The Warriors Attempt to Reverse Their Legal Losing Streak

Team appeals court decision requiring it to pay Oracle Arena's remaining debt. If the Dubs owners win this one, taxpayers could be stuck with the $40 million bill.

The owners of the Golden State Warriors, still smarting from losing the NBA Finals last week, are asking a court to overturn a decision that would force them to pay $40 million to settle the team’s Oracle Arena debt.

The franchise has filed a notice of appeal in a San Francisco court in its second attempt to reverse the ruling issued by an arbitrator last October, according to court documents.

“We believe the lower court made errors in its decision and have asked the Court of Appeal to review and set aside the lower court’s ruling,” the Warriors said in a statement the team sent to the Express. “As we’ve always said, we will pay any debt obligations we owe, and we look forward to the appellate court’s ruling.”

The long-running dispute centers on the $140 million bond debt that Oakland and Alameda County took on to renovate the arena for the Warriors in the late 1990s. Warriors owners since then have followed the arena’s license agreement by paying $7.5 million per year to the Oakland-Alameda County Coliseum Authority, the agency that runs the Coliseum complex. The remaining arena debt today is roughly $40 million, according to the authority.

But now that the Warriors have played their last game in Oracle Arena and are leaving East Oakland for the glitzy $1.4 billion Chase Center in San Francisco, team owners claim they no longer are on the hook for the renovation costs. If the Warriors franchise gets its way, Oakland and Alameda County taxpayers would have to foot Oracle Arena’s bill. The recent appeal means the team is taking the matter to a judge for the third time in less than a year. The Warriors already have a legal losing streak in this dispute.

First, the franchise lost an arbitrator’s decision last October when Judge Rebecca Westerfield affirmed the authority’s argument that the Warriors must continue paying the debt if the team terminated the arena’s license agreement any time before June 30, 2027.

The Warriors appealed the arbitrator’s ruling and claimed they were no longer responsible for the bond debt because they were allowing the arena lease to expire at the end of the 2018-19 season. But Judge Ethan Schulman rejected that argument and upheld the arbitrator’s decision.

“The Warriors draw too fine a distinction between the term ‘terminate’ and ‘expire,'” Schulman wrote in his April 12 decision. “The authority contends that the Warriors terminated the license agreement by deciding not to exercise their option to renew. The arbitrator agreed with that position. The court finds that the arbitrator did not err.”

After those two courtroom losses, however, Warriors owners are refusing to take no for an answer. Team attorneys filed the most recent notice of appeal on May 30, the same day the Warriors played in Game 1 of the NBA Finals in Toronto. The franchise had until June 24 to appeal, according to a spokesperson for the Oakland city attorney.

Scott McKibben, the Coliseum Authority’s executive director, said he will meet soon with attorneys to discuss the authority’s strategy for responding to the Warriors’ latest legal action.

“Obviously, we don’t agree with the position they are taking,” McKibben said. “But at the end of the day, they’re entitled to their right to appeal and we honor this process.”

The Warriors franchise is the NBA’s third-most valuable organization and is worth an estimated $3.5 billion, according to Forbes magazine. That’s up from the Dubs’ $3.1 billion franchise value in 2018. The team’s value likely will rise again after its fifth-straight NBA Finals appearance this spring and with a new arena opening in the fall. The Warriors’ ownership group, led by Joe Lacob and Peter Guber, paid $450 million to buy the franchise in 2010.

The team has already booked about $2 billion in “contractually obligated income from sponsorships, suites, and season ticket holder fees” at Chase Center, Forbes magazine reported in February.

Some critics wonder why one of pro sports’ most lucrative franchises continues to risk negative headlines by squabbling over money with cash-strapped government bodies.

Oakland City Council President Rebecca Kaplan has sharply criticized the Warriors’ legal maneuvers, saying the effort “to stick local taxpayers with their arena debt” runs counter to the team’s popular slogan.

“To spend that much effort to do something so offensive to their longtime fans and supporters is the opposite of ‘Strength in Numbers,'” Kaplan said. “And if they are trying to steal $40 million from struggling people while bragging about their billions to waste on an inaccessible San Francisco palace, it is despicable.”

Chris De Benedetti writes a regular sports column for the Express.

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