Why the Celtics’ $4.7 Billion Sale Highlights a Troubling Surge in Sports Franchise Values
Two weeks after winning the NBA championship, the Boston Celtics announced that the league’s most successful franchise is up for sale.
This announcement follows the recent purchase of the Dallas Mavericks for nearly $4 billion and the acquisition of the Milwaukee Bucks for $3.5 billion just over a year ago. Additionally, the Phoenix Suns were sold for $4 billion in 2022. In the NFL, the Washington Commanders were sold for over $6 billion last year, and the Denver Broncos for $4.65 billion the year before.
Is there a looming bubble for professional sports franchises?
No, according to a Northeastern University business expert, professional sports franchises remain a solid investment.
“There are plenty of stories of bubbles, but I think we’re far from the bubble, far from bursting the bubble,” says Evodio Kaltenecker, associate teaching professor at Northeastern’s D’Amore-McKim School of Business. “I think it looks good for several years on the horizon.”
Sports franchises are limited assets that are very attractive to billionaires, Kaltenecker notes, and they continue to have “tangible drivers of profitability.”
After 22 years of ownership and a value increase estimated at over $4 billion, the majority owners of the Boston Celtics, Boston Basketball Partners LLC, recently announced their intention to sell the team. The controlling family of the ownership group, the Grousbecks, stated that the decision to sell the team was made for estate and family planning reasons.
The group plans to sell a majority stake in 2024 or early 2025, with the remaining balance to be sold in 2028. Wyc Grousbeck will remain as governor of the team until the second closing in 2028.
The Grousbeck ownership group, which includes Steve Pagliuca, co-chairman of Bain Capital, purchased the Celtics for $360 million in 2002 from the Gaston family, who had bought the team for $18 million in 1983. The team is currently valued at $4.7 billion by Forbes.
Kaltenecker notes that sports franchises in four of the largest U.S. leagues have outperformed the Standard & Poor’s 500.
“It’s an opportunity to invest in a profitable business and diversify traditional investments. Given past deals, it’s a strong yes to invest,” says Evodio Kaltenecker, associate teaching professor at Northeastern’s D’Amore-McKim School of Business.
Professional teams are expanding internationally and creating local “ecosystems of businesses” by integrating sports with hospitality, retail, and entertainment, Kaltenecker explains. They are developing synergies around the teams, including arenas, hotels, shopping centers, and restaurants, and selling content and experiences.
“There are opportunities for additional growth. It’s a good investment for smart investors,” Kaltenecker adds. “This ecosystem can be improved and become very profitable if investors play the right game.”
Media rights further boost profitability, with television contracts continually rising. The NBA is entering the final year of a nine-year media deal worth an average of $2.67 billion annually. A new deal, expected to be long-term, could average at least $6 billion per year, more than doubling the current contract.
The Boston Celtics, with 18 NBA championships, are the league’s winningest franchise. Under the Grousbeck family’s ownership, the team has won two titles, in 2008 and this year.
After 22 years of ownership and a value increase estimated at over $4 billion, the majority owners of the Boston Celtics, Boston Basketball Partners LLC, announced their intention to sell the team. The Grousbeck family, which leads the ownership group, cited estate and family planning reasons for the decision.
The group plans to sell a majority stake in 2024 or early 2025, with the remaining balance in 2028. Wyc Grousbeck will remain as governor of the team until the second closing in 2028.
The Grousbeck ownership group, which includes Steve Pagliuca, co-chairman of Bain Capital, purchased the Celtics for $360 million in 2002 from the Gaston family, who had bought the team for $18 million in 1983. The team is currently valued at $4.7 billion by Forbes.
Kaltenecker notes that sports franchises in four of the largest U.S. leagues have outperformed the Standard & Poor’s 500.
