69, on a certain level.

The other aspect of the Warriors' sale that warrants a mention in today's news cycle is the price: $450 million, a record for an NBA franchise that surpassed the previous mark of $401 million paid by Robert Sarver for the Suns in 2004. One of the key sticking points in the negotiations between owners and players on a new collective bargaining agreement is the escalating value of NBA franchises. If the league's financial system is so broken, the players argue, why would someone pay nearly a half-billion dollars to join the club?

But the disagreement runs deeper than that. In an interview with CBSSports.com Wednesday, NBPA executive director Billy Hunter said a point of contention in reconciling commissioner David Stern's latest assertion that the league lost $370 million during the 2009-10 season is the cost associated with buying and owning the teams. Hunter said the league's finances include such expenses as interest and depreciation, which he views as costs that should be borne by the owners and not the players. The Warriors' sale is the perfect example of why such costs shouldn't be used as an excuse to cut player salaries. Here is the simple reason why:

Cohan bought the Warriors for $119 million in 1995. His capital gain of $331 million, less expenses, is his to keep. If the owners want to count interest and depreciation expenses in the formula that determines player salaries, then the players should receive a cut of the profit when owners sell their teams. The owners, for obvious reasons, would never agree to such an arrangement. The players, for equally obvious reasons, should never allow the expenses associated with investing in the purchases of NBA teams to be taken out of their pockets at the bargaining table.

"You can't expect the players to pay for the damn franchise," Hunter sad. "You can't tell me we have obligation to pay for your franchise and then split the difference with you."

Just a couple of things to think about as you digest the news of the Golden State Warriors becoming the highest-priced franchise ever purchased in NBA history.



Comments

Since: Aug 7, 2008
Posted on: July 16, 2010 4:56 pm
 

Two key questions about Warriors sale

Berger is wrong on several fronts. First, he criticizes the Warriors ownership and management but then also praises their training of Smart into a coach. Normally, if someone is a bad judge of character and he hires someone usually that person is also suspect. Secondly, most of the GMs that are available were FIRED! They did not quit because they just wanted to spend more time with family of help another team with a championship. Pritchard, Ferry, and Thorn have not proven to be successful. Not only did they fail to bring their teams a championship but they made a mess of their previous teams. Only West is good. I have never heard of Bower or Griffin. I am surprised that Berger did not mention Steve Kerr, Chris Mullin or rod Higgins. I know how much Berger loves ex Warriors. 
I think Mullin did a great job as GM...much better than Garry St. Jean or Dave Twardzik or that other loser they had running the show.
If I owned the Warriors I'd give Mullin a shot as coach...you never know he might actually be as good as Larry Bird was in his short time coaching the Pacers.
But whatever they do...I hope they do not hire Isiah Thomas....that guy is a racist, a liar and an adulterer. 



Since: Jun 28, 2007
Posted on: July 16, 2010 1:10 pm
 

Two key questions about Warriors sale

Partly right:  but after adjusting for inflation and risk, Cohan probably did not make all that much. $119 million in 1995 is worth about $166 million today.  So he still made almost $300 million.


steff1
Since: Mar 2, 2007
Posted on: July 16, 2010 12:57 pm
This comment has been removed.

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Since: Mar 27, 2008
Posted on: July 16, 2010 12:52 pm
 

Two key questions about Warriors sale

He took less money to keep it from Ellison so because he's worried that Ellison would have spent the money neccessary to make the Warriors a first class organization and have a legit chance to compete. Fans hate Cohen already for how poorly he ran the franchise imagine if Ellison stepped in and turned the franchise around in the next couple of years, the hatered would be ramped up and it would show even more how bad of an owner he was.



Since: Dec 1, 2009
Posted on: July 16, 2010 12:00 pm
 

Two key questions about Warriors sale

An owner's mismanagement of his personal finances is not the players' concerns, anymore than their mismanagement of their own personal finances is the owner's concern. If he overleverages himself into bankruptcy, then that's between him and his creditors, subject to the franchise's obligations to his fellow owners. Too bad if he goes bust. Frankly, given the seeming overexpansion of some leagues, I look forward to the day when push comes to shove and a franchise or three is forced out of existence in bankruptcy court.




Since: Sep 2, 2006
Posted on: July 16, 2010 9:13 am
 

Two key questions about Warriors sale

Warriors are sold to a minority owner in the Celtics and the CEO (or whatever) of Mandalay Bay Entertainment.    Las Vegas is about to start building an arena to attract an NBA franchise and the league has stated they would not be against an NBA team in Las Vegas.    Could it be soon they will become the Las Vegas Warriors?



Since: Jul 9, 2010
Posted on: July 16, 2010 3:14 am
 

Two key questions about Warriors sale

Curious about David Lee's decision to come to Warriors . Did his agent, Mark Bartelstein, do him a disservice given the uncertainity surrounding GS? Would Lee have been better off at New Jersey even if it would a been for a bit less money? The Nets have a good young core group, Avery as the coach and very committed ownership.



Since: Jul 15, 2010
Posted on: July 16, 2010 3:13 am
 

Two key questions about Warriors sale

What is with all the posts about finance?  Who cares!  The Warriors new owners should take this opportunity to completely clean out the organization and start over.  The team has been a disaster under Cohan's direction.  It's time to get his clowns out of there.



Since: May 7, 2009
Posted on: July 16, 2010 2:12 am
 

Two key questions about Warriors sale

A couple of comments:

I wouldn't buy whatever company holds the investment here without making sure I got the intangibles (names, contracts, logos, marketing rights, etc.).  For entertainment and high-tech companies this is often 90 percent of the value.

No use getting into details but some of the analyses have forgotten some very large costs.  Cohan presumably incurred investment advisor, diligence and other costs at the front end and very substantial broker costs at the sale (Galatioto don't come cheap).  Fees relating to the funding or bridge funding of the transaction, etc., could also be involved.  In short, we are way short of information to make quick assumptions.

btw, calculations should be done after tax, which may include basis adjustments from passing through operating losses.  Hard to say unless you know the strucutre of the companies being sold.

In other words, analyzing this is as tough as getting Monta to look for the cutter on the pick and roll.



Since: May 7, 2009
Posted on: July 16, 2010 1:35 am
 

Two key questions about Warriors sale

Good try.  The next few posts clear up most of your errors.


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