Private equity’s influence within the entertainment and sports world has been rapidly growing, and the landmark sale of the Boston Celtics, 18-time NBA champions and one of the most iconic sports franchises, for $6.1 billion has only reinforced this idea. The sale to private equity investor William Chisholm is not just a headline-grabbing price tag but a clear signal of how private equity reshapes such large industries.
At its core, private equity involves raising funds from high-net-worth individuals to acquire ownership stakes in several companies, aiming to increase profitability, improve performance and sell their stake at a higher value. These investors generally have a more hands-on role compared to public shareholders.
In the context of the sale of the Celtics, this deal reflects a change in ownership and strategy, which might lead to a case of the principal-agent problem. In this scenario, the head coaches will focus on winning more championships, while investors want to focus on profitability and the other factors listed previously. While Chisholm states he is a “diehard” fan of the Celtics, there is still worry amongst fans that decisions made by the new upper management may affect the team's current and future potential-filled seasons, having won the most recent NBA title in 2024, placing them ahead of the Los Angeles Lakers for the most championship wins in the league.
However, the deal may not be so bad for the franchise, looking at similar deals in the past. The Celtics were previously bought out for $360 billion in 2002 by venture capitalist Wyc Grousbeck, and this ownership group’s 23-year tenure brought stability, championships and explosive growth in the popularity of the Celtics. As a part of the new deal with Chisholm, Grousbeck will continue to be governor and CEO of the franchise through the 2027-2028 season, which may allow for a smoother transition in ownership over time.
This deal is part of a broader trend where private equity firms are increasingly drawn to sports due to their relatively stable cash flows, growing media rights deals, and passionate fan bases. These deals also benefit the franchises, as they allow for infrastructure upgrades (such as new stadiums and better training facilities) and global expansion, but they also raise questions. Will profitability be prioritised over the game itself? Will fans grow to have disdain for corporate ownership? What impact will fans have in the years to come?
Regardless, the deals set a precedent. This is a precedent that private equity investment will only become more prominent as the sports and entertainment industry expands. Even though Chisholm’s offer is on hold as NBA Commissioner Adam Silver reviews the deal, a statement has still been made. Private Equity is here to stay, and it’s not just watching from the sidelines.