When it Comes to Signing Basketball Players Like Kevin Durant, NBA's Golden State Warriors Have the Lacob Edge
“I’m glad Larry Ellison didn’t get it. That proves you don’t have to be a dick to win.” The date was July 15, 2010, and the speaker was a radio host in San Francisco (I’m paraphrasing from memory, since I heard it almost eight years ago). Bidding had just concluded for potential buyers of the sale of the Golden State Warriors, one of the worst basketball franchises in the National Basketball Association (NBA). Many sports fans had been led to believe that Larry Ellison, CEO of Oracle, wanted the team badly and would win the bidding. After all, the team's arena was already named after his company.
Oracle Arena. Creative Commons via Flickr.com by May Wong.
But he didn’t. When the new majority owners of the Golden State Warriors were announced, they were two men whose names were not familiar to most sports fans: Joe Lacob and Peter Guber. Joe Lacob is a billionaire venture capitalist with deep connections in Silicon Valley. And as more NBA stars turn toward investing and gaining equity in technology companies, no one is better positioned than the athletes who play for Joe Lacob. He gives the Warriors an edge that few NBA owners can match.
From Boos to Championships
In early 2012, the Warriors held a celebration to retire the jersey number of one of the team’s few heroes of the past, Chris Mullin. This was a hapless team that had foundered for many years since its only championship, more than a generation earlier. Getting into the playoffs at all was a highlight for this team. When the new majority owner, Joe Lacob, took up the microphone in the arena that night, he was booed by the team’s fans.
It was unfair of the fans to boo Lacob in early 2012, since he had been in control of the team for less than two years at that point. But decades of fan frustration spilled over and he took some of the blame for past ineptitude. It seemed that nothing would change.
Then all of the sudden, under Lacob’s watch, everything did change. Past draft picks, including Steph Curry and Klay Thompson, began to mature into not just good NBA players, but bona fide stars. A dark horse hire in the front office, former agent Bob Myers, ascended to the General Manager role. He began to fill in holes and brought in key drafts picks such as Draymond Green and Harrison Barnes in 2012. Owner Joe Lacob landed his golden boy coach, Steve Kerr, in 2014 after few basketball experts predicted that Kerr would forgo other career opportunities to coach the Warriors, a team that always had trouble attracting the top people.
Later, the team attracted one of the NBA’s marquee stars, Kevin Durant, to join in free agency and then renew on a below-market contract extension.
Owner Joe Lacob (in the middle with arms raised) celebrating one of his championships. Source: USA Today.
And now in early 2018, how big has the change been? Looking back just a few short years later, the Warriors have won two NBA championships and appeared in the last three NBA Finals. They now enter the playoffs again this year with an injured squad and tougher competition around the league, but with the chance to go deep into the playoffs once again. That will be at least four straight years that the team has set up as one of the top forces in the NBA.
Kevin Durant, Andre Iguodala, and David West All Left Millions of Dollars on the Table to Sign With the Warriors
Many experts predict that, barring injuries (which is a big “if”), the Golden State Warriors will contend for more NBA titles in the years to come. Franchise player Steph Curry has been signed to a long term deal. And this week, we learned that the team’s other franchise player, Kevin Durant, will opt out of the second-year of his current below-market contract.
Why is he opting out? Does he want to test the market and make more money? No, rumor is that he will sign again with the Warriors on a restructured deal. Durant seems to have some behind-the-scenes understanding with Warriors’ ownership.
Last year, Durant signed a two-year deal for WELL below his market rate, now opting out of the second year with his option. As CBS Sports reported, “When Kevin Durant re-signed with the Warriors over the summer he did so at a massive discount. The expectation was that he would take less than the max, but nobody expected him to sign the two-year $53 million deal he agreed to.”
Durant and Curry. Source: Golden State Warriors.
Will he keep signing below-market deals (taking advantage of the increased salary cap each year, then opting out and re-signing again) to keep this group together and keep them contending? Super-bench player Andre Iguodala signed again with the Warriors in 2017 on a three-year extension, passing up on the chance to make more money elsewhere. Veteran David West did the same, passing up millions of dollars elsewhere to sign for the league minimum salary with the Warriors in 2016.
What on earth is going on here? On the surface, there are two possibilities: (1) This is a nice group of guys and they like playing with one another and for coach Steve Kerr (more than they like making millions of dollars more elsewhere). (2) These players want the chance to win championships with a loaded roster (which is worth more to them than the millions of dollars they might make playing on another non-contending team).
Conventional wisdom is that one or both of those are true. And yet, from Bob Myers to Steve Kerr to Kevin Durant to Andre Iguodala to David West to Kevin Durant again (and others I have not even mentioned), owner Joe Lacob seems to get the right deal done. In the end, he almost always gets his man, even when they seemingly had more lucrative options elsewhere. Basketball fans have begun to expect Lacob will be able to attract anyone he wants.
Source: Bloomberg.
The Silicon Valley Warriors
And that is the third reason top talent keeps signing with the Warriors: Joe Lacob.
Before buying the Warriors and helping steer them to two titles and three finals in the last three years, Joe Lacob was a partner at Kleiner Perkins Caufield & Byers (technically, he still is). That’s one of the top venture capital firms in Silicon Valley. How can Joe Lacob keep getting Kevin Durant on below-market contracts? Lacob doesn’t need to give Durant all that money himself. He’s a venture capitalist with every connection in Silicon Valley.
Last year, the New York Times posted a story entitled, How Kevin Durant Became Silicon Valley’s Hottest Startup, which included the following update:
“Asked if he is plugging into the Bay Area tech scene, Mr. Durant responded that he is eagerly following the lead of a Warriors teammate, Andre Iguodala, who is a noted investor in companies like Twitter, Facebook, and Tesla.”
Andre Iguodala of the Warriors, a big player in the world of tech investing. Source: TechCrunch.
Curry and Iguodala. Source: Bloomberg.
By the way, Durant also drives a Tesla. The same article went on to note that the Durant Company, his investment entity, has “a swirling portfolio of investments in tech companies like Postmates and Acorns,” aided by super Silicon Valley angel investor Ron Conway. (Conway is a friend of Warriors owner Joe Lacob who was a key public supporter of its new arena project and often can be seen sitting in the first row at games.) Steph Curry also invests in Silicon Valley companies like Brandless and Slyce (which he co-founded).
“Assisted by well-connected venture capitalists like Ron Conway and Ben Horowitz,” reported Barron’s, “more NBA stars are making a fast break for tech investments, partnerships, and start-up equity. Front and center are the Warriors, who are taking advantage of their proximity to Silicon Valley and ties to owner Joe Lacob.”
Lacob, Sports Executive of the Year in 2016. Source: PBS.
Lacob’s Edge
Owner Joe Lacob can introduce them to all the right people in Silicon Valley. Venture firms like Lacob’s Kleiner Perkins not only know how to select successful companies of the future; they have the power to help brand their trends, develop them, and mould them into winners. And what startup company wouldn’t want Steph Curry, Kevin Durant, Draymond Green, or Andre Iguodala on its board, shaking hands with investors and charming other star-struck board members?
Kevin Durant and his agent/partner announcing their venture capital work. Source: SF Chronicle.
“KD, you’re my guy. Stay here and help me win some titles. Even after you retire, you’ll be in the center of the action and earning even more. You can make a difference in the world. And I can make you a billionaire.”
Connecting the dots, that’s probably what owner Joe Lacob is able to tell these guys. If so, it’s a powerful pitch, and there’s every reason to believe he can deliver on it. That’s one more reason the Warriors players don’t mind giving up more lucrative offers to play here. Working with Uncle Joe and his buddies, they’ll make that money back many times over, not only now but for years after retiring from their playing careers. For now, they look like saints for signing on the cheap because they love their teammates, love the fans, and love contending for titles.
Warriors Owner Joe Lacob: What's the Secret to Success? From ESPN.
They also love Joe Lacob and his friends. And the rest of the league has very little answer to what this guy can do to attract and retain the top players. He appears to manage his team’s budget and stay beneath the salary cap. But his team’s payroll is only the beginning of the money that Lacob can help these players access and leverage. Off the field, their earning potential is much greater in the long run. With that additional income potential, the Warriors can afford to underpay and still score top players.
Screenshot from CNBC.com
Sources:
Joe Lacob Beats Larry Ellison to Become New Owner of Warriors: https://www.mercurynews.com/2010/07/15/joseph-lacob-beats-larry-ellison-to-become-new-owner-of-golden-state-warriors/
Durant Will Opt Out and Restructure Deal: https://www.cbssports.com/nba/news/kevin-durant-will-reportedly-opt-out-of-contract-to-restructure-deal-with-warriors/
David West Chose Warriors and a Minimum Salary: https://www.mercurynews.com/2016/07/05/report-david-west-will-join-warriors-for-minimum-salary/
Iguodala Turned Down Bigger Offers to Re-Sign with Warriors: http://bleacherreport.com/articles/2704611-andre-iguodala-warriors-reportedly-agree-to-3-year-48-million-contract
Startup Equity is New Off-Court Play for NBA Stars: https://www.bloomberg.com/news/features/2017-08-24/the-new-off-court-play-for-nba-stars-is-startup-equity
Why Steph Curry and Andre Iguodala Are Getting Into Tech: https://www.bloomberg.com/news/articles/2017-08-17/why-steph-curry-and-andre-iguodala-are-getting-into-tech
Kevin Durant, Silicon Valley’s Hottest Startup: https://www.nytimes.com/2017/02/18/style/kevin-durant-silicon-valley-golden-state-warriors.html
Warriors Bet on Tech Startups: https://www.barrons.com/articles/silicon-slam-dunk-golden-state-warriors-bet-on-tech-start-ups-1513263624
Golden State Warriors, Silicon Valley Enjoy Close Ties: https://www.cnbc.com/2017/02/11/golden-state-warriors-silicon-valley-tech-industry-enjoy-close-ties.html
Top image: Slyce, Warriors star Steph Curry's startup.
Its a smart move from sport stars to invest their hard earned money in businesses, you can't be a player for all your life and everyone that gets into sports knows its not a life career and you'll be out before you hit 50 for sure.
Investing their money on tech start ups is a win-win for them, for the companies and for the future of their families. I rather see sport stars investing their millions of dolars on companies, helping the economy and other people achieve their dreams than waste them on crazy cars, parties and houses that most end up losing at a later time in their lives, especially if they don't find a good financial floor after retiring from sports.
Yes, it gives them something for the future, both in terms of financial benefit and a second career.
I likewise believe it's critical to feature the manner by which Lacob and the administration have figured out how to manage the reality of having 2 hotshots like Kevin Durant and Curry on a similar group. Once in a while it has happened that there are groups that put a great deal of cash in players who don't have science among st them and starts an inner selves battle that influences the group to fall flat.
For sure. The fact that they get along and want what's best for the team are big factors also.
You answered to a pesky copy/paste abuser who uses multiple accounts to farm upvotes.
This comment for example is stolen from @alejandromata
I wish @steemcleaners would finally blacklist him and all of his accounts ...
The billionaire boss is good but I'm more envious of the NBA players who can have both ends of the world. Playing at the highest level of basketball while living on the edge of technology world? It's a dream!
Many NBA players are smart now by investing their money during their playing days. There's a long list of players and even NBA superstars went bankrupt after earning millions of dollars due to failure to invest.
It's all about connection. Joe Lacob is a smart man.
I also think it's important to highlight the way in which Lacob have managed to deal with the fact of having 2 superstars like Kevin Durant and Curry on the same team.
Sometimes it has happened that there are teams that invest a lot of money in players who do not have chemistry between them and begins an egos fight that makes the team fails. Although Kevin Durant is a very humble person and Curry has been able to give him his space when he had to. Also It's impressive how he managed to create an environment in which players do not worry exclusively about money
This shows that Jacob is not an owner who only invests money but that he cares about the relationships between his players, which has given him these recent successes.
They definitely have targeted nice guys who are on the low end of the ego spectrum. It certainly has helped with chemistry.
Definitely, both Curry and Durant are very nice guys. They're very natural and kind.
This is what happens when people are able to see beyond short term gains. With the salary cap the way it is, these guys could definitely make a few million more today, but by becoming part of that valuable community, they are positioning themselves to earn significantly more in the long run.
Building something that has such value takes some short term sacrifice. Hmmmmm kind of sounds like something we all know very well.
Just don't get me started on how the Bulls front office refused to listen to Tom Thibodeau and drafted Marquis freaking Teague instead of Draymond Green like he told them too. Oh and you are also welcome for Jordan Bell too.
I feel this will take a mixture of competence and a good salary to spring up the motivation in any existing team. For Joe lacobs perspective it won't be so much a crime when passion is simply rewarded.
Wow! Not only this great for the players in the long term - while in short term starting a snowball with athletes teaming up with start ups - but it's going to be an additional reason why other players would want to join the Golden State Warriors... Mentorship, experience and whatnot.
One of the best prospects in Europe in the recent years Luka Doncic said recently that in the NBA draft he hopes to be picked by the warriors, there's already the appeal I think it will grow even bigger.
It was a backwater for decades that would need to overpay athletes to come play there. But more recently, it's a preferred destination.
Sometimes the darkest points in our lives actually bring out the best in us. He had been in power for almost two years and nothing changed until he was booed by the crowed.
The crowd actually brought out the best in him and he pushed beyond his limits to become really great.
This is a lovely story and I got glued reading it.
Thanks. I think it was more that he hadn't had a chance to implement many changes yet and that fans did not see impacts from his changes that early on. Lacob improved some things and deserves plenty of credit. But also, some decisions made by others before his time (such as drafting Steph Curry) began to pay larger dividends during Lacob's tenure.
These athletes and their coaches know the power of inspiration. To keep winning, they feed their minds as much as their bodies. They distill their drive and determination into short basketball phrases that the rest of us can feed off of.
Minds and wallets. :)