How do the Celtics Compare Financially to their Peers/Adversaries?
posted at 5/10/2013 2:10 AM EDT
A regular poster here has been bad mouthing the ownership of the Celtics calling them cheap and saying that this ownership doesn't have the financial muscle of other owners in the NBA.
Well .... Guess what???
> For the record, there are two teams in the NBA worth more than $1 billion this year, and the Celtics aren’t one of them–at least according to us–but they are getting closer. This year FORBES values the team at $730 million, number four in the league behind the New York Knicks ($1.1 billion), Los Angeles Lakers ($1 billion) and Chicago Bulls ($800 million). That’s a 51% increase in the Celtics‘ value over last year, thanks to a new television deal that will double cash flow. <
> They’re making a bundle, generating an estimated $19 million in operating profit on revenues of some $143 million last year versus the league averages of $12 million and $123 million. And they’re doing it without owning the building they play in, one of the toughest tricks in pro sports. <
> Toiling around the middle of the NBA pack in sponsorship revenue a decade ago, the Celtics now rank in the league’s top five (an improvement that mirrors their rise in FORBES’ annual valuations). They struck equally lucrative television deals. An agreement with Comcast gives the Celtics a 20% equity stake in the regional sports network CSN New England, while roughly doubling the club’s local TV revenue to $40 million annually, with provisions for steep increases over the next 20 years. <
> “These are sophisticated financial guys,” says Marc Ganis, a sports business consultant who has worked with many NBA teams. With myriad investments and business relationships, he notes, they’re able to tap their personal business networks for sponsorships, suite dollars and other support. Good thing. When you don’t own your building, “you’re far more dependent on how you run your basketball team,” he says. <
> The boldest move was Garnett, who came in a trade from the Minnesota Timberwolves (with Ainge practically swindling his former teammate Kevin McHale, Minnesota’s GM) with two years remaining on a six-year, $126 million deal. After two subsequent extensions Boston will wind up paying the big man $140 million for eight seasons, until he’s 39. It’s risky. The club’s full executive committee reviewed the deal, seeing it as a make-or-break moment.
“If it works, it’s a championship. If it doesn’t, it’s a financial burden,” Grousbeck says. “Every single guy said, ‘I’m in, and if anyone wants to be out I’ll do their piece’.'” Given Garnett’s central role in returning the Celtics to NBA glory and four years of consistent sellouts, it is working so far. “Winning after taking a risk makes it all the more fun,” he says. <
> “I just turned down a ridiculous number for this team,” Grousbeck says before we head down to our seats, unable to contain himself. How ridiculous? He’s a dealmaker, a longtime private equity guy, and he knows we’re in the middle of doing FORBES’ annual valuations of NBA teams, so of course he’ll whisper it but won’t say on the record and won’t disclose who made the offer. But if it had worked out, he insists, it would have dwarfed the $360 million he and a group of investors, including fellow private equity pal Steve Pagliuca, paid for the team back in 2002. Pushed, Grousbeck offers this: “There are franchises in the NBA that will be worth a billion dollars,” he says. “If there aren’t already.” <
Now, I offer this up ... There's no way a bunch of smart financial people turn down $1B for their NBA franchise and then watch it fall precipitously in value because they are too cheap to spend money on players to maintain or increase the value of their investment. That's ludicrous and if anything, it should give fans more confidence that this ownership group is comitted to this franchise and seeing to it that it's value increases after turning down such an offer. There's only one way to do that and that's to put a quality product on the floor and I have every confidence that they will do just that.