If the experience of the once sad-sack Golden State Warriors is anything to go by, the Raptors' value is about to skyrocket
Well before Kawhi and Kyle, the pan-Canadian, implicitly anti-American We the North slogan, the shot against Philadelphia that bounced around the rim, and a first NBA finals appearance by the Toronto Raptors, Brian Cooper had a problem.
A dilemma, both fundamental and elemental, centred upon the challenge of being a day one Raptors executive, circa 1995, and convincing a diehard hockey town to buy into an expansion NBA franchise — a team with a name inspired by a Hollywood summer blockbuster, a cartoonish logo, a sub-six-foot star player nicknamed Mighty Mouse, and a home arena that wasn’t an arena but a cavernous dome built for baseball.
Cooper’s initial answer was to sell the Raptors as a spectacle, an experience utterly unlike the good old hockey game, with dance packs, T-shirt tosses, an acrobatic mascot, thumping music and other assorted gimmicks intended to convince the curious first-time customer that a Raptors game was the place to be.
“We were selling entertainment first and basketball second, but now it’s basketball first,” said Cooper, now chair of MKTG, a global marketing agency and branding consultancy. “The level of fan sophistication is so much greater than it was 24 years ago. The Raptors have tapped into the patriotism nerve — something has been lit across the country. If you can then throw winning on top of that, there is going to be a huge multiplier effect increasing the brand value.”
Put simply, winning sells tickets and merchandise, attracts corporate sponsors, secures bigger broadcasting deals, convinces star players to come and elevates a franchise from being just another dot on the sporting map.
Consider the Golden State Warriors, current foil in Toronto’s basketball narrative, and the number three, as in the number of NBA championships the team has won since Joe Lacob and his partner, Peter Guber, paid an unheard of US$450 million in 2010 for a sad-sack franchise with a diehard fan base and a 50-plus-year-old arena on the wrong (Oakland) side of San Francisco Bay.
At the time, Forbes magazine valued Golden State at US$363 million in its annual NBA rankings, good for 12th spot in the 30-team league, but two rungs beneath Toronto, then valued at US$399 million.
Flash forward nine years and Golden State ranks third in the league at US$3.5 billion, more than double the US$1.67 assigned to the Raptors, owned by Maple Leaf Sports & Entertainment Ltd. (Team values are calculated by looking at broadcast deals, gate receipts, brand value, debt load, arena deals and sponsorships).
“During my first press conference as an owner I said we were going to win the NBA title in five years,” Joe Lacob said this week from his home office in the San Francisco Bay Area. “People scoffed.”
Five years later, Golden State won its first championship in 40 years, not because of Lacob’s words, but his deeds, including gambling on a young, no-name general manager (Bob Myers), firing a popular coach (Mark Jackson) and hiring an even more popular coach (Steve Kerr), trading away a fan favourite (Monta Ellis), building around shooting sensation Stephen Curry and pursuing “excellence,” top to bottom, organizationally.
All great things, but none of which would have mattered much emotionally, figuratively or financially without the ultimate payoff.
“It is all about winning, it is sports,” said Lacob, a former venture capitalist who decided at age 10, or thereabouts, that he was going to own a basketball team someday and runs the Warriors with a Silicon Valley startup ethos. Dreaming big is encouraged, as is Lacob’s personal belief, as the first person in his family to go to college, that nothing beats hard work.
Hard work, vision and a construction bill that has run to US$1.5 billion created the Chase Center, the Warriors new, privately funded, state-of-the-art basketball arena that opens for NBA business next October. It is built on the San Francisco side of the bay, and features Napa Valley-inspired luxury suites, low ceilings to amplify crowd noise, a Warriors-themed art gallery and a 10,000-square-foot Warriors store.
The building has generated more than US$2 billion in advance ticket sales, sponsorships and suites. The grounds around it will be peppered with restaurants, some featuring celebrity chefs, and, of course, it being California, there is public space set aside for group yoga classes and farmers markets.
It is a basketball mecca meeting the West Coast vibe in a city where the average starting salary for a tech worker is US$91,738. Add all that to a team with three NBA titles in four years and a franchise that was once a poorer NBA cousin to the Raptors is now worth twice as much.
But if Golden State can do it, why not the Raptors, too? Lacob views the Canadian franchise as one of “the better opportunities in the NBA going forward.”
One reason why is sheer numbers: Toronto is the fastest-growing city in North America, according to a new Ryerson University study , and new arrivals typically aren’t walking off the plane with a hockey bag slung over their shoulders. They are young and often brown, yellow, black and all the other glorious shades seen cheering themselves hoarse in Jurassic Park on game nights.
“Basketball reflects the changing face of the country, it’s the future,” MKTG’s Cooper said.
In sport, however, especially in Canada, the future has its constraints. The Raptors might have a local monopoly, but mammoth U.S. corporations care little about their northern neighbour. To them, We the North means not seeing as good a return if they spend sponsorship dollars on a team in a foreign country.
Scotiabank Arena is another potential limiting factor on franchise value. The Raptors home isn’t new, but it isn’t old — it opened in 1999 — and it is perfectly situated, so there is not a Chase Center looming on the near horizon.
But maybe that’s okay, since in the sport numbers game, some numbers are impossible to quantify, said Cheri Bradish, chair of marketing management at Ryerson University.
“Obviously, winning is always the goal, but I think that the footprint is now set: Toronto is a basketball city, a global city and a global sport business city,” she said.
Bradish points to the Toronto-hosted 2016 NBA All-Star game as a watershed event, likening it to a cruise ship stopping in Venice. People disembarked, walked around a bit and resolved to come back, perhaps for a longer stay next time.
In the three years since that game, MLSE has inked a 20-year, $800-million arena naming rights deal with Scotiabank — the largest deal of its kind anywhere — and watched as Real Madrid, a soccer behemoth, poached Dave Hopkinson , another day one Raptors employee, to be its global head of partnerships. All those factors represent intangibles, Bradish said, with incredibly “long legs.”
But just how long, at least partially, depends on winning.
Out in California on a Wednesday morning, three-time NBA winner Joe Lacob nervously awaited the Game 3 tip-off. His team was banged up, he said, without making excuses. Hours later, the Raptors had handily beaten the Warriors, grabbing a 2-1 series lead, inching that much closer to the rarefied riches of being champs.
Copyright Postmedia Network Inc., 2019