NBA Franchise Intervention
I know this probably opens opportunities to poke fun at myself for making this comparison, but the hiring of GSP reminds me of the HGTV’s show, Real Estate Intervention.
The premise for that show parallels our current Warriors sale situation. A home / franchise owner is trying to sell their house but just can’t come to grips with the reality of the market, what their home / franchise is really worth, and needs an outside party to deliver the spiritual and financial kick to the head needed to get them to budge so they can move their house / franchise.
Sound familiar? Hiring GSP brings in an outside party, who is still beholden to the owner, but is also in the business if making sure a sale gets done. I am not privy to the structure of whatever deal is in place with GSP, but I think it’s safe to assume that they stand to get paid more if a deal goes through, so they are motivated to make a sale. GSP was brought in by the league to perform a Real Estate Intervention on the Warriors. Here’s how the process likely shakes out.
Stage 1: Sales Packet
-Basics, square footage of arena, capacity, of current STH’s, average ticket price, revenue, cap situation, facilities, contracts
-Take photos that are flattering. Let’s see if we can make Biedrins wider, Ellis taller, Curry stronger, and photoshop out Corey Maggette completely.
-Slim down the books, trim payroll, trade out higher priced talent for younger or no talent, not just for the players but the front office as well
-Accentuate the positive by drawing comparisons to other teams in the area, but be liberal in your definition of the area, i.e. Sharks, Giants, Niners, not Raiders, A’s
Stage 2: Assess the market
-What are the comps for an NBA franchise in a large market? What were the actual vs reported sales prices and terms? Bobcats $275 million vs Forbes valuation at $278
-How many other franchises are for sale, will buyers have choice, is the market flooded with NBA teams?
-How recent were the sales, what is the trend, what is the forward looking trend likely to be? Will there be a lockout?
-How many potential bidders are there, and what is their timeline and desire to own this particular team?
Stage 3: Level set with seller come up with pricing
-Frank and open discussion with Cohan on what the market is like, potential buyers, his timeline
-Pricing to generate bidding war or pricing to eliminate negotiations
-Getting Cohan to agree to realistic pricing, this is the biggest hurdle and why I think GSP is really working this deal. Forbes has the W’s are worth $315 and that is being generous in the current economy, and is down from $335 in 08′. Considering the effects of the current recession weren’t felt until this season 09-10 you would expect values to continue to go down this year. I think $310 is the number, and considering the amount of deferred maintenance with the current team, it leaves some wiggle room in there for improvements, new roof, power forward, etc.
Stage 4: Bidding
-Review offers, evaluate based on cash and debt, likely hood of deal to receive league approval, Jordan deal had about $150 million in debt
-Negotiate with bidder(s) preferably more than one so you can play them against each other, get egos involved if you can
Stage 5: Home inspection, Appraisal and Closing
-Note: Can be skipped in case of a cash offer since no financing would be needed
-Take a deeper look at the books, maybe use an outside auditor, review contracts
-Move in and cleanup, park dumpster out in front of the practice facility, divide items into trash, recycle, keep, but that’s a different show