I’m not sure you can claim to be probably light years ahead of every other team in “structuring, planning, how we’re going to go about things”. And complain about the rules governing the structure and planning that all NBA franchises are subject to, but Golden State Warriors owner Joe Lacobo is trying.
Lacob Would you believe it is “very unfair” that the Warriors have to pay soaring taxes to put together a championship team, when their unique ability to rage against the system is what has taken their ownership. Turned the group’s $450 million investment into one. Valuation of $5.6 billion over a period of 12 years.
The Warriors were coming out of a championship and finishing a record-breaking 73-win regular season when Lacob delivered His infamous “light-year” diatribeAnd three months later, a one-time 35% hike in the salary limit made it possible for the Warriors to sign Kevin Durant and the form greatest team in basketball history,
(The reason for that cap spike? The nine-year, $24 billion television deal that earned teams an average of $800 million to split between team owners and players. The next TV deal is expected to triple in 2025.)
In between, his team took a 3–1 series lead to the Cleveland Cavaliers in the 2016 Finals, but that didn’t keep the Warriors from earning at least $359 million in revenue from the roster the following season with a $100 million payroll. was stopped. That figure increased every year until March 2020, when Lakob informed us that Forbes’ estimate of the Golden State’s revenue of $474 million – a record-setting figure – was in fact.Importance,
“We have a lot more revenue than [New York] Knicks and [Los Angeles] The Lakers,” Lakob claimed, referring to the two teams that print money every season because they are present in the league’s biggest media markets.
It was the first season the Warriors opened their doors at the Chase Center, a field that achieved a record $2 billion.”contractually bound income“Before construction is over. their own guesses Annual revenue related to basketball is estimated at $700 million. They didn’t hit that mark in the first year of the COVID-19 pandemic, when Warriors lays off 1,720 part-time workers And 10% of their full time employeesbut that figure Estimated Close to $800 million for this past season – another record for the NBA industry.
Not to worry, the Warriors made up for any pandemic losses by selling a 5% stake in the team for $275 million.
How much did the warriors really lose?
Losses can also benefit billionaire owners who Use Them as a Tax Write-Off against other earnings. There are also ways to disguise profit as loss. Los Angeles Clippers owner Steve Ballmer has reportedly claimed damages of $700 million, even though Forbes lists his profits at more than $200 million since buying the team in 2014 for $2 billion . The Clippers are the only team that pays more luxury taxes than the Warriors.
It’s not unlike how Sony wrote off Warriors co-owner Peter Gubere’s $3.2 billion allegedly spent them, and then the company invested $275 million in his next venture. (This is the story of how Guber made a fortune with Infamous Former business partner is John Peters as wild as it goes in the entertainment industry. Neither Guber nor Lacob are free scandals He passed followed their powerful peers In recent years.)
Sports franchises are not philanthropic ventures for billionaires, even if they can be charitable, They are cash cows. There are reasons why Lacob has “a standing offerWhy else to buy the Oakland A. Guber has ownership stakes in the Los Angeles Dodgers and Los Angeles Football Club. The money follows.
Forbes’ estimates are not the complete picture generated by the Warriors beyond basketball. The Chase Center sits on an 11-acre plot of oceanfront commercial and residential real estate, which the team also owns in the second largest rental market in the country. This includes a $1 billion, 20-year lease on Uber’s headquarters.
as team president Brandon Schneider told CNBC“Disney started out as a theme park. The Warriors started out as a basketball team. See what Disney has become, and see what the Warriors are becoming.”
It moves the Warriors from Oakland, where the Warriors try to churn out the city’s taxpayers. $45 million in decades-old debt The renovations made to San Francisco at the publicly owned Oracle Arena were a wise investment, even though it cost the Lacob ownership group $1.4 billion to build the new campus. The Oakland Peoples, who retained the franchise when it was bad enough to draft Stephen Curry with the seventh overall draft pick in 2009, may find it unfair for the team to move only for a higher profit margin.
The Warriors paid $170 million in luxury taxes this past season because their payroll exceeded the NBA’s $137 million limit by $38 million. This is in large part due to the $32 million salary for Andrew Wiggins, whose contribution to Golden State’s final victory was second only to Curry. The Warriors were able to acquire Wiggins as they traded D’Angelo Russell for Durant and Wiggins for Russell.
The whole reason there is a luxury tax is to encourage equality and discourage the championship team from adding one of the 15 greatest players in history. Or, at the very least, it rewards non-tax paying teams with hefty checks that essentially subsidize the system of owning a large market and still profit potential.
Why there are holes in Joe Lacob’s luxury tax criticism
Golden State is owned by the group Benefit $448 million in the years after signing Durant, according to Forbes “reduced” figures. This includes a $44 million loss during the season played mostly on empty grounds and does not include the millions of dollars that Lacob & Co brought home last season.
Retaining everyone from their title team would cost the Warriors more than $400 million, and that number could grow north of $500 million in the near future if they signed Wiggins, Jordan Poole, Draymond Green and Klay Thompson with contract extensions. reward the. Run in the latter part of this decade, when Curry would be earning a salary of $60 million at age 37. It’s prohibitive to hold a dynasty together, which is the point.
“Those numbers are not even remotely possible,” Lacob tells The Athletic’s Tim Kawakami, rather oddly scapegoating the league office this summer for not matching the $41 million payout paid to Gary Peyton II and Otto Porter Jr. The benefits of the group must have been eaten up significantly. “They just aren’t. I’m already in trouble with the rest of the league. We’re in trouble to stay where we are. In fact, there will be a Board of Governors meeting in Vegas. They’re not happy. It’s just us.” Not only this, other teams are also going into the luxury tax now.
“You know, we’ve blown a hole in the system, and it’s not a good look from a league perspective. They don’t want to see that. And there are limits,” he said, notifying that the league cap would be his. expenses, not its investors. “I wouldn’t say what they are, but there are limits to what you can do.”
Those limits can be increased when your team generates $800 million in revenue. It is possible for Golden State to pay $400 million to $500 million to the players who are responsible for that cash flow. It’s just not practical.
It’s unwise for Green and Thompson to pay the maximum salary (or close to them) five years from now, both of whom experienced a decline last season at age 32 amid concerns over athleticism and injury. It’s also easier to blame the luxury tax on your favorite fan and one of the pillars of your lineage than to tell it’s no longer worth the maximum investment, especially when you’re talking one of those old pillars.
“The truth is, we’re only $40 million more than the luxury tax,” Lacob tells Andre Iguodala on his “Point Forward” podcast, “Now, that’s not small, but it’s not a huge number. We’re over $200 million in total because most of it is this incredibly punitive luxury tax. And that’s what I consider unfair and I’m going to say it on this The podcast and I hope anyone who’s listening gets it back… and obviously it’s self-serving to me, but I think it’s a very unfair system because… all The top eight players have been produced by this team.”
That’s not true, of course. Wiggins was not drafted by the Warriors, and he is a direct result of signing Durant in 2016. Golden State isn’t guaranteed three championships without them. The Warriors are only “light-years ahead” because they’ve capitalized on an anomalous hat spike, and now they’re paying for it. They built a dynasty and profited immensely from it, and should we really feel sorry for them?
strange how Lacob was singing a different tune a few years ago, when He told Kawakami“We can do whatever we want [financially], And you should hope that it won’t be a reason why this team… won’t be great going forward. We have the capital to pay our players what they deserve. and we will.”
You want to pay Green and Thompson for past performances because they made you a lot of money? go ahead. This is your prerogative. It’s going to cost you increasingly to add layers of expense on top of them, like re-signing Wiggins and Poole to a combined salary of $60 million a year.
Lacob has some decisions to make from the comfort of his $20 million mansion in Atherton, America’s richest zip code. Or maybe he’s spending the summer on another $20 million home he just bought in Malibu. He’s come a long way from his hometown of New Bedford, a blue-collar port city in Massachusetts that he calls “dirty“I’m not interested in leaving,” He once told Ethan Strauss“And I don’t want to be near it.”
When billionaires are complaining about taxes, the system is working as designed. If anything is unfair, it’s that the Warriors can push that system to an odd degree, rake in nine digits and still ask for a bailout.