NBA, Warriors hoping for quick sale
A quick sale of the Warriors is needed to avoid a lost season and added fees
If Larry Ellison becomes the team's next owner, the sale could move along quickly
Larry Riley, Don Nelson have been told to prepare as though they're staying
The Golden State Warriors and the NBA are hoping to have the Bay Area team into a new owner's hands by the end of the summer, according to multiple sources.
One source said the target date is early- to mid-August so that any new owner can execute the necessary changes for the 2010-11 season to avoid a lame-duck year.
The last thing the NBA wants is to have a meaningless first season of ownership for whomever buys the team from Chris Cohan, then follow that up with a potential lockout that could wipe out the second season, thus giving the new ownership essentially two years of negativity through which it has to fight before it can put its own team on the floor.
To that end, commissioner David Stern will do whatever he can to expedite the process so that an end-of-summer sale or sooner can be realized. Unlike the Nets, whose sale to Russian billionaire Mikhail Prokhorov has been drawn out in part because of the complications of the land deal for a new arena in Brooklyn, N.Y., the Warriors can complete a deal in an expeditious fashion should Stern want it.
The recent sale of the Charlotte Bobcats from BET founder Bob Johnson to Hall of Famer Michael Jordan took place in about a month, in part because Stern wanted the icon so badly to be a league owner, but also because the league was familiar with Jordan and his finances. In a similar fashion, it took only a month for Robert Sarver to purchase the Phoenix Suns for a record $401 million in 2004.
If Oracle CEO Larry Ellison becomes the Warriors' next owner, the sale could move along quickly, a league source said, because Ellison is a well-known commodity whose checks will be written from an established and very deep account. If another entity -- particularly a foreign entity -- steps into the bidding and is successful, it could take the league far longer to do its due diligence on that person's financial background and reputation, delaying the sale.
According to a source, Cohan has already received 10 legitimate inquiries about purchasing the Warriors -- one of which was from Asia -- though none have made an official bid. The official offering is set to be released in about a week, and official bids will be accepted in mid- to late April.
Salvatore Galatioto, whose company Galatioto Sports Partners has been hired by Cohan to sell the franchise, declined to speak about the sale. GSP's vice chairman is Russ Granik, who was the NBA's deputy commissioner for 15 years.
Another name that has been floating around as a possible bidder is Philip Anschutz, part-owner of the Staples Center in Los Angeles. However, a source close to him said Anschutz is not a player in the Warriors' sale because his model of investing has been to take undervalued projects and turn them into profitable businesses. Because Cohan is seeking in excess of $400 million for the Warriors -- one source said the franchise could go for as much as $500 million -- Anschutz does not view the team as being undervalued.
Anschutz -- a Lakers part-owner who would have to divest his shares of that team in order to purchase the Warriors -- could get involved, however, if the new owner decides that he wants to build a new arena, moving from Oracle Arena in Oakland. There has been a great deal of speculation that a new sports and entertainment complex could be built across the Bay where there's currently a parking lot next to the San Francisco Giants' stadium.
In addition to the Staples Center, Anschutz has stakes in London's O2 Arena, as well as multiple Major League Soccer teams and the NHL's Los Angeles Kings. Partnering with the Warriors' new owner makes sense, one source said. Of course, the league and Bay Area fans are hoping Ellison, the world's sixth-wealthiest person with a net worth of $28 billion, according to Forbes, will ultimately outbid anyone in the running.
There is concern within the organization, though, that Ellison may have been turned off by Cohan's recent power play and may not want to be put into the position of being in a bidding war.
Two months after Ellison told Oracle shareholders that he was trying to buy the Warriors, Cohan put the team on the open market. There is a feeling within the organization that Cohan may have been better served to approach Ellison privately and try to broker a private sale rather than staking Ellison against the rest of the world.
Cohan is hoping, of course, that Ellison makes a preemptive bid, distancing himself from everyone before the bidding even gets started, which would make the sale process go that much more quickly.
The timing of the sale is key for both Cohan, who purchased the team for $119 million in 1995, and the team's immediate future. If it leaks into 2011, Cohan will be responsible for some $20 million more in capital gains taxes because of changes made by the Obama administration. (According to reports, in 2007, the IRS said Cohan owed the government more than $160 million in back income taxes and penalties.)
For the team, general manager Larry Riley has been told to prepare for the upcoming draft and potential summer roster moves as if he is going to be in place next season. And sources have indicated that the organization is leaning toward bringing back coach Don Nelson because it is pleased with how he's kept the players competitive despite suffering more injuries than any other team in the league. Nelson is scheduled to make $6 million in the final year of his contract and has indicated that he will honor that final year rather than retire -- regardless of whether he breaks the NBA record for all-time coaching wins (he needs three more victories).
If a new owner is able to take control by August, he will almost certainly organize his own staff between the time he submits the winning bid and the time he is approved. An August approval would give the new staff a month and a half to get things in order by the start of an October training camp.
If the sale goes later than August, it would be difficult to put in place all the necessary pieces to make wholesale changes.
The clock is ticking. And everyone, especially the new owner, knows it.
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