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The Golden State Warriors dominated the NBA for the better part of a decade. Since the arrival of owner Joe Lacob, they won more championships and sold more merchandise than any other franchise in the sport. And in 2019, they opened the doors on a lavish new stadium.
THE BIG DEAL
EGO AND AMBITION NOT ONLY BUILT THE GREATEST TEAM OF this era, but were necessary for its purchase.
On July 15, 2010, Bay Area newspapers received a curious press release from California’s richest man. Oracle founder and tycoon bon vivant Larry Ellison made a surprising non-announcement: he wasn’t acquiring the Warriors. It had long been assumed that Ellison was in line to buy the team, then a long-suffering franchise, from then owner Chris Cohan. But something had happened.
“Although I was the highest bidder, Chris Cohan decided to sell to someone else,” Ellison’s email read. “In my experience this is a bit unusual. Nonetheless, I wish the Warriors and their fans nothing but success under their new ownership.”
Fans could be forgiven for some confusion. That day’s edition of the San Francisco Chronicle included a story entitled, “Ellison Reportedly Close to Buying Warriors.” Ellison was indeed close to buying the Warriors. Or at least he thought he was close. “Someone else,” it turned out, was, out of desperation, playing by an entirely different set of rules.
Now flash forward to July 10, 2018. The deal has long since been done, and the Warriors’ suffering is a distant memory.
“Maybe I should eat something so I can be human,” Joe Lacob says, indicating that he just might be in on the joke. The joke, of course, is that Lacob is more machine than man, that he cannot fathom the utility of social graces, that he is a parody of the already parodic Gavin Belson of HBO’s Silicon Valley.
The other billionaires in the building likely aren’t in a joking mood. We are at the Wynn casino in Las Vegas, and Lacob is about to step into the NBA’s annual Board of Governors meeting, the league’s high court of petty grievances. That ballroom will contain some twenty-odd ownership groups who’ve no hope for a championship. Men who turned thousands into billions see no realistic avenue past Lacob’s smirking face. Joe is lucky that these competitors are merely armed with pens, as Julius Caesar might have encountered a friendlier crowd when he ran into some senators at the Theatre of Pompey. Joe, who refers to himself, co-owner Peter Guber, and Warriors president Rick Welts as a “triumvirate,” eschews a toga in favor of flowing white shirts tucked so deep into his 1990s jeans that the cloth grazes the ’80s.
Dad jeans or not, he boasts decadent imperial ambitions. “People say we’re a dynasty today,” he muses. “OK, we’ve done really well, but you know, there’s been some great ones in the past. Our goal is to be one of the greatest teams over a long period of time.”
Lacob doesn’t believe in drop-off. He doesn’t buy into the notion that the NBA is cyclical. His idea is that, when the sun sets behind the Golden Gate Bridge, it’s only to temporarily bathe in an ocean as wide and deep as the championship window in front of it. No fallow periods, just Warriors greatness forever.
Obviously, this perspective is insane. But.
“It’s the only way you’re going to achieve success in life,” Lacob explains. “You have to be an optimist, you have to work harder than anyone else and you have to be looking to the future all the time. You can’t rest on your laurels. If we’re going to rest on our laurels, all right, we might as well go sit on the beach and call it a day.”
At the Board of Governors session in summer of 2016, Kevin Durant’s signing was the sore point. “I felt attacked,” Lacob says of that session. This time, Joe enters the meeting right on the heels of the Warriors snagging All-Star DeMarcus Cousins for the midlevel exception.
Lacob is animated when talking about the Cousins coup, even more so than usual. Like many CEO types, Lacob projects an outsized energy. “I have never had coffee in my life,” he says with a laugh. “I don’t need it! Let’s just leave it at that. And I don’t take drugs, I don’t do any of those things.” He speaks quickly, with little pauses between sentences, followed by bursts.
The Cousins signing fits a narrative Lacob likes, as it’s a testament to a vision where, for all the Warriors-curbing sentiments at the BOG, the Warriors still remain one step ahead of rules designed to hem them in. “There’s a lot of market inefficiencies in the NBA,” Lacob says. “Other teams could have gotten Cousins, but they didn’t. There’s always going to be some sort of opportunity, some inefficiency, I believe.”
Believing that you’ll keep seizing a market inefficiency means believing that you’ll keep outsmarting an industry replete with smart people. Not everyone is comfortable airing such self-regarding sentiments. Lacob is too ravenous in pursuit of the next thing to worry whether the last thing offends. Brash? Certainly. But such brashness is indivisible from the ambition that propelled Lacob into that very ballroom, when no such thing should have been possible.
Before the Warriors were Lacob’s, Ellison’s purchase had been rumored for years. When Cohan put the Warriors up for sale in March 2010, it was a fait accompli, given Ellison’s natural advantages. With $28 billion in a recession-ravaged economy, Ellison should have had a monopoly over the selling process. A notoriously extravagant spender, he claimed one of the most extensive real estate portfolios on earth, to go along with a similarly lavish fleet of superyachts. Even for your average billionaire, entering a bidding war with Larry Ellison was akin to fighting a tank with a bayonet.
Conversely, who was Joe Lacob? A successful Kleiner Perkins partner to be sure, but not to the tune of billions. Nor did Lacob have anything resembling Ellison’s fame. On the day of the Warriors team sale, the name “Joe Lacob” had not appeared in the Chronicle since 1998, back when the paper briefly mentioned Joe’s purchase of a San Jose squad in a since defunct women’s basketball league.
Lacob at least had a partner in Hollywood executive Peter Guber, a man of similar capital capabilities. The two had joined forces and grown close while almost winning a bid for Dodgers ownership alongside Frank McCourt, who went on to purchase a percentage of that team later, in 2004. One small catch derailed their joining McCourt. “Frank called when we thought the whole deal was done. Literally done!” Guber says in his office at Warriors HQ, where he’s watched over by a massive monochrome photograph of legendary filmmaker John Huston.
Guber projects a similar abundance of energy, but his elocution has more musicality, and is all the more entertaining for his thick Boston accent. There’s a theatrical element to it. Guber’s words often crescendo as he makes a point.
“Frank called and asked, ‘Can you two guys come back to Boston?’” Guber said. Lacob and Guber would meet in McCourt’s Copley Square office.
McCourt wanted more money from Lacob and Guber up front. But that wasn’t all. Guber explains, “Frank says, ‘I would like you to meet the president of the organization.’ How can you have a president when you haven’t closed the final deal? So he brings his wife in, Jamie.” With a laugh, Guber says, “I think, the four of us cannot sleep on one pillow at night! There’s too many people there. So that was that.”
The McCourts would go on to suffer an ugly, expensive public divorce that would eventually lead to a bankruptcy sale of the team. The bond between Lacob and Guber would continue. And they still wanted a piece of pro sports. Years later, Lacob and Guber got wind of another opportunity.
Guber says, “One day [San Francisco Giants CEO] Larry Baer called me and said, ‘How would you like to buy the Warriors?’” This was a thrilling bit of information for the Guber-Lacob tandem. Chris Cohan was selling off a dream scenario and possibly not even in an auction setting. Maybe Baer could facilitate. It was an incredible prospect for a prospective buyer. The bigger the auction, the higher the price, and a higher chance you’d lose out. But if you had a one-to-one deal? Then you could get a team in short order, likely for a fantastic price.
That opportunity was fleeting. Though Cohan may have been relatively hermetic, his phone would still ring on occasion. Often, the man on the other line was Sal Galatioto, a master of running team auctions. “Well, I’m relentless, so I call everybody,” Galatioto recalls. “A lot of people won’t even talk to me, but I kept calling Chris and he finally took a meeting.”
Suddenly, Cohan was in the auction business. “Larry [Baer] went dark,” Guber says with a grimace. Baer had to remove himself from any proceedings because there were now multiple bidders and he couldn’t show favoritism. In fact, there would be twelve prospective buyers for the Warriors, a “frothy auction” as Galatioto calls it.
It was no surprise that Galatioto wrangled so many bidders for his client. The sixty-six-year-old banker happens to be one of the most quietly influential people in sports. Galatioto is the industry’s leading team sale financier. He does it in a boutique, specialized kind of manner one associates with small-scale luxury shops—a Friedman’s Shoes, but for sports franchises. Somehow, Sal sells billion-dollar concerns out of an office that employs eight people.
How did Galatioto carve out a niche so massive? Relentlessness, mostly. The son of Sicilian farmers, Sal shined shoes and worked loading docks as a youth. So many in high-level banking hail from the Ivy League. Sal graduated from Hunter College. He craved a place in the upper echelon of sports business and there was only one way to get it: cold-calling.
Sal explains the process: “Before the Internet, you could buy these books that would have all this information about teams. You would get the general number. You’d call and you would ask for the owner because it would list who the owner was. And I would just keep trying.” The success rate on this method was not high, but Sal kept calling.
“Abe Pollin was the first guy to give me a chance,” Galatioto says of the since deceased former Wizards owner. “I was calling owners. Nobody would take my phone calls, nobody ever heard of me back in the mid-nineties. And I decided on a summer Friday afternoon to wait, because his assistant would never let me through to him, to call him around five o’clock hoping she had left and Abe would pick up the phone. He picked it up, I started talking to him and he said to me, very nicely, ‘I’ve never heard of you. What do you know about sports?’ And I said, ‘Mr. Pollin, I love sports, please give me a meeting.’”
On the spot, Pollin decided to give Galatioto a test. If Sal passed, they would meet. If Sal failed, they would never speak again. He then asked if Galatioto could name the 1969 Knicks starting lineup from the series in which they swept the then Baltimore Bullets. Sal said, “Mr. Pollin, not only can I tell you the Knicks, I can tell you the five starters on the Bullets.” After Sal rattled off the names from both teams, he’d won a meeting with Pollin, and earned a beachhead into the league. Through Pollin came connections, conversations, and teams to sell in multiple leagues.
For years, the routine continued. Constant phone calls, obsessive checking. With Sal on the case, Cohan wasn’t going to simply sell his team to one buyer. Lacob and Guber would have to beat steep odds.
“Peanuts! Peanuts here! Get your peanuts, peanuts, peanuts!” Lacob performs the chant with a wide grin. This used to be his job, hawking peanuts in Anaheim Stadium to pay for college. “I sold peanuts for seven years,” Joe reminisces. “Those days you had to sell. You walked the aisles, you threw the peanut bags and you kept the quarters.”
The ever-opulent Wynn is a long way from those peanut bag days, longer still from the days that preceded those. Lacob’s youth in New Bedford, Massachusetts, was humble enough that he avoids visiting, even when in town for Boston’s MIT Sloan Sports Analytics Conference.
“I have a general view, which is that I don’t like to look back,” Lacob says. “And that’s kind of the way I’m built, that’s the way I think. I’m all about the next thing, the future. So the idea of going back to my hometown, which was crappy growing up, nothing great, not the nicest place in my mind. Not to say anything negative about that city, but I’ve only been back twice since 1969, once to show my kids and once to show my ex-wife. That’s it. I have no interest in going and I don’t want to be near it.”
A certain stereotype of the ultrarich holds that the most arrogant “bootstraps” types are those who were born on third base and assume they hit a triple. This highlights the hypocrisy of a certain cohort, but the truth is likely more complicated. Among the ultrarich I’ve met, the hardest to humble are probably men like Joe Lacob, who came from nowhere. How can anyone tell Joe Lacob anything at this point? “It is attitudinal,” Lacob says of his ethos. “This is America. It’s a free market system. You get to do these things, you get to work really hard.”
The current owner of the Warriors is someone who bet on himself and beat odds steeper than any gambler in the Wynn faces. And Lacob beat those odds so soundly that in the Board of Governors ballroom, he might as well be the house.
And yet, even for Joe, there’s something to be said for a certain kind of collectivism. “You probably don’t understand this, but in my industry, venture capital, you never own one hundred percent of the deal,” Lacob says. “You always have partners spelled with a capital P. That’s the way I think and I was taught to think. It’s just better because some of those partners are useful, they can help you think through things, problems.”
Joe needed Peter and not just for the capital influx. Guber offered a crucial idea at the right time.
Guber, who grew up more comfortably in his neck of the Boston area, speaks often of empathy and understanding the plight of other teams in the league. Unlike Lacob, Guber does believe that the NBA is cyclical. “I have a different view,” Guber says. “My view is you have to deal with the ebbs and flows.”
Lacob only knows one flow and that’s forward. Guber has a bit more feel, more of an interest in what makes people tick. Together, the two would execute a play for everything. That play came in the form of a threat, delivered in person.
When it got down to the finals in the bidding process, Ellison versus Lacob-Guber, the latter party was already uncomfortably offering far more than planned.
“When it got to $400 million, it was us and Ellison,” Lacob remembers. “I wasn’t even sure Ellison had a real bid at 400, I didn’t know. There were a lot of rumors that he did not, that he was waiting for me to go away because we needed to go away, we weren’t real. We had heard those rumors. So we were there, we felt we could do that. And once it got to that level, which kind of was the walk-away number initially, I said, ‘all right, thank you so much.’ It was going to take four [hundred million] and unfortunately he had more money than us and he, if he really wanted it, let’s be clear, he could’ve had it because he was one of the richest men in the world. He could’ve outbid us, no question.”
There is simply no way to beat Larry Ellison in an open auction. It was a contest between two non-billionaires and a billionaire twenty-eight times over. This left only one option for Lacob and Guber: they had to give Chris Cohan an exploding offer.
The “exploding offer” tactic has been deployed by many an NBA general manager, some rather infamously: Take this now, or it goes away forever. Take this offer to someone else and it ceases to exist as an opportunity, much less leverage. It can be a bold play, and sometimes a called bluff. But if you’re desperate enough, it’s the only play that’s right. And Lacob-Guber were desperate, after having missed out on prior teams.
How to handle the notoriously shy Cohan was a tricky business. Lacob suggested lobbing the exploding offer over the phone. Guber had to counsel.
Guber recalls, “Joe said, ‘We’ll call him and make this offer.’ I said, ‘Man, I’m a storyteller!’ That’s my whole history, thirty-five years. When you’re trying to sign a piece of talent, a big star actor, a talent, an artist, you have to be there. You have to look them in the eye. You have to breathe the same air. You can’t take any edge off your opportunity.”
“The key part of the strategy at that point had turned,” Lacob says of the ploy. “I called Sal Galatioto and said, ‘I need a meeting with Chris Cohan directly.’ And Sal said, ‘He’s not meeting with the buyers.’ I said, ‘Well, I have to drop out then. I need to have a discussion about whether I could really buy this team.’
“At first Sal refused and then finally, for whatever reason, allowed us to meet with Chris Cohan. And so he said, ‘His son has a lacrosse tournament in Baltimore and if you want to meet him, it’s going to have to be tomorrow.’”
It was go time. “I had a plane, fortunately,” Lacob says. “I got on a plane; I called the pilot and said, ‘Get it ready, I’m going to Baltimore.’ So we flew to Baltimore. This is where it gets really interesting.”
This is not the story that was told back in 2010, when the deal got done. At that time, and for years afterward, it was commonly presented as a simple tale, one where Ellison screwed up, underbid out of cheapness, complacency, or who knows what. The Baltimore meeting was not for public consumption.
Then commissioner David Stern hinted at it a bit at the time, saying of Lacob and Guber’s coup, “It wasn’t quite cloak and dagger, but it was to a degree.” There’s an open question as to whether this move was ethical. Lacob and Guber were circumventing the standard auction process, in favor of cutting clandestine deals. Guber rejects the premise of questioning the morality. “There are no rules, but you break them at your peril,” Guber says. “Anything that gives you a competitive advantage that isn’t illegal, maybe sometimes in certain circumstances immoral, I think is fair game.” He adds, “The idea of having a strategy to go at the last piece of the equation, to face the person, is not only appropriate, it is the best process. To not do it would be an act of derring-do of bad proportions.” In Guber’s estimation, and possibly in the culture of this world, the result is all that matters. “It’s binary,” Guber says. “You either had the deal or you didn’t have the deal.”
It should also be noted that, despite confirmation from multiple parties of the Baltimore meeting, Galatioto discounts this version of events, writing via email, “I don’t know where you got that, but it is totally untrue. [Cohan] never spoke with Joe. I handled all the negotiations. Whoever told you that doesn’t know what he is talking about. He is completely misleading you.” When told that more than one source had confirmed it, Galatioto would add, “It never happened! I was getting bids until we signed the purchase and sale agreement. Chris [Cohan] stayed completely out of the process. If they said that, they are delusional. I was the one that ran the auction. I am the only one who knows what happened. There was no negotiated deal and no meeting in Baltimore.”
And yet, in the version of events told by Lacob, Guber, and additional sources, Joe did indeed get on that plane and meet with Chris Cohan. Lacob retells, “I said in the meeting with Cohan, ‘I can’t bid against Larry Ellison. We just can’t do that. So can you name a price that you will sell it to me for. Just name the price.’ And we’re in at four hundred, which we thought was a lot, and I’m sure Larry [Ellison] did too. And Cohan said, ‘I can’t do that, we have a process, a bidding process, blah, blah, blah.’”
It was time for Joe to add some pressure.
“I said, ‘Well, here’s the deal—I’m not bidding anymore, so I’m out. I can’t beat him in a bidding process. But if you give me a price that you absolutely will take, I will give you an answer yes or no.’“
All a great plan in theory. In practice, it initially appeared to fail.
“Cohan did not accept this at first,” Lacob recounts. “I told Peter as we’re flying home, I said, ‘I don’t think we’re going to get it.’” All that work, all that preparation, had led to another impasse, another stymied effort at buying a team. Or so it seemed.
“The next day, they called me back, and his people said, ‘It’s decided. He likes you.’”
In theory, “like” shouldn’t have much to do with this process. In practice? A team sale is an unusual business, complicated by sentimentality, cronyism, and the reality that everyone involved is usually rich enough not to need the absolute best price. Guber had been on the wrong side of that dynamic back when he’d put together what seemed like an unimpeachable bid for the A’s.
“I made the whole deal with Billy Beane, making him president of the team,” Guber says. “Billy came to my house, negotiated the whole deal. All fully finished. All fully organized except for Major League Baseball. Then Bud Selig said, ‘Sorry I can’t approve you.’ He said, ‘You’re okay, but we can’t approve you because we’re going to do contraction. We’re going to contract Minnesota and Oakland.’ But it wasn’t contraction. It was concoction. It was, really, I think, that he wanted Lew Wolff, who was his roommate in college, to get the team.”
This illustrates another layer of complication in a team sale process: is it the commissioner or the seller who holds the cards? Some knowing parties have speculated that Ellison miscalculated and fostered more of a connection with Stern than with Cohan. While, say, longtime NBA executive Clay Bennett might have benefited from a tight relationship with Stern in his pursuit of the then Sonics (now the Oklahoma City Thunder), every one of these situations is different. Stern, though famously powerful, saw himself as more of a facilitator in this and other proceedings.
“I knew that Sal was representing the product, and I knew Joe, and I knew Larry [Ellison] and so I was in touch with them,” Stern says in a phone interview. “I don’t wanna get any further than that.” Stern adds his assessment: “Larry could’ve made the purchase, but he didn’t. He skipped a beat and Joe moves right in and took the team away from him.”
If Ellison didn’t have much of a relationship with Cohan, it would have been hard to entirely fault him, given Cohan’s status as something of a Keyser Söze of failure. Shamed by bad press, the former Warriors owner had not made a public appearance in years. Few who worked for him could provide me any details on his current status. Only one person provided so much as a phone number. The call was not returned.
Lacob had laid the groundwork with Cohan, though, having met with the man at AT&T Park years earlier. At the time, Cohan wasn’t selling, but Lacob wanted to make an impression.
“So he liked me maybe,” says Lacob, who then muses, “I think that part of it was that he really didn’t want Larry to get the team, perhaps.”
A source close to Chris Cohan says that Cohan’s wife, Angela, disliked Ellison and had influence over the ultimate decision. If that dislike proved decisive, it’s a reminder of how much of history gets determined by little-known actors. Few if any Warriors fans know who Angela Cohan is. Without her, a dynasty may never have risen in Oakland.
Lacob, of course, had his own influence over the proceedings. Having established a positive rapport, Joe sought to make a hard sell to Chris.
“‘OK, what’s the price?’ I asked,” Lacob recalls. “He said, ‘$440 million and there will be no deductions for anything you find during the due-diligence process. That’s the price, flat out, has to be it. Second, $20 million, nonrefundable under any circumstances.’ Now, that is a risk.
“And so I gave him an answer, instantaneously, and I don’t know where it came from, but it just came out of me: ‘I won’t do that.’ And he said, ‘OK.’ And I heard a silence at the other end of the line.”
The silence lingered.
Joe then broke in with, “But I will pay you $450 million, but there will be deductions for something we find absolutely by common business deal transaction standards.” Lacob additionally committed to the $20 million nonrefundable up front.
Lacob just had one other big, unusual demand: he needed a signed purchase agreement within seventy-two hours. Such arrangements usually take months, but Lacob pressed on. There was too great a fear of Ellison catching wind and blowing the offer out of the water. Sure, Cohan could orally agree to this deal, but what if Ellison pulled an extra hundred million out of his couch cushions? Could Cohan be trusted not to buckle?
“We worked straight, seventy-two hours,” Lacob recalls. “I said to our lawyer, ‘You do not go to sleep until this thing is done. ‘Cause this is the key, we have to get this closed, we can’t have a nonbinding agreement ’cause we’ll get reshopped.’”
Three sleepless nights later, the Warriors were secured, taken right from under Ellison’s nose. Guber celebrated at his Los Angeles–area home, while holding the “Ellison Reportedly Close to Buying Warriors” story up in the air. Lacob, on vacation in Greece, exalted while strapped in a helicopter flying over the Oracle at Delphi. He even allows some reminiscing for this one. “We took off up there and took our vacation days,” Lacob says. “That was a pretty big moment that you like to remember. And pretty fun when you think about it. That was a big moment.”
That moment was the start of a dominant dynasty. Many fans might prefer to know less about it. Nobody likes owners, frankly, even if they have some of the same personality tics and drives as top players. It can be preferable to think of the NBA as wholly determined by athletes. It can be comforting to think of the Warriors as something Steph Curry built on his lonesome.
Such fans would not be alone in wanting to avoid this particular narrative. Cohan wasn’t wholly happy with the end result, either. According to sources, Cohan was angered by Guber announcing at his and Lacob’s official introductory press conference as owners, “We’re not the cure for cancer, but we might be the cure for Cohan.”
“I sent him a note,” Guber says of the blowback.
- "While Strauss clearly loves the sport, he also treats the N.B.A. as a reflection of the 'Darwinian contest' prized by American society...[he] offers insights into how power gets played out in personalities--the motivations, insecurities, and over-all vibe of people who are often insulated from judgment."—The New Yorker
"Strauss skillfully captures a team peaking as change is taking place all around them, and pulls the curtain aside on the often unsavory realities of what it means to succeed in the NBA."
- What Ethan Strauss does best is to dispense with the niceties and to cut to the core. He's done it again with The Victory Machine, an unvarnished inside account of the Golden State Warriors, from the driven, resolute owner who bought them to the capricious, conflicted superstar who ultimately left them. A must-read for NBA fans.—Jackie MacMullan, senior ESPN writer and Hall of Fame basketball commentator
- "The Victory Machine is The Breaks of the Game of its era. Strauss pulls the curtain back to reveal the ambitions, insecurities, and riches that propel one of the most interesting sports leagues in the world. Most sports books are either idea-driven or character-driven-but Strauss has accomplished both. This is a book I'll come back to again and again for its insight and wit."—Kevin Arnovitz, NBA writer, ESPN The Magazine
- "The Victory Machine isn't a romantic look at the Golden State Warriors dynasty, but it gets to the human core of success and asks the reader to question everything he or she knew about sports."—Bomani Jones, cohost of High Noon
- On Sale
- Apr 14, 2020
- Page Count
- 224 pages