Throughout the years that Crimson Auerbach ran the Celtics, the group was a paragon of stability and custom. First Crimson coached the Celtics, after which, typically, the gamers he coached coached the Celtics. The uniforms didn’t change, and banner after banner of the identical plain sort amassed within the rafters of the previous Boston Backyard. One after the other, participant numbers have been retired and raised to the identical lofty place above essentially the most storied court docket within the Nationwide Basketball Affiliation. From a basketball perspective, the Celtics have been about as strong and secure because the rock of Gibraltar.
However that stability was not mirrored in staff possession.
After Walter Brown died unexpectedly within the fall of 1964, the Celtics went via a twenty-year interval when ten completely different possession teams managed the staff.
In 1983, the Celtics have been bought from Harry Mangurian by a consortium led by Don Gaston. Gaston had been an govt with Gulf+Western after they owned the Knicks, having bought Madison Sq. Backyard and its tenants in 1977.
Gaston’s consortium included Boston native Paul Dupee, and Alan Cohen, who was an govt with the New Jersey Nets on the time—each have been additionally Gulf+Western alumni. The sale worth was reported to be $15 million.
Gaston, a Texas native, had left Gulf+Western in 1982 after assembling a gaggle of traders that bought Windfall Capitol Worldwide Insurance coverage Ltd., and Well-known Gamers Realty, Ltd. from Gulf+Western for $350 million.
About three years after buying the Celtics, Gaston and his companions determined to share the wealth whereas creating some wealth for themselves.
They offered 40% of the Boston Celtics on the New York Inventory Trade on December 3, 1986.
This was the primary—and thus far solely—time {that a} sports activities franchise has been publicly traded.
It offered a chance for any variety of Celtics followers, together with my dad, to say an possession stake in what may in a really actual sense now be referred to as ‘their’ staff.
It was additionally a superb transfer for the wallets of Boston’s possession group. Having paid round $15 million for the staff within the fall of 1983, they recouped about thrice that in an IPO that concurrently lined their pockets with an estimated $48 million in money and boosted the valuation of their holdings to about $72 million—not a nasty return total. On the shut of the primary day of buying and selling, the Celtics have been valued at $120 million, give or take. This was an astronomical worth for an expert sports activities staff on the time.
For the subsequent sixteen years and alter, the Celtics have been, partially, a publicly traded entity.
The IPO was the brainchild of Charles Weiss at Smith Barney, an funding banking agency that didn’t survive the 2008 monetary disaster. His thought was to create a collection of “Grasp Restricted Partnerships” wherein sports activities franchise homeowners may elevate a big quantity of capital by promoting a minority stake available on the market; grasp restricted partnerships would additionally ease the tax burden that sports activities groups would face, as revenue could be distributed to companions who would pay taxes individually. Gaston and his companions, who have been all the time businessmen first, leaped on the alternative.
The Celtics IPO was a comparatively small float of two.6 million shares.
It ended up within the fingers of about 95,000 traders, which means the common shareholder was sitting on simply over 27 shares. This created an infinite headache every time dividends got here due. It value the Celtics roughly $1 million per yr simply to print and mail out the quarterly checks. These quarterly dividends, all the time below a greenback per share, have been rapidly changed into an annual distribution which saved appreciable cash in postage and printing. Including to the headache was the truth that roughly one out of each ten stockholders did not deposit these dividend checks.
Celtics followers held onto their shares, too. On any given day, fewer than 2,000 Boston Celtics Restricted Partnership shares would possibly change fingers on the New York Inventory Trade. Much more inventory certificates have been prone to be discovered hanging on the partitions of places of work and dens, and, within the case of notably tolerant spouses, maybe even in residing rooms.
In change for a sudden inflow of money and a lift to the underside line, buying and selling on the inventory change required that the Celtics open their books to public scrutiny in a method that no staff earlier than or since has needed to. Along with participant contracts, which have been typically reported on and public information, salaries of entrance workplace personnel have been revealed. For instance, it turned out that Crimson Auerbach was making a comparatively modest $250,000 per yr, an quantity that had been assured for Crimson’s lifetime in a contract with the brand new homeowners.
In 1998, a ten-year provision that had saved the favorable tax therapy of revenue below grasp restricted partnerships in place expired. Consequently, the Celtics have been reorganized right into a byzantine construction wherein people who held greater than 100 shares could be eligible to acquire associate standing, whereas smaller traders would obtain a share within the new entity together with $20 in subordinated debt per share: principally, they’d be given an IOU from the Celtics guaranteeing fee of 6% annual curiosity (or $1.20), and, in forty years, compensation of the complete $20.
This new construction was organized in an effort to protect the pass-through therapy of revenue that had been in place with the grasp restricted partnership.
Beneath the brand new association, the Boston Celtics have been owned by a partnership, Celtics Basketball, L.P., which, in flip, was owned by Celtics Basketball Holdings, L.P. 48.3123% of Celtics Basketball Holdings, L.P. was owned by Boston Celtics Restricted Partnership II, or “BCLP II,” which was, in truth, the unique Boston Celtics Restricted Partnership. A brand new Boston Celtics Restricted Partnership, “BCLP,” owned 99% of “BCLP II.” BCLP was the entity with publicly traded shares, whereas BCLP II was the entity that issued the $20 debentures.
Presumably there have been tax benefits to having this many tiers of possession over the Boston Celtics, and it appears probably that such convoluted preparations are in place with different groups, now that skilled sports activities have change into an enormous enterprise.
The truth is, it may very well be effectively argued that the Celtics IPO was the start of the ‘large enterprise’ period for sports activities franchise possession.
At a swoop, the valuation of the Celtics jumped from $15 million to $120 million. Possession of a basketball franchise, which had been roughly a passion for the well-heeled up thus far, all of the sudden grew to become a realm the place severe money was required to purchase into the sport. With that money got here expectations relating to income development and profitability.
Accessible paperwork from the SEC’s EDGAR on-line database of filings from 2001 and later present that there have been nonetheless about 58,000 particular person stockholders on the time that Wyc Grousbeck’s possession group put in a proposal for the staff.
These people, a lot of whom had probably held onto their shares going again to the preliminary public providing, or a number of months afterwards, have been paid $27 for his or her share, which, together with redemption of the $20 debenture, meant a $47 return on an preliminary funding, if made across the time of the IPO, of about $18. This was a few 261% achieve, not counting dividends.
Apparently, this mirrored an roughly even return on funding in comparison with what Gaston and firm had accrued based mostly on the staff’s valuation on the time of the IPO. The web sale worth of the Celtics in 2002 was $310 million, which was a 258% enhance over the IPO’s valuation of round $120 million.
Nonetheless, Gaston, Dupee and Cohen had purchased the staff for simply $15 million, and the return on their money outlay amounted to about 2,067% when the staff offered in 2002, not counting the $48 million that they’d acquired from the IPO. Grousbeck’s group paid $360 million for the Celtics, which was a document sum for the NBA on the time, however $50 million was used to retire numerous debt obligations, together with the debentures that had been distributed to shareholders in 1998.
This sale marked the top of an attention-grabbing experiment in franchise possession throughout a interval that noticed valuations {of professional} sports activities groups skyrocket. This development has solely continued with the document sale of the Celtics in 2025 for $6.1 billion, a sale worth that was quickly eclipsed by two completely different gross sales of the Los Angeles Lakers, first for $10 billion after which, lower than a yr later, $12.5 billion.
The irony is that an IPO that marked the transformation of sports activities into large enterprise additionally made it potential for bizarre followers of each stripe to personal a bit of their favourite staff, no less than for a time.
