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You’ve probably heard that the Boston Celtics are for sale. Less than two weeks after breaking a record with their 18th NBA title, the consortium that controls the Celtics announced it would sell all of its shares. Interest is likely to be high –Sport The team is valued at $5.12 billion and the Celtics are one of the most recognized brands in all of sports.

But the reason for the sale has escaped many fans. In a statement last week, the team cited “wealth and family planning considerations.” It’s easy to overlook that – when the news broke, a friend tweeted to me that it was PR-speak for “I want more money.”

But in professional sports ownership, estate planning is the bogeyman that keeps older owners (and their families) awake at night. It is not talked about in the mainstream sports media, but succession considerations are front and center at annual owners’ meetings. It is driving many of the changes that fans Do Announcement, such as the opening of ownership classes to private equity firms and sovereign wealth funds.

Beneath the surface of these major ownership changes is a steady stream of smaller, undisclosed shifts in equity, trust assets and ownership structure designed to mitigate the complications of estate planning. The problem is so widespread that every summer the NFL requires every owner to file updated succession documents with league headquarters so it knows current plans are in place.

Why is estate planning in sports so complicated? As franchise values ​​soar, the cost of passing that wealth on to family members increases dramatically due to taxes. Even for family members not directly involved with the team, selling becomes more tempting. This is 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, then the highest price paid for an NBA team. All major U.S. sports owners are rich, but not equally, and the Grousbecks do not have the liquidity of peers such as Steve Ballmer or Dan Gilbert.

The Celtics’ owners have been tight-lipped about specifics, but sources familiar with the situation have revealed a little about what’s at stake. Irv Grousbeck is about 90 years old, and his estate planning over the past few years has revolved 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 has been actively involved as a team governor, his three siblings may disagree about keeping the team in the family. The Celtics have increased in value about 14 times over the course of their ownership, and that’s a lot of money tied up in an illiquid asset. The family ultimately decided to convert the money into cash.

In an interview with CNBC earlier this week, Wyc Grousbeck declined to elaborate on the family dynamic. He also did not respond to an email seeking comment. A representative for the Celtics declined to comment.

Grousbeck told CNBC he believes in the NBA as a long-term investment and the family would like to sell the Celtics in two phases – 51% now and the rest in 2028 – with the stipulation that he maintains control until the second transaction is completed. Asking for that and getting it are two very different things. It could prove difficult to convince someone to pay over $5 billion for a team and not take control immediately, and the last NBA team to sell in set phases (the Minnesota Timberwolves) is currently embroiled in a legal battle over the contract.

Family planning problems are by no means unique to the Grousbecks. Often, older owners (or their children) ultimately decide to sell. Sometimes it is the older owner’s decision, sometimes that of their children. Sometimes it is controversial, sometimes not. For many, wealth preservation, not wealth creation, is the priority in this process.

More modern sports teams have sold for this reason than out of fear of a potential loss of value – a specter that has followed every NBA sale since Mark Cuban floated the idea after selling the Mavericks. The NFL’s Denver Broncos and MLB’s Baltimore Orioles, two of the most recent major U.S. franchises to sell, have been heavily influenced by family disputes. The Seahawks and Trail Blazers will eventually sell as part of the will of late owner Paul Allen. The Saints, Pelicans and Chargers may also soon face major estate-planning transactions due to their aging owners or family discord. When asked on a recent podcast if he could imagine his children owning the Mavericks one day, Cuban replied, “I wouldn’t put that on them.”

This pressure on family estate planning is felt most acutely in the NFL for three main reasons: 1) The teams are worth more. An NFL franchise is worth an average of $5.14 billion, more than any other league in the world. 2) NFL teams change hands far less frequently. Several NFL teams have been owned by the same family for 100 years or more. The longer an asset is in the family, the more ownership can be divided between children, grandchildren, and great-grandchildren. And, of course, assets continue to rise in value. The Bears, for example, were purchased for $100 in 1920; today the team is worth $6 billion. 3) The NFL’s ownership rules are more restrictive than those of any other league. NFL owners have been willing to work around these rules in the past (in the case of the Rooneys in Pittsburgh, for example) and are currently discussing further changes that could help keep football a family affair well into the future.

Still, NBA teams are slowly catching up to NFL values. The average NBA team is now worth $4 billion, and the Celtics’ value is about the NFL average. The franchise’s increase in value under the Grousbeck group is also similar to that of the NFL. This is obviously good news for the NBA and its owners, but it will surely lead to more sales forced by estate planning in the future.

If you want to read more on this topic, Sportico wrote a multi-part series on succession planning in the NFL in 2022. You can read these stories Here, Here, Here And Here.

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