. . . when a son runs it but Dad owns it
The Boston Celtics cruised to the NBA Championship in June. They returned with the same roster for 2024-25, one that includes five All-Stars and a two-time All-NBA Defensive Team member. They are at least eight-deep in quality players. All of them are signed through 2026.
The Celtics are also for sale.
The team governor, Wyc Grousbeck announced the sale just a week or so after hoisting the trophy. The timing was shocking – both because the Celtic’s had just won their 18th championship and seem poised to add to it over the next few seasons.
The Official Reason for Selling the Business -Estate Planning
Wyc Grousbeck, 67, runs the Celtics while owning 3% of the shares. His father, Irving, owns at least 20% and is the controlling shareholder. In announcing the sale, Wyc stated that it is necessary for estate planning purposes.
The investment group headed by the Grousbecks bought he Celtics for $360 million in 2002. Forbes currently values the team at $4.6 billion. The Grousbecks are asking $6 billion.
The odds they get that amount are much lower than the odds of the Celtics repeating.
The [Probable] Real Reason for the Sale
Within days of the announced sale – and announced reason – media reports began flooding in that estate planning was not the reason. It was reported, everywhere, that Irving was unhappy with his son’s spending. That was before he re-signed several players to maximum contracts, or, as the Boston Globe called it, “shelling out big-buck contracts this summer to lock up its stars.”
Even before the Celtics embarked on the 2023-24 season, there were questions in the media and around the league about the roster’s long-term sustainability due to a ballooning payroll – several players were due for automatic and substantial raises over upcoming seasons.
The Celtic’s GM, Brad Stevens, put together a remarkably deep roster last September after trading for All-Stars Tru Holiday and Kristaps Porzingas before the season started. Stevens put it together and Wyc Grousbeck – in search of a title – picked up their salaries.
Despite a year of near sellouts every night and the run through the playoffs the Celtics barely turned a profit.
If they go as deep into this coming season they may just end up in the black again in June ’25. Emphasis on ‘just.’
The Celtic’s 2024-25 salaries, with the league’s collective bargaining agreement supermax contracts for Jaylen Brown and Jayson Tatum kicking in, as well as the extensions the Celtics agreed to in order to sign Derrick White and Jrue Holiday kick in. will be $203.1 million; in 2025-26 it will be $233 million.
A Rift with Dad
According to the NY Post and Sports Illustrated, the “ballooning payroll allegedly sparked a rift within the Grousbeck family . . . Irving Grousbeck, balked at funding big losses on the horizon from the massive contracts that helped the Celtics capture a record 18th NBA championship . . . Sources said that the Celtics are expected to lose roughly $80M because of luxury tax fines for being over the salary cap for the upcoming season.”
The NBA’s fine for being over the salary cap is scheduled to become much harsher in 2025-26 and could conceivably cost the Celtics a $280 million luxury tax penalty. Put it together with their projected salary and a potential NBA Championship in 2025-26 would cost the Celtics an incredible half billion dollars.
It was enough, again according to the media to “spark a rift within the family . . . leading the aging patriarch to demand his free-spending son sell the iconic franchise."
Selling the Team
The official statement from Celtic ownership is that “The Grousbeck family is selling the team for estate and family planning considerations. To say the sale is in any way related to losses is completely incorrect.”
Perhaps. It is hardly, though, an opportune time to sell the team – made much harder (impossible) with the conditions the Grousbecks are trying to place on any potential sale.
Regardless of when and for how much they sell the team, they will walk away with a huge profit. Forbes values the team at $4.6 billion, the Grousbecks purchased them for $360 million in 2002.
The Celtics are looking for $6 billion with the backing of the NBA which is hoping to drive up the market price for the entry fees of its coming expansion teams (hello, Seattle?).
But there are problems. Unless the Celtics somehow decide to shed salaries – and drop like a rock in the Eastern Conference standings – they will lose tens of millions over the next season.
Another, major issue – the Celtics do not own its home arena, TD Garden. There is no way to earn money in the off season. The most valuable teams in the NBA, the Warriors (8.28b), Knicks ($7.43b), and Lakers ($7.34b) own their home arenas. The lease on TD Garden runs another 12 years.
But the reason for the sale has been lost on many fans. In a statement issued last week, the team cited “estate and family planning considerations.” That’s easy to gloss over—when the news broke, a friend tweeted to me that it was PR-speak for “I want more money.”
But in pro sports ownership circles, estate planning is the boogeyman that keeps older owners (and their families) up at night. It doesn’t get talked about in mainstream sports media, but succession considerations are front and center in annual owner meetings. It’s driving a lot of the changes that fans do notice, such as opening ownership ranks to private equity firms and sovereign wealth funds.
Under the surface of those major ownership transactions, there’s a constant stream of smaller undisclosed shifts in equity, trusts and ownership structure aimed at mitigating the complications of estate planning. The issue is so prevalent that every summer, the NFL has each owner file updated succession documents with the league’s central office so it knows up-to-date plans are in place.
Why is estate planning so complicated in sports? As franchises skyrocket in value, the price of handing that asset down to family members grows dramatically due to taxes. The allure of selling also grows for family members who aren’t directly involved in the team. That’s especially true for owners who paid relatively little for their franchise. The Celtics group, led by Irving Grousbeck and his son Wyc Grousbeck, bought the team in 2002 for $360 million, at the time the highest price paid for an NBA team. All major U.S. sports owners are wealthy, but not equally so, and the Grousbecks do not have the liquidity of peers like Steve Ballmer or Dan Gilbert.
Lastly, significantly, are the conditions the family wants to place on the sale. They want to do it in two steps, with the bulk of the payment now and the rest in 2027-28 (or so). In the meantime, they want to maintain control of the day-to-day operations of the team.
Cynics – which includes more than a few potential buyers – sense that the Grousbecks want the credit for any championships before selling and leaving the buyers with a roster that would have problems competing in the Big East.