“Perpetual optimism is a force multiplier.”
It’s a famous quote admired by Steve Ballmer, the former Microsoft CEO turned pro sports owner.
“Colin Powell taught us that,” said Ballmer in a sit-down interview with CNBC. Powell’s words relate perfectly to Ballmer’s new mission: taking a more significant piece of revenue in the basketball and entertainment market in Los Angeles.
On Friday, Ballmer broke ground on his new $1.2 billion arena, the Intuit Dome. The 18,000-seat complex will be vital in helping the Clippers capture underserved sports fans in Los Angeles. Ballmer labels them the “grinders” of the city, a term used to describe working-class sports fans.
Before discussing specifics around the Intuit Dome, the former Ballmer reflected on his time in his post-retirement role as a professional sports owner. Here’s what Ballmer said he learned about owning the Clippers and how it relates to his business past.
It starts with Powell, the former Secretary of State under President George W. Bush’s administration.
Ballmer’s optimism comes through
Ballmer, 65, entered a conference room at the Clippers downtown LA office, having conducted over four interviews, with more on his schedule. The discussion with CNBC lasted a little over 15 minutes, covering various topics from the arena and his previous life in business. Powell’s words helped explain the optimism around Ballmer’s vision for the Clippers, starting with the Intuit Dome.
“You have to be optimistic to take on a huge project when you don’t start with land,” Ballmer said. “Putting the land together is quite the circus of legal issues, resolutions. We had to buy the Forum as part of that process. You have to keep your optimism.”
Ballmer was referring to the $400 million in cash he paid Madison Square Garden Company, the previous owner of the Forum. The Lakers played there from 1967-1999, and the building mainly hosts concerts today. Ballmer needed to resolve legal issues with MSG, who complained Ballmer’s new arena would damage the Forum’s income. MSG purchased the Forum for $23.5 million in 2012 and cashed out in 2020, thanks to Ballmer.
The Clippers owner also paid the town of Inglewood $66.2 million for the land where Intuit Dome will sit. The Clippers will get some of that back, though. Intuit, the software company that makes Turbo Tax, will pay the team more than $500 million for a 23-year naming rights slot.
That deal only enhanced Ballmer’s optimism.
“This stadium is about being optimistic about our team,” Ballmer said.
“It’s about being optimistic about our fans. Get in the building, pump up, make energy,” Ballmer added, clapping his hands. “Your energy can feed our team to greater success.”
He then laughed when discussing the “weird, small world” and a key relationship that probably helped land the Clippers a record naming rights agreement. Ballmer flashed back to 1977, when he worked at Procter and Gamble. The person in charge of helping him settle in was Scott Cook, who later co-founded Intuit.
Asked about one of the lessons he learned at P&G that he stills using today as an NBA owner, Ballmer said: “It’s good to make consistent long-term bets. We took that to a whole other level at Microsoft.”
Getting it right
Ballmer’s history as CEO of Microsoft had mixed results. But, while some will point out that Microsoft missed key tech breakthroughs like the modern smartphone and the search engine, Ballmer did help triple Microsoft’s sales during his 14-year run as CEO.
When discussing his time at Microsoft, Ballmer noted the long-term bets made, which positioned the company for its current $2.2 trillion market cap.
“There’s a reason why Microsoft is the second most valuable company in the world,” Ballmer said. “We got Windows and Office right. We got our back-end technology right, with servers. We got Xbox right, and I got my replacement [Satya Nadella] right. Succession is a huge part of it, and I left my successor with the infrastructure to go build a cloud business.”
Ballmer’s optimism shifted back to Intuit Dome, comparing the arena’s construction to the birth of Apple’s top product.
“When I think about this product – our new building – in a way, I do liken it to the way Apple thought about the phone,” Ballmer said. “They didn’t try to design the cheapest phone. They didn’t go in saying, ‘Let’s build a cheap product because it might sell a higher volume at a lower price.’
“They came in with a premium approach,” he added. “They came in thinking of new ways to do things. That’s what we’re doing here. This is a premium building, and our fans aren’t going to suffer for that.”
Inside Ballmer’s newest asset
Throughout sports, teams are bracing for a new way to leverage their product, especially after pandemic losses. Premium experiences never hurt, and the Intuit Dome will offer a one-of-a-kind experience in the NBA.
The 18,000-seat arena will feature 44,000-square feet of LED lights for its halo-shaped video board, plus technology that allows fans to purchase concessions and automatically be charged without using cash or cards. In addition, the Clippers will leverage four courtside cabanas, a concept Ballmer borrowed from the National Football League.
“We’re pioneering the feel of end-zone suites,” said Ballmer of the luxury offering.
The Intuit Dome will not host hockey games, so the building has “basketball geometry,” meaning it was built specifically to watch basketball games. The Clippers business operations will relocate to the Intuit Dome, and the team will also house their practice facility in the arena.
The Clippers estimate the Intuit Dome will generate roughly $260 million in annual economic activity for Inglewood, including over 7,000 full-time and part-time jobs. The Clippers also committed to a $100 million community benefits package.
“It’s a big market,” Ballmer said. “There’s plenty of fans that can be fans of the Clippers and Lakers. But we want to tell you who we are. I think there are many folks in LA who identify with this notion of being the underdog, the person who strides. It’s almost two LA’s. It’s not all showtime and movie business. Our fans are grinders.”
“I’m optimistic about our team,” added Ballmer. “I’m optimistic about our team success, and that optimism is a force multiplier. In many ways, the reason we did this is consistent with that optimism as a force multiplier approach.”
As the interview neared its conclusion, Ballmer explained the what he learned in his latest leadership role. After announcing his retirement from Microsoft in 2013, he purchased the NBA’s second LA team in 2014 for a then-record $2 billion. The team hit the market after the NBA banned former owner Donald Sterling for making racist remarks that became public.
In this world, wins and losses are critical. A new arena will only help the Clippers for some time. Ballmer is approaching his eighth season as Clippers owner, and the team is 346-208, including sixth playoff appearances and one conference finals appearance during that time.
Team president Gillian Zucker runs the business unit. Ballmer made one coaching change on the basketball side when the team parted with Doc Rivers last September, replacing him with Tyronn Lue. Ballmer also elevated executive Lawrence Frank to operate basketball operations.
Ballmer has also displayed his willingness to spend on talent. Next season, the Clippers will spend $166 million per season on player contracts, the third highest in the NBA. That brings an $88 million luxury tax bill and includes paying stars Kawhi Leonard and Paul George an average annual value of $44 million per season until 2025. Those two deals will expire a year after the Intuit Dome is scheduled to open.
Asked to reveal the most challenging thing to deal with as a sports owner, Ballmer responded: “Injuries – they happen. We had an injury to Kawhi, and with this injury, we’re not sure how long he’s going to be out this year.”
Ballmer then pointed to improved “judgment and understanding of where and how I should be involved on the basketball side. I’m not deciding who is the 12th player on the roster. I’m not involved, and it was important to me to know I’m not involved. That’s not the way for me to add value. I add value by asking questions.”
Asked if he desires to own another team, as the NFL could have an opening in Denver, Ballmer said: “No –and my wife says, ‘You spend enough time on sports already.’ This is it for me in sports.”
Ballmer is three years away from opening the Intuit Dome, which is future-proof, allowing the Clippers to keep adding features as technology improves. That should align more revenue streams with sports betting and augmented and virtual reality experiences.
As Ballmer learned at P&G and applied at Microsoft, he said the plan is to continue making long-term bets as a pro sports owner.
“And you don’t blink,” he said. “We’re not blinking on the Clippers. We’re going to consistently invest and making our team as good as it can be. And in this new building, we’re going to invest.”
Ballmer then departed for another media interview, flaunting his perpetual optimism.