By Steven Tavares.
The Golden State Warriors are set to sign a two-year lease extension to play in Oracle Arena that will ease the transition to the new Chase Center in San Francisco set to open in late 2019.
The lease deal, scheduled for discussion at next Tuesday’s Oakland City Council meeting, also includes three one-year extensions with staggering penalties for the team opting out.
The Alameda County Board of Supervisors must also sign-off on the extension. The Oakland Coliseum Joint Powers Authority (JPA) Board of Directors approved the lease on April 5. The Warriors current lease expires June 30.
The Warriors will pay $2.5 million in base rent for the duration of the deal, but failure to exercise the first one-year option triggers an additional $2.5 million exit fee. Failure to execute the second option includes a $1.5 million exit fee, and $500,000 for the third year.
The city, county, and JPA will likely benefit from some of the exit fees since the Chase Center is not scheduled to open until the beginning of the 2019-2020 NBA season and providing there are no construction delays. The Warriors broke ground on the new waterfront arena in January.
In addition, the Warriors recent string of playoff appearances stands to favor the city, county, and JPA. Under terms of the lease, taxpayers will retain all playoff-related revenues.
Then there’s the issue of Oracle Arena’s outstanding debt related to its 1996 remodel, which stands at roughly $60 million. Although no plan is in place for reconciling the entire debt before the Warriors move across the bay, the lease extension says the team will continue paying its $7.5 million share in annual debt service.