The Sacramento Kings, Milwaukee Bucks, Los Angeles Clippers, and Houston Rockets all subsequently broke the record, but the Golden State Warriors turned NBA valuations on their head by selling for $450 million in 2010.
The Warriors appeared destined to land in the hand of one of the richest men on the planet, but he was outmaneuvered by a group led by two businessmen who took a big chance with a maverick move.
The Golden State Warriors were largely rudderless
Businessman Chris Cohan purchased the Golden State Warriors in October 1994 for $130 million, but he didn’t enjoy much success on the court. Golden State posted only two winning seasons in his 16 years as owner, and the only playoff appearance ended with a loss in the 2007 NBA Western Conference semifinals.
With Cohan facing legal issues following the sale of his cable television business and the Warriors coming off consecutive seasons of 29 and 26 victories, he put the team up for sale.
The benchmarks up until that time were the $360 million that the Boston Celtics fetched in 2002, followed by a $401 million sale of the Phoenix Suns in 2004. The Great Recession briefly turned the NBA into a buyers’ market, and the Charlotte Hornets, Brooklyn Nets, and Washington Wizards all sold for between $200 million and $310 million in 2010.
The stagnant pricing ended when Cohan put the Warriors up for sale and a billionaire entered the picture as the presumed buyer.
Larry Ellison had an advantage over Joe Lacob and Peter Guber
When Chris Cohan put the Golden State Warriors up for sale in 2010, billionaire businessman Larry Ellison became the immediate leader in the clubhouse. According to MarketWatch, Ellison’s Oracle Corp. already owned the naming rights to the arena where the Warriors played their home games, and Fortune ranked Ellison as the sixth-richest person in the world with a net worth of $28 billion.
Ellison was an NBA fan associated with the potential purchase of other teams over the years. He enjoyed a good relationship with then-NBA Commissioner David Stern, who referred to him in a 2012 interview as “a terrific potential owner.”
Just days before the July 2010 announcement that Cohan sold to the group led by Joe Lacob and Peter Guber, Ellison was still regarded as the favorite to land the team based upon his ability to outbid the competition. The $401 million purchase of the Phoenix Suns in 2004 was at or near the maximum that Cohan could expect to reap.
However, only Cohan knew that Lacob and Guber had gone outside the process that had begun in March 2010.
Joe Lacob and Peter Guber put an end to the auction
It’s rare that any franchise in the major American sports changes hands in a pre-ordained deal between two parties. Instead, an owner looking to get out typically uses an intermediary who identifies potential buyers and conducts a behind-the-scenes auction.
Golden State Warriors owner Chris Cohan did just that in 2010 by bringing in Galatioto Sports Partners, which had handled the sale of many teams in the past. It soon became apparent that the competition would come down to Oracle founder Larry Ellison against a group led by Joe Lacob, a partner in a venture capital investment firm, and Peter Guber, a big figure in Hollywood who founded Mandalay Entertainment Group and Mandalay Sports Entertainment.
As the bidding reached $400 million, Lacob and Guber realized that they could not stay in the competition against a billionaire much longer. They decided to pull an end run around Sal Galatioto and approach Cohan directly. The Athletic reported they found Cohan at his son’s lacrosse tournament in Baltimore and told him that they were dropping out if he didn’t accept their final offer.
“I can’t beat him in a bidding process,” Lacob told Cohan. “But if you give me a price you will absolutely take, I will give you an answer, yes or no.’”
After an intense back-and-forth, Cohan accepted a final offer of $450 million.
The Warriors returned to the NBA playoffs in 2013. Two years later, they won the first of their three league championships in a four-year span.