Woj Bomb: Celtics Ownership looking to Sell

[Donoghus]

This is probably the best thing that I've read concerning the potential sale of the Celtics.

"What to watch: The most likely scenario is that Pagliuca tries to cobble together a group that includes some combination of a new deep pocket, a private equity fund, and a sovereign wealth fund.

    Remember, if he and the other minority owners roll over their stakes, they may only need around $1.5 billion. Kind of like how Mat and Justin Ishbia didn't really need $4 billion to buy the Phoenix Suns last year."

https://www.axios.com/2024/07/02/boston-celtics-sale-break-records

I'm curious if he would try to partner with Wynn or a local real estate developer.  Eventually, an ownership group is going to want its own arena.

Yeah, I read yesterday that the current lease is through 2035-36.  Garden will be 40 years old then.  Wonder what the arena landscape will be in a decade.

[Celtics2021]

My bet is on Wynn. 

Here as interesting list though:  https://www.msn.com/en-us/sports/nba/top-10-candidates-to-buy-the-boston-celtics/ss-BB1penQS?ocid=msedgntp&pc=DCTS&cvid=40c4143c21b74d0d80f268a62f6a0dde&ei=21

Maybe that link works better on not mobile: I just have a would-be listicle that  says ?here are 10 candidates? and then is just a bunch of ads.

John Henry (Red Sox, Penguins, Liverpool, $5.1b net worth)
Jeff Bezos ($161b net worth)
Larry Ellison ($158b net worth)
Rob Walton (Wal-Mart, Broncos, $67.4b net worth)
Phil Knight (Nike)
Abigail Johnson (Fidelity, $25.5b net worth)
Steve Cohen (Mets)
Robert Kraft (Patriots)
MacKenzie Scott (Bezo's ex-wife, $37.1b net worth)
Jerry Jones (Cowboys)

I kind of like the idea of Abigail Johnson.  Boston girl who made it big, not afraid of taking a risk.

Those are some weird names.  Like, no way is MacKenzie Scott buying a team.  So not her thing.

I had a post about Abigail Johnson (and the Johnson family in general) that got deleted before it posted.  She is super rich and could afford to make leas profits if she wanted the Celtics to win, but she seems to be set to spend her money in the Boston arts and culture scene, as opposed to sports.  The BSO has definitely relied on her and her family?s generosity for decades.  (Much appreciated, Johnson family, if you are reading this!)

As a Mets fan I?d be happy with Steve Cohen, because he?s willing to spend to win, and wants to win.  But I think he?s a Knicks fan and that?s the only team he would make a play for.

I also thought about Phil Knight but he already owns an athletic department so I don?t know that he?s interested in an NBA team.

[Kuberski33]

This is probably the best thing that I've read concerning the potential sale of the Celtics.

"What to watch: The most likely scenario is that Pagliuca tries to cobble together a group that includes some combination of a new deep pocket, a private equity fund, and a sovereign wealth fund.

    Remember, if he and the other minority owners roll over their stakes, they may only need around $1.5 billion. Kind of like how Mat and Justin Ishbia didn't really need $4 billion to buy the Phoenix Suns last year."

https://www.axios.com/2024/07/02/boston-celtics-sale-break-records

I'm curious if he would try to partner with Wynn or a local real estate developer.  Eventually, an ownership group is going to want its own arena.

Yeah, I read yesterday that the current lease is through 2035-36.  Garden will be 40 years old then.  Wonder what the arena landscape will be in a decade.

The landscape has already changed - drastically - from when Wyc & co bought the team. Whoever buys the team is going to need more revenue to make the C's a worthwhile investment. I'm not sure being a tenant makes sense anymore but trying to get an arena built in and around Boston has been rather 'challenging' and will probably continue to be.

I also think doing something for the 'good of the community' is a nice thought, but probably not practical with the franchise valuation being so high.

[footey]

This is probably the best thing that I've read concerning the potential sale of the Celtics.

"What to watch: The most likely scenario is that Pagliuca tries to cobble together a group that includes some combination of a new deep pocket, a private equity fund, and a sovereign wealth fund.

    Remember, if he and the other minority owners roll over their stakes, they may only need around $1.5 billion. Kind of like how Mat and Justin Ishbia didn't really need $4 billion to buy the Phoenix Suns last year."

https://www.axios.com/2024/07/02/boston-celtics-sale-break-records

I'm curious if he would try to partner with Wynn or a local real estate developer.  Eventually, an ownership group is going to want its own arena.

Soveriegn wealth funds capped off at 5% I think.  Whoever owns the most capital is going to want to be in control.

[footey]

This is probably the best thing that I've read concerning the potential sale of the Celtics.

"What to watch: The most likely scenario is that Pagliuca tries to cobble together a group that includes some combination of a new deep pocket, a private equity fund, and a sovereign wealth fund.

    Remember, if he and the other minority owners roll over their stakes, they may only need around $1.5 billion. Kind of like how Mat and Justin Ishbia didn't really need $4 billion to buy the Phoenix Suns last year."

https://www.axios.com/2024/07/02/boston-celtics-sale-break-records

I'm curious if he would try to partner with Wynn or a local real estate developer.  Eventually, an ownership group is going to want its own arena.

Yeah, I read yesterday that the current lease is through 2035-36.  Garden will be 40 years old then.  Wonder what the arena landscape will be in a decade.

The landscape has already changed - drastically - from when Wyc & co bought the team. Whoever buys the team is going to need more revenue to make the C's a worthwhile investment. I'm not sure being a tenant makes sense anymore but trying to get an arena built in and around Boston has been rather 'challenging' and will probably continue to be.

I also think doing something for the 'good of the community' is a nice thought, but probably not practical with the franchise valuation being so high.

Current Mayor seems to be a huge supporter of the team.  Governor too.  Where would you build the arena?

[Kuberski33]

This is probably the best thing that I've read concerning the potential sale of the Celtics.

"What to watch: The most likely scenario is that Pagliuca tries to cobble together a group that includes some combination of a new deep pocket, a private equity fund, and a sovereign wealth fund.

    Remember, if he and the other minority owners roll over their stakes, they may only need around $1.5 billion. Kind of like how Mat and Justin Ishbia didn't really need $4 billion to buy the Phoenix Suns last year."

https://www.axios.com/2024/07/02/boston-celtics-sale-break-records

I'm curious if he would try to partner with Wynn or a local real estate developer.  Eventually, an ownership group is going to want its own arena.

Yeah, I read yesterday that the current lease is through 2035-36.  Garden will be 40 years old then.  Wonder what the arena landscape will be in a decade.

The landscape has already changed - drastically - from when Wyc & co bought the team. Whoever buys the team is going to need more revenue to make the C's a worthwhile investment. I'm not sure being a tenant makes sense anymore but trying to get an arena built in and around Boston has been rather 'challenging' and will probably continue to be.

I also think doing something for the 'good of the community' is a nice thought, but probably not practical with the franchise valuation being so high.

Current Mayor seems to be a huge supporter of the team.  Governor too.  Where would you build the arena?

I was speaking more to someone local buying the team and not caring if they lose money.  But in terms of building an arena, the Krafts getting involved might make things interesting since they have the land, parking etc already in Foxboro.

[KGs Knee]

This news was definitely a shocker to me. Kinda wild it seems the main impetus for Wyc getting out is because apparently he won't have enough liquid assets to pay the eventual inheritance tax on on his father's estate, who is also a part owner of the Celtics. I do hope Pags can cobble together a group and keep some sort of continuity in ownership.

[Kernewek]

This news was definitely a shocker to me. Kinda wild it seems the main impetus for Wyc getting out is because apparently he won't have enough liquid assets to pay the eventual inheritance tax on on his father's estate, who is also a part owner of the Celtics. I do hope Pags can cobble together a group and keep some sort of continuity in ownership.

This is where we insert that gif of Woody Harrelson crying into his fis-tful of money, I think.

(apologies to the profanity filter for the letters ess tee eff ewe).

[DefenseWinsChamps]

The sale is proof of what a good owner Wyc is. He supported the team to becoming a contender again. He paid the tax and committed the team to paying the tax for a while.

He doesn't have the liquidity now, but will still ensure that we are able to put the best possible team on the court.

[footey]

Buying the Celtics for the going price of $4.5-$5 Billion is going to make sense only for a few multi-billionnaires as a vanity acquisition, preferably who have a  love for the team and the City. It makes no sense from a business perspective to pay that much for a team that doesn't own its arena, and will be operating at significant operating deficits for the foreseeable future.  2025-26 tax bill alone will run approximately $250mm.

There are probably more profitable ways to invest $5 billion, but the Celtics have had annual profits of around $100 million per year.  Yes, luxury tax liabilities will rapidly increase in the coming years, but so will the value of the TV contract, etc.    My guess is that the new ownership group will continue to make plenty of money going forward from 2028, or whenever they take over.

Where are their financial statements disclosed?  They are not a public company, and I am unaware of any reporting requirements by the NBA. 

I am dubious that this team will be able to operate with positive net operating cash flow after deducting for the projected $250mm annual tax, on top of all their other operating expenses (player payroll (yikes), coaches, front office and other staff, rental payments to TGG owners, overhead, etc.  Notwithstanding increase in TV revenue from new deals.  The new money has to be spread among 30 teams. 

I would love to be  wrong, and that Wyc's motivation is more about estate planning issues arising from his dad's estate tax.

But if the point of the new rules is to essentially force 2nd apron teams to cut payroll andbetter balance player contracts among the teams, it is hard to imagine the Celtics could remain profitable under these conditions.

[Celtics2021]

Buying the Celtics for the going price of $4.5-$5 Billion is going to make sense only for a few multi-billionnaires as a vanity acquisition, preferably who have a  love for the team and the City. It makes no sense from a business perspective to pay that much for a team that doesn't own its arena, and will be operating at significant operating deficits for the foreseeable future.  2025-26 tax bill alone will run approximately $250mm.

There are probably more profitable ways to invest $5 billion, but the Celtics have had annual profits of around $100 million per year.  Yes, luxury tax liabilities will rapidly increase in the coming years, but so will the value of the TV contract, etc.    My guess is that the new ownership group will continue to make plenty of money going forward from 2028, or whenever they take over.

Where are their financial statements disclosed?  They are not a public company, and I am unaware of any reporting requirements by the NBA. 

I am dubious that this team will be able to operate with positive net operating cash flow after deducting for the projected $250mm annual tax, on top of all their other operating expenses (player payroll (yikes), coaches, front office and other staff, rental payments to TGG owners, overhead, etc.  Notwithstanding increase in TV revenue from new deals.  The new money has to be spread among 30 teams. 

I would love to be  wrong, and that Wyc's motivation is more about estate planning issues arising from his dad's estate tax.

But if the point of the new rules is to essentially force 2nd apron teams to cut payroll andbetter balance player contracts among the teams, it is hard to imagine the Celtics could remain profitable under these conditions.

I think they?ll still be profitable.  Their share of national TV revenue alone in the next deal will be over $200 million a year. 

[Roy H.]

Buying the Celtics for the going price of $4.5-$5 Billion is going to make sense only for a few multi-billionnaires as a vanity acquisition, preferably who have a  love for the team and the City. It makes no sense from a business perspective to pay that much for a team that doesn't own its arena, and will be operating at significant operating deficits for the foreseeable future.  2025-26 tax bill alone will run approximately $250mm.

There are probably more profitable ways to invest $5 billion, but the Celtics have had annual profits of around $100 million per year.  Yes, luxury tax liabilities will rapidly increase in the coming years, but so will the value of the TV contract, etc.    My guess is that the new ownership group will continue to make plenty of money going forward from 2028, or whenever they take over.

Where are their financial statements disclosed?  They are not a public company, and I am unaware of any reporting requirements by the NBA. 

I am dubious that this team will be able to operate with positive net operating cash flow after deducting for the projected $250mm annual tax, on top of all their other operating expenses (player payroll (yikes), coaches, front office and other staff, rental payments to TGG owners, overhead, etc.  Notwithstanding increase in TV revenue from new deals.  The new money has to be spread among 30 teams. 

I would love to be  wrong, and that Wyc's motivation is more about estate planning issues arising from his dad's estate tax.

But if the point of the new rules is to essentially force 2nd apron teams to cut payroll andbetter balance player contracts among the teams, it is hard to imagine the Celtics could remain profitable under these conditions.

Forbes, etc. 

The Celtics had $443 million in revenue last year.  That's clearly going up with the championship, and then the massive new TV deal.

Revenue:  https://www.statista.com/statistics/196696/revenue-of-the-boston-celtics-since-2006/

Operating income:  https://www.statista.com/statistics/286033/operating-income-of-the-boston-celtics-national-basketball-association/

[Celtics2021]

Buying the Celtics for the going price of $4.5-$5 Billion is going to make sense only for a few multi-billionnaires as a vanity acquisition, preferably who have a  love for the team and the City. It makes no sense from a business perspective to pay that much for a team that doesn't own its arena, and will be operating at significant operating deficits for the foreseeable future.  2025-26 tax bill alone will run approximately $250mm.

There are probably more profitable ways to invest $5 billion, but the Celtics have had annual profits of around $100 million per year.  Yes, luxury tax liabilities will rapidly increase in the coming years, but so will the value of the TV contract, etc.    My guess is that the new ownership group will continue to make plenty of money going forward from 2028, or whenever they take over.

Where are their financial statements disclosed?  They are not a public company, and I am unaware of any reporting requirements by the NBA. 

I am dubious that this team will be able to operate with positive net operating cash flow after deducting for the projected $250mm annual tax, on top of all their other operating expenses (player payroll (yikes), coaches, front office and other staff, rental payments to TGG owners, overhead, etc.  Notwithstanding increase in TV revenue from new deals.  The new money has to be spread among 30 teams. 

I would love to be  wrong, and that Wyc's motivation is more about estate planning issues arising from his dad's estate tax.

But if the point of the new rules is to essentially force 2nd apron teams to cut payroll andbetter balance player contracts among the teams, it is hard to imagine the Celtics could remain profitable under these conditions.

Forbes, etc. 

The Celtics had $443 million in revenue last year.  That's clearly going up with the championship, and then the massive new TV deal.

Revenue:  https://www.statista.com/statistics/196696/revenue-of-the-boston-celtics-since-2006/

Operating income:  https://www.statista.com/statistics/286033/operating-income-of-the-boston-celtics-national-basketball-association/

It should also be noted that Boston is a small enough media market that the Celtics are eligible to receive money from NBA revenue sharing if they are not profitable.  (It?s not a small market, but at least as of the prior CBA markets with fewer than 2.5 million TV households were eligible, and the Boston DMA is 2.4 million).  So there?s a bit of a backstop for the new owners as well if things get out of control for a season.  (If the Celtics do ever qualify for revenue sharing since it is only for teams that are losing money, then yes, expect roster cuts soon).

[footey]

Buying the Celtics for the going price of $4.5-$5 Billion is going to make sense only for a few multi-billionnaires as a vanity acquisition, preferably who have a  love for the team and the City. It makes no sense from a business perspective to pay that much for a team that doesn't own its arena, and will be operating at significant operating deficits for the foreseeable future.  2025-26 tax bill alone will run approximately $250mm.

There are probably more profitable ways to invest $5 billion, but the Celtics have had annual profits of around $100 million per year.  Yes, luxury tax liabilities will rapidly increase in the coming years, but so will the value of the TV contract, etc.    My guess is that the new ownership group will continue to make plenty of money going forward from 2028, or whenever they take over.

Where are their financial statements disclosed?  They are not a public company, and I am unaware of any reporting requirements by the NBA. 

I am dubious that this team will be able to operate with positive net operating cash flow after deducting for the projected $250mm annual tax, on top of all their other operating expenses (player payroll (yikes), coaches, front office and other staff, rental payments to TGG owners, overhead, etc.  Notwithstanding increase in TV revenue from new deals.  The new money has to be spread among 30 teams. 

I would love to be  wrong, and that Wyc's motivation is more about estate planning issues arising from his dad's estate tax.

But if the point of the new rules is to essentially force 2nd apron teams to cut payroll andbetter balance player contracts among the teams, it is hard to imagine the Celtics could remain profitable under these conditions.

Forbes, etc. 

The Celtics had $443 million in revenue last year.  That's clearly going up with the championship, and then the massive new TV deal.

Revenue:  https://www.statista.com/statistics/196696/revenue-of-the-boston-celtics-since-2006/

Operating income:  https://www.statista.com/statistics/286033/operating-income-of-the-boston-celtics-national-basketball-association/

Thanks.  Net income dropped a lot in 22/23, no doubt due to increase in player payroll.   Will be curious to see the net income figures after 25/26 assuming we don't cut back payroll and stay in the 2nd apron.  I hope Wyc makes that a condition to any sale. 

[Kuberski33]

Here's a good (and fairly short) podcast that offers a little more insight into the situation:

https://podcasts.apple.com/us/podcast/the-boston-celtics-sale-will-break-records/id1593114026?i=1000661104512

What stands out to me are the luxury tax implications and also the speculation that there may be a plan already in place for what happens next - which the league could potentially kill based on the Minnesota situation.