🏀 The $6,100,000,000 Deal for the Boston Celtics

The Long Play now lives on Spotify!

If you are reading this article and use Spotify as your primary podcast playform you can now access my videos there too. The next one will be out on the weekend where I breakdown the fascinating business of Darts!

We are beginning to go multi-platform. Spotify is the first on the list! See all episodes here.

Alas, today we discuss the largest franchise acquisition in NBA history.

The largest sports franchise sales in the US make for interesting reading:

• NFL - Washington Commanders: $6.05bn (June 2023)

• NFL - Denver Broncos: $4.65bn (June 2023)

• NBA - Phoenix Suns $4bn (November 2022)

• NBA - Milwaukee Bucks $3.5bn (November 2022)

Last week, the Boston Celtics, one of the most historic and illustrious NBA franchises sold for $6.1bn, making it the largest sale in American Sports History!

I do not tend to cover American Sports with this platform, but there are too many fascinating things with this deal to ignore.

The first is the fact that the Celtics are one of 11 NBA teams that do not own the arena that they play in. TD Garden is the O2 Arena of Boston Massachusetts. The building is owned by the parent company of the Boston Bruins and the Celtics pay an annual rental amount for the ability to play there.

That may not seem that important on the surface of it, but William Chisholm, the new owner of the Celtics just paid $6.1bn and does not have rights to operate the playing surface for the team!

We have seen very recently, looking at you Jim Ratcliffe, how important the ownership and control of the playing facilities are to sports owners. I cannot imagine to think what the purchase price would have been had TD Garden been “in-house”. Instead, TD Garden continues to be something the Celtics pay for each year.

In addition, William Chisholm has inherited a very expensive team. The Boston Celtics currently have the third highest payroll of any team in the NBA.

The NBA operates on a “soft” salary cap model where every $ paid to players above the league threshold incurs a “tax” to pay to the league.

If things stay as presently constructed, next season the Celtics will become the first team in NBA history to pay $500m in salary and luxury tax contributions— a truly staggering amount of money.

No team has ever come close to that before and would represent an astonishing commitment to the team if Chisholm were to commit to do it.

Thirdly, as part of the deal, Wyc Grousbeck (the seller) will maintain control of the sporting operations for three seasons, before handing over the reins to someone Willian Chisholm (the buyer) appoints in 2028.

So when you break it all down, William Chisholm has just broken the record for highest price paid to acquire a sports team in sporting history, and for his spoils he will not own an arena, nor will he have control of the team for three seasons!

It is hugely possible that the Boston Celtics win the NBA Championship this season— they are currently the best team in the NBA. However, if they do, the decisions around player salaries and contract renewals will come thick-and-fast.

Those decisions will lie in the hands of Wyc Grousbeck, the outgoing owner. Will he be motivated to ensure the success of the Celtics continues in an era where he is not invested in the team?

Who knows.

It’s also worth nothing that this deal didn’t just make Celtics ownership rich—it also changed the future of the league.

The worst kept secret in the NBA has been the prospect of expansion. The league is currently 30 teams large, but in the next 5 years it will become 32 teams.

If a team like Boston can fetch $6.1 billion in a franchise sale, how much can the NBA charge for a brand-new team in Seattle or Las Vegas?

$6 billion in expansion fees? That’s $200 million given to each current team.

What a fascinating deal.

See you next week.