California Sports, Inc.
California Sports, Inc.
555 North Nash Street
El Segunda, California 90245
Telephone: (310) 426-6000
Fax: (310) 426-6106
Web site: http://www.nba.com/lakers
Employees: Not Available.
Sales: $152 million (2002)
NAIC: 711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities
California Sports, Inc. is the majority owner of the Los Angeles Lakers basketball team of the National Basketball Association (NBA), one of the most successful and valuable properties in professional sports. Since their inception as the Minnesota Lakers in the late 1940s, the team has won 14 titles. Its games at its home court at Los Angeles’s Staples Center are consistently sold-out; the team is also one of the most popular draws in other NBA cities. Thanks to its regular appearances in the NBA playoffs and a history of such star players including Wilt Chamberlain, Kareem Abdul-Jabbar, Magic Johnson, and Shaquille O’Neal, the Lakers franchise is also a leader in sales of licensed NBA merchandise. California Sports also owns the Los Angeles Sparks of the Women’s National Basketball Association. Between 1994 and 2001 the company’s sales more than doubled, increasing from $68.7 million to $144 million.
Creating Professional Basketball in the 1940s
The Los Angeles Lakers basketball team was born at a time when professional basketball did not even enjoy a shadow of its century-end popularity. In 1947 Max Winter, Ben Berger, Maurice Chalfen and a group of other investors paid $15,000 for the Detroit Gems and moved that team to Minneapolis, where it became the Minneapolis Lakers of the National Basketball League (NBL). Anchored by center George Mikan, who would soon become basketball’s first star, the Lakers quickly proved themselves the dominant team of the early days of the pro game. Its first year in the league, the team won the NBL championship. When it jumped to the Basketball Association of America (BAA) for the 1948 season, the Lakers became the BAA champs; and, when one year later the NBL and BAA merged to form the National Basketball Association, the Lakers were that league’s first title winners as well, going on to win more titles in 1950, 1952, 1953, and 1954. Most fans believed that only George Mikan’s injured ankle kept them from the championship in 1951.
The Lakers were the team to beat in the late 1940s and early 1950s. With players like Mikan, Slater Martin, and Vera Mik-kelsen, Minneapolis brought pro basketball its first widespread public recognition. However, basketball was still a long ways from the spectacle sport and big business it would become in the 1980s. In 1947 salaries for the entire Lakers team totaled $70,000, of which George Mikan’s alone salary accounted for $25,000. In 2003, NBA teams had an annual salary cap of approximately $40 million a year.
By the latter half of the 1950s, Mikan and his teammates had either retired or were showing signs of age. In February 1957, Berger and Chalfen put the team up for sale. A St. Louis group expressed interest and it looked like the team would be changing cities again. At the last minute a local trucking and hotel magnate, Bob Short, put together a consortium that purchased the Lakers for $150,000. Once Short owned the team he had to contend with various problems. With Mikan gone, the Lakers were in the middle of a transitional period, which led, in turn, to falling attendance. Most problematic, the team did not have a regular court for its home games, dividing its home appearances among as many as six sites. While the Minneapolis Auditorium was its main venue (whenever other events were not scheduled), some of the Lakers’ other home courts were not even in the Twin Cities. The playoffs, which could not be penciled in on a calendar more than a few weeks in advance, were a particularly uncertain time of year.
Making Los Angeles Home in the 1960s
Citing the Lakers’ arena problems, in 1960 Short negotiated a move to Los Angeles. Although Minneapolis fans would later complain that Short had only moved the team in order to push its market value up, at the time the move occasioned next to no reaction in the Twin Cities. On the other hand, NBA owners vehemently opposed the move to Los Angeles. With most teams located east of the Mississippi, they were concerned that it would lead to exorbitant travel costs. They only changed their minds and gave their unanimous approval for the move when it was announced that the owner of the Harlem Globetrotters was about to launch a rival league, and install a team on the West Coast.
The Lakers’ first season in Los Angeles began in autumn 1960. Despite the incongruity of a Southern California team situated on the Pacific Ocean being called the Lakers, no thought was given to a new name. The team had more pressing issues to contend with. Interest in basketball in Los Angeles was so low that no radio stations were even interested in broadcasting games until the end of the first season when a new star, Elgin Baylor, led the Lakers in an exciting playoff match-up against the St. Louis Hawks. Baylor, with his driving, leaping acrobatic style, which was about to revolutionize play in the NBA, would draw fans to Lakers games throughout much of the 1960s. By the time Jerry West, another future Hall of Famer, joined the team, the Lakers were once again among the finest teams in professional basketball.
As the Lakers’ play improved, their market value shot upwards. When Bob Short decided to sell the team in 1965, he asked $5.175 million. He found an eager buyer in Jack Kent Cooke. Cooke, born in Canada and a naturalized American citizen since 1960, was a passionate sports fan. He owned the National Football League’s Washington Redskins and had tried unsuccessfully to obtain the California Angels baseball team when the American League expanded in 1960.
In 1967 Cooke would add the expansion Los Angeles Kings hockey franchise to his portfolio. It was Cooke’s desire for a hockey club that led, in part, to his decision to build the Los Angeles Forum, which would be the home of the Lakers for more than 30 years. The Los Angeles Coliseum refused to allow Cooke’s prospective hockey team to play in the arena, holding Cooke to a contract that Bob Short had signed on behalf of the Lakers. In frustration Cooke built a new home for the Lakers. Modeled on the architecture of ancient Rome, the Forum cost Cooke $12.5 million. The Kings played the first game in the structure on December 30, 1967, and a day later the Lakers followed suit. Once the arena had opened, Cooke stamped it with the mark of his flamboyant personality. He removed the press from courtside and gave the seats over to Hollywood stars and other glitterati.
Cooke desperately wanted a title for his Lakers and spared no expense in its pursuit. In summer 1968 he obtained Wilt Chamberlain, signing the former Philadelphia superstar to a $4 million, four-year contract. In the NBA finals the Lakers battled their nemesis, the Boston Celtics, to a three game tie before returning home for deciding game seven. So certain was Cooke that his team would win the championship that he readied thousands of balloons in the rafters for the post-game celebration—a fact that did not escape the notice of Celtics’ coach Red Auerbach. In the fourth quarter, Chamberlain injured his knee and had to leave the game. Boston won 108–106. The balloons remained in the rafters. Laker glory days were still more than a decade away.
New Players and a New Owner in the 1970s
It would be 1972 before the Lakers won another NBA championship, in what would be the swansong of the Baylor, West, and Chamberlain era. Baylor left during the 1971–72 season, Chamberlain hung up his sneakers a year later, and West retired in summer 1975. The Lakers went into an almost inevitable decline. In 1975 they missed the playoffs for the first time since 1960. After that debacle, Cooke took the first steps towards the next Laker dynasty, trading three players to acquire Kareem Abdul-Jabbar from the Milwaukee Bucks. The foundation was completed in 1979 when Cooke selected Earvin “Magic” Johnson in the NBA draft. With Abdul-Jabbar, Johnson, and other players like James Worthy on the team, the Lakers would go on an impressive run, winning conference titles every year of the 1980s, and NBA titles in 1979–80, 1981–82, 1984–85, 1986–87, and 1987–88.
At the end of the 1979 season, the Lakers were once again on the sales block. Reasons for the sale were varied. Cooke was concerned about his health, and he had also lost a sizable chunk of his fortune when his wife was awarded nearly half of his net worth—some $100 million—in a divorce settlement. Most importantly, however, as owner of the Washington Redskins, Cooke was also confronted with an NFL rule obliging him to divest himself of any interests in other professional sporting teams.
- A group of Minnesota investors purchases the Detroit Gems and renames the team the Minneapolis Lakers.
- Lakers jump from National Basketball League to Basketball Association of America (BAA), winning BAA title.
- Lakers join the National Basketball Association (NBA) and win the league’s first championship.
- Lakers are sold for $150,000 to group led by Bob Short.
- The Lakers move to Los Angeles.
- Bob Short sells the Lakers to Jack Kent Cooke for $5.2 million.
- Construction of the Los Angeles Forum is completed.
- Lakers sold to Jerry Buss for $67.5 million.
- Jerry West becomes Lakers’ general manager.
- Last holdings in Los Angeles Kings hockey team are sold to Bruce McCall.
- Lakers’ home court moves from Great Western Forum to Staples Center; Jerry West retires as general manager; Jeanie Buss takes over operations from her father, Jerry Buss.
On May 18, 1979, Cooke sold the team to Jerry Buss, a chemist turned real estate tycoon. The deal, characterized by the New York Times as “the largest single financial transaction in the history of professional sports” and “the most confusing, complex transaction in the history of sports,” was valued at $67.5 million and included not only the Lakers but also the L.A. Kings hockey franchise, the Forum, and, reportedly, a lease on New York City’s Chrysler Building. The deal almost fell apart the day before it was to close when Buss realized that he was $2.7 million short of funds. The money was raised through last minute phone calls to Donald Sterling, the owner of the Los Angeles Clippers, and Sam Nassi, who would later purchase the Indiana Pacers.
Like Cooke, Buss was a sports nut who happened to be rich. He bought the Los Angeles Strings, a World Team Tennis franchise, in the late 1970s, and as owner of the Lakers would add to his holdings the L.A. Lazers indoor soccer team and the L.A. Sparks of the Women’s National Basketball Association (WNBA). Buss also had a reputation as a high-living playboy, and he made the Lakers into an extension of his lifestyle. “A person doesn’t go into sports to make money,” Buss told the Boston Globe, “but it’s still a business. I decided that I wanted the Lakers to play a certain style of basketball and I wanted certain people to come to the games.” He introduced the Laker Girls, a squad of sexy cheerleaders. He brought the idea of “Showtime” to the Forum, inviting a select list of movie and television stars to Laker games.
Under Buss, courtside seats became highly coveted items. Going for $15 apiece when he bought the team, the ticket price was bumped to $45 the following year. Buss kept increasing the price until by 2001 a seat at courtside cost $1,500. In 1982 Buss hired former Lakers star Jerry West as general manager and gave him full authority in making player decisions. That same year, Buss brought in a new coach, Pat Riley, whose slicked-back hair and designer suits would become as synonymous with the Laker dynasty as Magic Johnson’s smile.
Once he was firmly ensconced in the business he loved best—professional sports—Buss started selling off his real estate businesses to concentrate on the Lakers. That, along with his free spending on players, led to a minor financial crisis in his company, California Sports, Inc. In February 1985 a Los Angeles television station reported that the company’s banks were considering a seizure of the Kings and Lakers, which were held as collateral on unpaid loans. Without explicitly denying the charges, Buss managed to avoid foreclosure, and the banks were not exactly anxious to foreclose, fearing such a move could force their market value down. Buss’ marketing innovations, such as the Showtime concept, helped offset the crises. In 1988 he put together one of the first corporate licensing deals in professional sports with the great Western Financial Corporation worth $17.8 million after which the Forum was renamed the Great Western Forum. Buss sold off his holdings in the unsuccessful L.A. Kings hockey team piecemeal between 1986 and 1989 to Bruce McCall, an antique coin dealer, and in 1989 was trying—unsuccessfully—to purchase a Major League Baseball team.
Turmoil and Change in the 1990s
In November 1991, the Lakers organization, indeed professional basketball as a whole, was shaken by the revelation that Earvin “Magic” Johnson, arguably the most popular in the NBA and the Lakers’ most important player, had been infected with the HIV virus. Uncertain of his personal future, Johnson announced his retirement from the team, a decision which threw the immediate future of the Lakers into doubt as well. A comeback by Johnson the following year was canceled when opposing players expressed concern about the possibility of becoming infected themselves perhaps through an open cut during a game. Johnson did finally return to the Forum as the Lakers’ coach for part of the 1993–94 season, without particular success; it was one of the few seasons in Lakers history in which they failed to make the playoffs. Magic Johnson returned as a player for the 1995–96 season and retired again for good after the team’s defeat in the playoffs that year, remaining affiliated with the team as a 5 percent owner.
A large part of the Lakers’ success as a team in the 1980s and 1990s was attributable to the savvy of its long-time general manager, Jerry West, as well as to owner Jerry Buss’ willingness to give West virtually free rein in player selection. Not only did West bring the Lakers superstar players such as Vlade Divac, Kobe Bryant, and Shaquille O’Neal (players that brought the Lakers back into contention in the 1990s), he was also able to construct teams that functioned well with the Lakers’ star talent.
At the end of the 1990s the Lakers made a controversial decision to leave their long-time home in the Great Western Forum. The decision was based largely on the building’s age. It had been built in another era of sports, one in which arenas did not include luxury suites or corporate boxes. Remarkably, after two decades of being his own landlord, Buss decided not to build a new arena of his own, but to become instead a tenant of the new Staples Center in downtown Los Angeles. The move was a financial masterstroke. Under the terms of the contract, Buss received 25 percent of the luxury suite revenue at the Staples Center, which were reported to lease for a total of about $300,000 a year. In all, the move increased the value of the Lakers franchise by about $100,000. With the move, Philip Anschutz and Edward Roski, the owners of the L.A. Kings hockey team who built the Staples Center, were able to acquire a 25 percent share of the Lakers franchise.
Throughout his ownership of the Lakers, Jerry Buss gave responsibility for various California Sports operations to his children. For three seasons in the 1980s, his son Jim ran the Los Angeles Lazers, an indoor soccer team which later went broke. In 1998 Jim Buss was made an assistant to Jerry West, prompting speculation that he would eventually take over the company when his father retired or passed away. In 1998 son John Buss was president of the Lakers’ sister team, the Los Angeles Sparks of the Women’s National Basketball Association. This team had mixed success in Los Angeles, and its failures were frequently attributed to the unwillingness of John Buss to market the franchise imaginatively. By far the most promising of the Buss clan was daughter Jeanie. With a degree in business from the University of Southern California, she proved her ability as the president of the L.A. Forum. In 2000, after the Lakers moved to the Staples Center, Jerry Buss turned over much of the responsibility for the running of the team to Jeanie, making her one of the most powerful, influential women in professional sports.
Other major changes were taking place within the franchise as the decade ended. In 2000 Jerry West resigned as Laker general manager, citing health problems. That same year the team signed Shaquille O’Neal to a blockbuster contract worth $88.4 million over three years. A major problem during this time for the Lakers was finding a coach who could win the respect of multimillionaire superstars like O’Neal and Kobe Bryant. During the 1998–99 season the team went through two coaches, Del Harris and Kurt Rambis, neither of whom had been able to make his mark on the team. In June 1999 Buss took the bull by the horn and gave a five-year contract worth a reported $6 million to Phil Jackson, the coach who had not only led the Chicago Bulls to multiple NBA championships in the 1990s, but who had proved himself capable of coaching Michael Jordan, one of the five greatest players in NBA history. Jackson got off on the right foot almost immediately when Shaquille O’Neal called him “a white version of my father” and said he would only play for the Lakers so long as Jackson was the team’s coach. When Jackson arrived, he brought with him many of his assistants who had helped him build the dynasty in Chicago, including 77-year-old Tex Winter, the creator of the Bulls fabled “triangle offense.” Jackson proved his value over the coming three years, leading the Lakers to three consecutive NBA championships in 2000, 2001, and 2003.
Los Angeles Lakers; Los Angeles Sparks.
L.A. Kings Hockey Club; L.A. Clippers; Mighty Ducks of Anaheim.
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—Gerald E. Brennan