The marriage of private equity and sports is nothing new. First Round remembers when Marc Cuban bought a majority stake in the NBA’s Dallas Mavericks for $285 million in 2000. Now venture capitalists, private equity investors and hedge funders own more than a quarter of the league.
Kleiner Perkins Caufield & Byers’ Joe Lacob is a fine case in point: he is majority owner of the Golden State Warriors, which he bought in 2010 and which last year won the championship.
The Warriors have also just broken the record of the most wins in a season, surpassing the Chicago Bulls’ record of 72 wins in the 1995-96 season, when Michael Jordan led the team. (During Lacob’s predecessor’s 16 years of ownership, the Warriors reached the playoffs only once.)
Lacob hasn’t just succeeded in making the Warriors a winning team; he has generated a handsome multiple. His initial investment of $450 million (at the time deemed wildly excessive) is now worth $2 billion, according to a recent New York Times Magazine article.
Running an NBA team isn’t exactly like running a startup. But Lacob’s plan to bring the VC mindset to the NBA has clearly paid off. “I thought about the way we design a board of directors, the way we design the financing,” he told the NYT Magazine. “There’s an architecture to it. And I started thinking about the architecture I would use when I owned and built my own team someday.”
VCs are often forced to change entire management teams at startups and Lacob wasn’t daunted by the challenge of turning around the Warriors, according to the article. Lacob is confident the VC way is what made the Warriors successful.
“The great, great venture capitalists who built company after company, that’s not an accident,” he said. “And none of this is an accident.”
Photograph: Michael Tipton/Flickr.com