By now you’ve likely heard that the Boston Celtics are for sale. Less than two weeks after winning an NBA record 18th championship, the consortium that controls the Celtics announced that it would sell all of its shares. There will be a lot of interest—Sportico values the team at $5.12 billion and the Celtics are one of the most recognizable brands in all of sports.
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.
The Celtics owners have been quiet about specifics, but sources close to the situation have shared a little of what’s at play. Irv Grousbeck is around 90 years old, and his estate planning over the past few years has centered around what happens to the family’s most valuable asset when it ultimately passes to the next generation. Wyc is one of four children, and while he’s been hands-on as team governor, his three siblings may feel differently about keeping the team in the family. The Celtics have appreciated about 14x over the course of their ownership, and that’s a lot of money tied up in an illiquid asset. The family ultimately decided to turn that into cash.
In an interview the CNBC earlier this week, Wyc Grousbeck declined to elaborate on the family dynamic. He also didn’t respond to an email seeking comment. A representative for the Celtics declined to comment.
Grousbeck did tell CNBC that he believes in the NBA as a longterm investment property, and that the family would like to sell the Celtics in two phases—51% now, and the rest in 2028—with the provision that he stays in control until the second transaction closes. Asking for that and getting it are two very different things. It could prove hard to convince someone to pay $5+ billion for a team and not gain immediate control, and the last NBA team to sell in set phases (the Minnesota Timberwolves) is currently locked in a legal battle over the contract.
Family planning challenges are by no means unique to the Grousbecks. It’s common for aging owners (or their children) to ultimately decide that selling is the best course of action. Sometimes that’s a choice made by the elder owner; sometimes by his or her children. Sometimes it’s contentious; other times it’s not. The priority for many in this process is wealth preservation, as opposed to wealth creation.
More modern sports teams have sold for this reason than because of any fears that the valuations would go down, a specter that follows every NBA sale since Mark Cuban teased the idea in the wake of his unloading the Mavericks. The NFL’s Denver Broncos and MLB’s Baltimore Orioles, two of the more recent major U.S. franchises to trade, were greatly influenced by family in-fighting. The Seahawks and Trail Blazers will eventually sell as part of late owner Paul Allen’s will. The Saints, Pelicans and Chargers may soon also have major transactions tied to estate planning, due to their aging owners or family disagreement. Asked recently on a podcast if he could have seen his kids owning the Mavericks one day, Cuban replied, “I wouldn’t put them through it.”
This pressure on family estate planning is most acutely felt in the NFL for three main reasons. 1) The teams are worth more. The average NFL franchise is worth $5.14 billion, the highest of any league in the world. 2) NFL teams change ownership far less. There are a number of NFL teams that have been owned by the same family for 100 years or more. The longer an asset is in the family, the more fractured ownership can become among children, grandkids and great grandkids. And, of course, the asset continues to appreciate. For example, the Bears were purchased in 1920 for $100; the team is now worth $6 billion. 3) The NFL’s ownership rules are more restrictive than any other league’s. NFL owners have been willing to bend those rules in the past (for the Rooneys in Pittsburgh, for example) and they are currently discussing further changes that might help keep football a family affair moving forward.
All that said, NBA teams are starting to catch up to NFL valuations. The average NBA team is now worth $4 billion, and the Celtics’ value is right around that NFL average. The franchise’s appreciation under the Grousbeck group looks NFL-like as well. This is obviously good news for the NBA and its owners, but it will certainly lead to more sales forced by estate planning in the future.
If you’d like to read more on this topic, Sportico in 2022 wrote a multipart series about succession planning in the NFL. You can read those stories here, here, here and here.