- The Golden State Warriors are opening their new arena, Chase Center, in San Francisco next season.
- Rick Welts, the team’s president, told Business Insider that the building of the arena, which was self-financed and cost about $US1.4 billion, was a “perfect storm” of events.
- The Warriors got lucky finding a space in San Francisco, the team is in a booming market that will pay for the arena’s luxury features, and they have a championship team that makes it worth the bill.
Next season, the Golden State Warriors will open their new San Francisco arena, Chase Center.
Chase Center is a $US1.4 billion arena the team self-financed. With 18,000 seats, luxurious suites, an outdoor plaza with restaurants and shops, two office towers occupied by Uber, a public park, and a 44,000-person wait list for season tickets, the arena is widely expected to be the nicest in American sports when it opens.
Building such an arena, and self-financing it, was a “perfect storm” of events that was unique to the Warriors, Rick Welts, the team’s president, said.
Welts spoke with Business Insider and explained how he wouldn’t advise another team to self-finance its arena because no team can replicate the Warriors’ circumstances.
The team wanted to move to San Francisco
According to Welts, the city of San Francisco refuses to put public money toward sports stadiums. That meant the Warriors were on their own.
“That’s just not the philosophy in San Francisco, so knowing we’re gonna build in San Francisco, we knew that would be the case,” he said.
Welts said, ideally, the Warriors would have gotten public funding. He believes cities should give money toward sports buildings because they enhance the quality of life for residents. But the team knew off the bat that wasn’t an option.
The team stumbled into space in San Francisco
Increasingly, teams want to build their arenas in urban spaces, not in far-off, isolated areas off highways.
When the Milwaukee Bucks opened their new $US500 million arena, Fiserv Forum, in downtown Milwaukee last year, Peter Feigin, the team’s president, told Business Insider that they didn’t want to make it an “island” far off in the city.
But in some places, finding that actual space in the city is rare.
The Warriors initially proposed to build Chase Center on Piers 30 to 32 in San Francisco, close to the Bay Bridge and closer to the city center. The proposal was reportedly met with resistance by the city, but before it went to a ballot, the team heard from Salesforce CEO Marc Benioff, who had four city blocks of land in the industrial, less undeveloped neighbourhood of Mission Bay. They bought it from him for an undisclosed price.
“It’s very hard to do in San Francisco,” Welts said. “We’re a very small city. Seven miles by seven miles – there’s not a lot of 10 1/2-acre opportunities in San Francisco. We got very lucky to actually find this.”
The Warriors have the perfect market for this
With the team shelling out about $US1.4 billion for the construction of Chase Center – an updated figure, according to Welts – they will need to make money back. They might be in the perfect market for it.
“You have a city that’s really exploded on the global scene as one of the great cities of the world, driven a lot by what happens there from a business standpoint, which is part of why it’s so vibrant right now and so economically healthy right now,” Welts said. “I don’t think there’s ever been a time like this in the Bay Area.”
The Bay Area is, of course, booming for the wealthy. Chase Center will be like a playground for the Silicon Valley elite and a cash cow for the Warriors.
Chase reportedly paid $US300 million for 20 years of naming rights to the arena. The office towers on-site are being used by Uber. Retailers are renting space in the outdoor plaza.
Almost all the season tickets have been sold (the Warriors reserve 5,000 seats per night for single-game tickets). Buying season tickets requires a one-time membership fee that the Warriors pay back, interest-free, over 30 years – a unique plan in sports. The Washington Post’s Ben Golliver reported that half the fees are said to be $US15,000 or less.
The arena has several luxurious suites, including suites for the elite that are event-level and tucked underneath the seats. According to Golliver, the luxury suites have gone for $US1 million to $US2.5 million for a year’s worth of events.
As Golliver said, the Warriors are going from tenants in Oakland’s Oracle Arena to landlords in San Francisco.
“Part of what we did – and I think you see it more and more with sports teams building arenas and stadiums – was we had to kinda fill that gap,” Welts said. “In our league, the ballpark has been around $US300 million in taxpayer money to do these projects. So that’s a good part of the reason we created the office buildings, doing the hotel, doing all the retail, not only are they going to enhance the environment, but they’re going to help fill the gap of what would have been public financing for our budget.”
Other teams aren’t the Warriors
What makes footing this bill worth it? In large part, the basketball team.
The Warriors have made the past four NBA Finals, winning three of them. They’re the heavy favourites to make a fifth and win a fourth, becoming just the second team in the last 60 years to make five straight finals.
The team is simply a draw. People will pay to see them. Indeed, the construction bill would be scarier if the Warriors were a mediocre team who might not draw a crowd. Historically, the team had done well in Oakland at attracting a dedicated fan base, even when they weren’t competing for titles. Given its recent boom, if the team takes a step back, people will still come out to see them.
That latter point is a possibility. Kevin Durant and Klay Thompson will be free agents this offseason. Durant is believed to be a real flight threat, while NBA insiders think Thompson is likely to re-sign with the Warriors.
The Warriors would love to re-sign both players to keep the team together, even if doing so will rocket them into the NBA’s luxury tax, which could have them paying more than $US300 million for the roster. It’s worth it.
“Players have an opportunity at some point to decide where they wanna play, so it’s not all in our control,” Welts said. “But if we have the opportunity to bring this team back, we’re gonna bring this team back. The bill’s going be what the bill’s going to be, but it’s not going be because we chose not to bring this team back.”
All these factors have allowed the Warriors to do something unique – become the first team to finance an arena privately and do so in grandiose fashion.
“We have like a perfect storm. We have this roaring economy, we have the companies that are changing the world are part of our backyard, we have a championship-calibre team, and we have a great city, great global city that never in its history has had one of these [arenas],” Welts said.
“So I wouldn’t recommend anybody else trying to recreate that formula because I think it’d be impossible.”
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