A New Gold Standard for Sports PSLs: The Golden State Warriors’ Membership Program

By: Michael Medved

I. Introduction

For the 2019-2020 National Basketball Association season, the Golden State Warriors concluded their long residency in Oakland’s Oracle Arena and embarked on a move across the bay to San Francisco’s newly constructed Chase Center.[1] True to the pathos of their Silicon Valley backgrounds, Warriors’ ownership implemented an innovative financing mechanism to assist in this move. But, “[w]hile Chase Center follows many 21st century arena trends—favoring an intimate fan experience instead of maximizing its seating capacity—the building’s financing [ran] counter to established norms.”[2]

The radical financing scheme the Warriors implemented to fuel construction of the Chase Center was called a membership program.[3] This program was an alteration to Personal Seat License’ (PSL) agreements as previously used by other sports franchises.[4] The membership program allowed the Warriors to solicit their rabid and wealthy fanbase to help fund construction of the Chase Center. Bruce Schoenfeld of the New York Times claims that Warriors owners Joe Lacob and Peter Gruber had envisioned this scheme since their purchase of the team. “Once Warriors’ owners Joe Lacob and Peter Guber decided their team needed a new arena, in San Francisco—and they seemingly made that decision before they bought the team in 2010—they also knew who would pay for it: the fans.”[5] Ultimately, the success of the program allowed “the Warriors to consolidate their arena, practice facility and basketball operations offices under a single roof and allow[ed] them to tighten their grip over all aspects of their business.”[6]

This article illuminates how the Warriors were able to persuade their fans to become purchasers of their membership offering in order to finance construction of the Chase Center. Specifically, this article will focus on how the Warriors were remarkably successful in this endeavor despite this membership not including the price of admission; but solely providing for the right to purchase admission. In doing so, this article will note the innovative strategies used by the Warriors that were held out as “carrots” to turn fans­—the most profitable of which being the Silicon Valley’s tech giants— into members. It will conclude with a recommendation for how future NBA teams incorporating a PSL should steal from the Warriors’ playbook.

II. Background

A. Streaming Services, Social Media & the Rise of the NBA

Following the turn of millennium in the year 2000, the National Basketball Association (NBA) has enjoyed tremendous success. Arguably, this is foremost due to the introduction of streaming services such as Netflix, Hulu, Amazon Prime among others, that has placed a heavy premium for NBA action due to cable and streaming providers’ desire to broadcast live event television. Furthermore, the NBA has capitalized on the opportunity presented by social media, most notably Twitter, to a higher degree than any of the other popular professional sports leagues. Fans, journalists and NBA players have created their own sub-Twitter as by the nickname NBA Twitter.[7] In NBA Twitter, fans watch games together simultaneously commenting on the platform. The platform explodes with commentary on the release of important news, highlights and roster moves.[8] The engagement is staggering. “The NBA is the most-tweeted-about sports league in 2018, according to Twitter, with more than 100 million NBA-related tweets heading into the NBA finals.”[9]

B. Financial Health of Lacob & Guber’s Warriors

Joe Lacob and Peter Guber purchased the Golden State Warriors for $450 million in July 2010.[10] Prior to being the Warrior’s owners, Lacob was managing partner at private equity firm, Kleiner Perkins, and Guber was the founder and chairman of the production company Mandalay Entertainment.[11] Many thought this to be an overpay considering the team’s Forbes’ valuation at the time and history of lack of success. At the time, noted sports business commentator Darren Rovell wrote the following regarding the state of the Warriors at the time of the sale, “the Warriors franchise, which was bought by Chris Cohan in 1995 for $119 million, was valued at $315 million by Forbes in December of last year, but the Warriors’ location in the Bay Area undoubtedly added more interest and thus a higher price.”[12] In February of 2019 Forbes valued the Golden State Warriors at $3.5 billion.[13]

All being said, Bruce Schoenfeld’s 2016 claim in the New York Times was likely not without merit.[14] Lacob and Guber were notably different from the other NBA owners back in 2010. They were younger and had new money; accumulating their fortunes during the internet-boom of the early 2000s.[15] Many alike them have since followed. For example, hedge fund manager Marc Lasry led a group to purchase the Milwaukee Bucks in 2014—the same year Microsoft’s Steve Ballmer purchased the Clippers to name only a few.[16]

C. The ‘Silicon Valley’s Influence on the Chase Center’s Success

The Silicon Valley and its tech giants play a key role in the financial success of the Warriors, and their role expanded even further with regard to the Chase Center. Specifically, “[t]he Golden State Warriors obtained the land from Salesforce CEO Marc Benioff to construct their state-of-the-art stadium”[17] for an unknown purchase price. “[A]vailable space where you can build from ground up is known to be scarce in San Francisco. So the team caught a break when Salesforce CEO Marc Benioff sold four city blocks to the Warriors for an undisclosed price.”[18] Salesforce is not the only tech giant that has gotten on board. “The team has $2 billion under contract from a cluster of founding partners, including tech giants like Adobe, Oracle, Google Cloud, Accenture, and of course, JPMorgan Chase.”[19]

Moreover, the limited nature of available seating for a Warriors home game makes Warriors tickets the hottest commodity in town. Many corporations in the Silicon Valley, usually startup companies, are software as a service, (SAAS), whose business models are reliant upon large scale companies contracting for use of their services.[20] In turn, these companies have to cater to the interests of executives at these corporations in order for them to engage with their companies’ offering. For the most part, it is more attractive to them to attend a Warriors’ game than it is to attend a San Francisco Giants or a 49ers game.[21] The baseball season contains more home games and thus demand for attendance is impacted by the vast supply.[22] Football has considerably less mystique to the tech-world and new 49ers’ Levi’s Stadium being located in far-away Santa Clara, has not been helping matters. The lack of attraction in the alternatives play a significant role in currying demand for the Warriors. If one of your competitors is offering Warriors’ tickets—your hand is forced as well.

III. Analysis

A. Remarkable Nature of the Warriors Offering to their Benefit

The program requires potential “season-ticket buyers to pay a one-time fee that will enable to them enable them to buy their seats for 30 years.”[23] “While the Warriors won’t divulge the full details of their membership fee program, which varies based on seat location, half the fees are said to be $15,000 or less.”[24] Though for some select seats, this fee was as high as $35,000.[25] Additionally, 12,000 of the available 18,064 seats for Warriors’ home games are solely set aside for members.[26] The price of the actual tickets has been reported to be $600 per seat; amounting to $24,000 a season itself.[27]

Another remarkable feature of the Warriors can only be uncovered upon a deeper look within its specific terms. In the Chase Center Membership Program FAQ listed online, there are two statements that appear to be misleading. The FAQ states that “Members will have the right to transfer their membership to family members and other third parties.”[28] The FAQ further states “Members will have the opportunity to sell their membership to a third party, for an amount not to exceed their initial investment.”[29] The San Francisco Chronicle, though, has reported some further conditions on these provisions that were conspicuously left out in the “FAQ”.[30] Namely, that the Warriors “will control all transfers, or sales of memberships, on their own marketplace. Warriors Senior Vice President of Business Development Brandon Schneider has confirmed these provisions and responded, “We don’t want people going out and trying to make money on this. All transfers would have to go through us.”[31] Importantly, there is no limitation to what price the Warriors could receive from this sale. The market will dictate this. A waitlist of 43,000 suggests that the current price would largelyexceed the initial.[32] By contract, all value above the initial price is for the sole enjoyment of the Warriors’ Organization.

B. Carrots Marketed by the Warriors

1. Refund

Another interesting incentive of the Warriors’ membership is the refund it promises to purchasers. “In a unique twist yet to be used in any pro sport, the Warriors promise to pay back that fee after 30 years.”[33] Upon considering inflation, though, the “refund” looks more like a marketing tactic than function as a true refund. “[A]djusted for inflation, that money won’t be worth much down the road.”[34] A dollar today is worth more than a dollar tomorrow. A dollar today is worth much more than a dollar in thirty years.[35] At the historical year over year long-term average for inflation, (3.2%), membership purchasers would eventually recoup $.39 on their $1.00.[36]. If, however, inflation was to rise 6% over the thirty-year period then that same dollar today would be worth only $.17. Over time, inflation rates have only gone in one direction, up.[37] The higher the “investment’ paid today the more significant the inflation becomes.

2. Chase Center Technological/Entertainment Innovations

The Chase Center also incentivizes paying its exorbitant prices by offering a superior viewing experience than previously had at the Oracle Center. The most basic of these improvements—while enjoyable by any fan in the arena—are really on par with what one might expect when their team renovates their stadium or constructs a brand new one. Albeit, with this being San Francisco and the Golden State Warriors, there of course is just a little more flash. The Chase Center will now possess the largest scoreboard in the entire NBA “at nearly 10,000 square feet.”[38] It includes 15 independent screens allowing for easy viewing at any angle in the stadium.[39] Additionally, the Warriors are experimenting with “augmented-reality technology to show fans replay reels from different perspectives around the court.”[40] Lastly—because of course it is Silicon Valley—the Warriors hired Accenture to “eliminate WiFi lag and enable smooth delivery of stats and video to mobile devices.”[41] Assistance from the Silicon Valley is not limited to WiFi—“Much of the venue is powered by the sponsors’ technology.”[42]

But all of the above listed features were to entice purchasers at the $15,000 level. The “Chase Center’s most memorable features are for one-percenters.”[43] “Above the court are 44 traditional suites, named for Oracle . . . and underneath the first bowl of seats are an additional 32 bunker-style Google Cloud and Accenture courtside lounges.”[44] The exact price tag paid for Silicon Valley’s elite corporations for these Chase Center’s 32 ‘court-side lounges’ remains unknown. Reporting has placed the value for these suites “at a cost of between $1 million and $2.5 million.”[45] Thankfully, however, some of the features of these luxury suites have leaked out to the public: “[p]remium courtside suites, built under the lower-bowl seats so they aren’t visible from the court, are equipped with a butler, a well-appointed dining room area for social events and a private wine cellar.”[46] Silicon Valley’s lavish desire for exclusivity, pays for those who capitalized upon it. The Warriors did just that.

IV. Recommendation for Future NBA Franchises Implementing a PSL Financing

Everything in the NBA moves an accelerated pace. On the court, plays and offensive and defensive schemes developed by one team are constantly being stolen by others. For the past few years the Warriors were the NBA’s most successful franchise both on and off the court. As of the publication of this article, the Warrior’s record stands at 2-10 in the Western Conference.[47] Any team can become the next generation’s Warriors. Suddenly, the remarkable feat the Warriors accomplished in their membership program may soon be not only doable by another franchise but outdated. As a reminder, Lacob & Gruber bought the team as recently as 2010.

As a reality, future smaller market teams implementing a PSL will likely be unable to enjoy the advantages the Silicon Valley provided to the Warriors. There are simply not many locations that contain such wealth and scale of well-financed corporations. However, future NBA teams should get more favorable considerations in their own future PSLs by stealing from the Warrior’s playbook.

Specifically, these teams should release limited information to the public. That information should likewise be framed and pushed in marketing as benefits. Moreover, future teams should additionally make sure to incorporate the latest entertainment innovations in their new stadium and incorporate similar public relations victories such as offering a “refund”. Specifically, for the business fan, the offering should be packaged through marketing efforts as a business opportunity. And, for those regions’ special corporations, teams should create only a limited number of courtside lounge type-suites with over-the-top features in an effort to instigate their own bidding war for the team’s benefits.


[1] Mark Medina, Will Steph Curry and the Golden State Warriors Give New Chase Center a Five-Star Rating, USA Today (Oct. 6, 2019), https://www.usatoday.com/story/sports/nba/2019/10/06/golden-state-warriors-first-game-chase-center/3892188002/.

[2] Ben Golliver, Inside Chase Center, the Warrior’s Billion-Dollar, Privately Financed San Francisco Arena, The Washington Post, (Mar. 6, 2019), https://www.washingtonpost.com/sports/2019/03/06/inside-san-franciscos-chase-center-warriors-billion-dollar-privately-financed-arena/.

[3] Al Saracevic, Warriors Reveal Long-Term Chase Center Season-ticket Plan, San Fransisco Chronicle, (July, 19 2017), https://www.sfchronicle.com/sports/article/Warriors-new-offer-Season-tickets-for-30-years-11300137.php.

[4] Martin J. Greenberg and M’Kenzee Galloway, Personal Seat Licenses in the NBA: Golden State Warriors, Greenberg Law Offices, (Feb. 1, 2018), https://www.greenberglawoffice.com/personal-seat-licenses/#_ftn83.

[5] Bruce Schoenfeld, What Happened When Venture Capitalists Took Over the Golden State Warriors, N.Y Times, (Mar. 30, 2016), https://www.nytimes.com/2016/04/03/magazine/what-happened-when-venture- capitalists-took-over-the-golden-state-warriors.html.

[6] Golliver, supra note 2.

[7] Rick Maese, NBA Twitter: A Sports Bar That Doesn’t Close, Where the Stars Pull Up a Seat Next to You, Washington Post, (May 31, 2018), https://www.washingtonpost.com/news/sports/wp/2018/05/31/nba-twitter-a-sports-bar-that-doesnt-close-where-the-stars-pull-up-a-seat-next-to-you/.

[8] Id.

[9] Id.

[10] Tim Cato, How Much Did Each NBA Owner Pay to Buy Their Teams?, SB Nation, (Sep. 5, 2017), https://www.sbnation.com/nba/2017/9/5/16255168/nba-teams-sold-highest-record-price-all-30.

[11] Darren Rovell, Golden State Warriors Sell for Record $450 Million, CNBC News, (July 15, 2010), https://www.cnbc.com/id/38262946.

[12] Id.

[13] The Business of Basketball: #3 Golden State Warriors, Forbes, (Feb. 2019), https://www.forbes.com/teams/golden-state-warriors/#5aaa9092f0a7.

[14] Schoenfeld, supra note 5.

[15] J.A. Adande, Lacob, Guber hae deal to buy Warriors, ESPN, (July 15, 2010), https://www.espn.com/nba/news/story?id=5383261.

[16] Tiffany Davis, New Money, New Problems: On the Changing Face of NBA Ownership, Sports Illustrated, (Oct. 22, 2015), https://www.si.com/the-cauldron/2015/10/22/new-money-new-problems-changing-face-nba-ownership.

[17] Katie Canales, We Toured the Golden State Warriors’ New $1.4 Billion San Francisco Arena, the Most Luxurious Arena in Sports, and it’s Just What San Francisco’s Tech Elite Ordered, Business Insider, (Aug. 29, 2019), https://www.businessinsider.com/chase-center-golden-state-warriors-stadium-san-francisco-photos-2019-8.

[18] Id.

[19] Id.

[20] Silicon Valley SaaS Companies, Crunchbase, https://www.crunchbase.com/hub/silicon-valley-saas-companies#section-overview, (last visited Nov. 15, 2019).

[21] See Schoenfeld supra note 5 (explaining the increasing interest in the NBA by venture capital executives).

[22] Danielle Allentuck and Kevin Draper, Baseball Saw a Million More Empty Seats. Does It Matter?, N.Y Times.

[23] Chase Center Membership Program FAQ, https://www.nba.com/.element/media/2.0/teamsites/warriors/pdf/chase- center-membership-faqs.pdf.

[24] Golliver, supra note 2.

[25] Scott Ostler, Warriors; New Arena Gives Some Season-Ticket Holders Sticker Shock, San Francisco Chronicle, (Mar. 1, 2018), https://www.sfchronicle.com/sports/ostler/article/Warriors-new-arena-gives-some-season- 12720962.php?psid=ixvj.

[26] Ron Leuty, How the Warriors Shift the Ticket Lineup to Deliver the Right Value’, Biz Journals, (June 22, 2018), https://www.bizjournals.com/sanfrancisco/news/2018/06/22/golden-state-warriors-season-tickets-chase-oracle.html.

[27] Ostler, supra note 25.

[28] Chase Center Membership Program FAQ, https://www.nba.com/.element/media/2.0/teamsites/warriors/pdf/chase- center-membership-faqs.pdf (last visited Nov. 15, 2019).

[29] Id.

[30] Ostler, supra note 27. .

[31] Id.

[32] Id.

[33]Chase Center Membership Program FAQ, https://www.nba.com/.element/media/2.0/teamsites/warriors/pdf/chase- center-membership-faqs.pdf (last visited Nov. 15, 2019).

[34] Rick Welts, Golden State Warriors Season Tickets Will Require A 30 Year PSL Agreement At Chase Center, http://www.fromthisseat.com/index.php/blog/19863-golden-state-warriors-season-tickets-will-require-a-30-year-psl- agreement-at-chase-center (last visited Nov. 15, 2019).

[35] Tim McMahon, Annual Inflation, Inflationdata.com, (Nov. 13, 2019), https://inflationdata.com/Inflation/Inflation/AnnualInflation.asp.

[36] Id.

[37] Id.

[38] Canales, supra note 17.

[39] Id.

[40] Id.

[41] Golliver, supra note 2.

[42] Id.

[43] Golliver, supra note 2.

[44] Canales, supra note 17.

[45] Ron Leuty, Ready for tipoff: Inside the Warriors’ New Chase Center, San Francisco Business Times, (Aug. 26, 2019), https://www.bizjournals.com/sanfrancisco/news/2019/08/26/golden-state-warriors-chase-center-opening.html.

[46] Golliver, supra note 2.

[47] ESPN, NBA Standings, https://www.espn.com/nba/standings (last visited Nov. 15, 2019).