“There are bounty of stories of bubbles, but I think we’re distant from the bubble, distant from bursting the bubble,” says Evodio Kaltenecker, relate educating teacher in Northeastern’s D’Amore-McKim School of Commerce.
Two weeks after winning the NBA championship, the Boston Celtics announced they were selling the league’s best team.
The announcement came just a few months after acquiring the Dallas Mavericks for approximately $4 billion and just over a year after acquiring the Milwaukee Bucks for approximately $3.5 billion. The Phoenix Suns were sold for $4 billion in 2022. In the NFL, the Washington Commanders sold for more than $6 billion last year, and the year before that the Denver Broncos were sold for $4.65 billion. Is the professional sports franchise bubble about to burst?
No, professional sports franchises remain a smart investment, says a Northeastern University business expert. “There’s a lot of talk about bubbles, but I don’t think we’re anywhere near a bubble or even a burst,” said Evodio Kaltennecker, assistant professor of economics at Northeastern University’s D’Amore McKim School of Business. “I think things will continue to run smoothly for a few years.”
Kaltennecker said sports franchises are finite assets, highly attractive to billionaires and continue to be “a visible driver of profitability.”
After 22 years of ownership and an estimated value increase of more than $4 billion, Boston Basketball Partners LLC, majority owner of the Boston Celtics, recently announced plans to sell the team. The Grousbecks, who control the ownership group, said in a statement that “after careful consideration and internal discussions, we have decided to sell the team, taking into account our succession and family planning.”
The group announced plans to sell a majority stake in 2024 or early 2025, with the remainder to be sold in 2028. Wyck Grousbeck will remain as the team’s governor until the second closing in 2028. Grusbek’s own group, including CA-CHAIR DE BAIN CAIN CAIN CAPITAL Steve Paglius, acquired Celtics for $ 360 million in 2002 from the Gaston family, which acquired a team for $ 183 in 1983. Forbes. Kaltenecker said he found that sports franchises in four of the largest leagues in the United States outperformed the Standard & Poor’s 500 rankings.
“It’s a bit of an opportunity to invest in a profitable business and also the diversification of traditional business. Looking at the previous transactions, this is a solid yes (investment), “explains Caltenecker.
According to Kaltenecker, these professional teams develop internationally, create a “business ecosystem” at the regional level, and create a combination of sports and hospitality. They develop synergistic effects around the team, such as arena, hotel, shopping center, retail store, merchants, and restaurants. We sell content and experience. “There’s plenty of room for further growth. I think it’s a good investment for a smart investor,” Kaltennecker said. “So this ecosystem can be improved. If investors get the strategy right, it could be very profitable, no joke.”
Up the road lies media rights, as TV deals continue to grow, Kaltennecker said. The NBA is in the final year of a nine-year media contract that brings in an average of $2.67 billion per season and is currently negotiating a new, long-term deal that is expected to be worth at least $6 billion per year, more than double the value of the current deal. With 18 NBA championships, the Celtics are the winningest team in the league. Under Groesbeck’s leadership, the team won two titles this year and in 2008. The face of the establishment is Wyk Grousbeck, one of the four children of 89-year-old Irving Grousbeck, who has nine grandchildren and made his fortune in 1963 as co-founder of Continental Cablevision. Forbes lists the cost of Irving Glusbeck and $ 1.8 billion.
So why is Grosbeki selling now? Kimberly Eddleston, Schultz Distinguished Professor and Montoni Fellow in Entrepreneurship at Northeastern University’s D’Amore McKim School of Business, said Irving likely wants to leverage the value of his team and preserve the wealth of current and future members of his family.
“Irving is 89 years old, and I think he wants to leave his legacy for his family, for this generation and for generations to come,” Eddleston said. “I think he’s very concerned about leaving them a really good nest egg,” says family business expert Edelston.
“He wants to preserve all the wealth that they’ve accumulated over the years and make sure that it’s distributed fairly, perhaps, to his children, his grandchildren and someday his great-grandchildren, so that they continue to be a good, united family.” This is a real problem that I see when I work with families. Families are very concerned about moving away from their families and keeping it that way,” says Edelston. “So one of the reasons businesses are sold and succession planning is done, which is a very common reason, is to preserve family harmony and mitigate or reduce any kind of conflict.”
Celtics CEO and governor Wyck Grousbeck told CNBC that he is not the sole owner of the team. “Just to be clear, this is not my majority stake. The leadership of the team is with my family,” Grousbeck told CNBC. “So it’s the family that I’m a part of and then there’s also the Celtics family that I’m a part of, so there’s intersections and connotations. The family has been doing this for 22 years. There have been discussions and considerations about estate planning and family planning.
Eddleston said the Celtics have a lot of value at this point, but not everyone in the family will benefit unless the team is sold. Additionally, property taxes are expected to increase in 2026. Wick Grousbeck often said that homeowners “get paid in style.” Thus, the sale will allow all members of the family to access wealth. “(Irving) seems to be a very successful businessman and from a family business perspective, I wouldn’t be surprised if a consultant said now is the time. And if you want to achieve equity, take control of your asset allocation and also ensure you lower your taxes, now is the time,” she says.
