Boston Celtics Now Most Valuable Team, Betting on March Madness

0:01Bloomberg Audio Studios Podcast Radio News. This is the business of sports. The business of sports can be intimidating or hard for a startup to break into. We really appreciate when our owners are actually there, you know, with us through the journey. Teams, ours especially, have been very intentional to diversify at all levels of the company. I think we're in the golden years for the NFL and college football. Our demographic reach has continued to expand. This is going to be really unlocking the streaming platform for sports fans. Sports valuations are rising. We'll see when they peak. You don't have to be the best in your sport to make a whole ton of money.

0:43Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports, where we explore the big money issues of the world of sports. I'm Michael Barr, along with my colleagues Damian Sassauer and Vanessa Berdomo. Scarlett Fu will join us later in the show. Coming up, we talk college basketball. March Madness is here, and we'll talk with BetMGM CEO Adam Greenblatt about some of the biggest betting trends for the tournament this year. We've seen a 30 % year-on-year increase in bets on women's college basketball, and this is going to blow your mind. Over the past two years, we've experienced more than 750 % increase in bets on the women's college game.

1:28We'll also talk the latest in a legal battle between the NCAA and former players. A crucial court date is set for early April, And that could pay out nearly$3 billion in damages to former athletes and build out plans for future compensation for college players. All of that and more is straight ahead on the Bloomberg Business of Sports. But first, the Boston Celtics, they have a new owner. A group of buyers, including STG Partners co-founder Bill Chisholm, reached a deal late this week to buy the NBA's Boston Celtics in a deal totaling just over$6 billion. Here now to take us through what we know about the deal and what could be next is Bloomberg News sports business reporter Randall Williams.

2:16Randall, welcome to the Bloomberg Business of Sports. Thank you for having me. Gee, something happened with the Boston Celtics. looks like they're sold. $6.1 billion to Bill Chisholm. Now that's more than Josh Howard's paid for the Commanders, right? Yeah. So does that make it the most? Yes, the most expensive sports deal ever. Wow. Which people were wondering if this would happen if they would surpass that$6 billion mark. They barely got over it. Wow, that's awesome. I mean, so$6.1 billion. Yeah, I mean, Wick Rospeck's got to be doing cartwheels in his living room right about now, wouldn't you say?

2:52Yeah, I think so. I mean, the Celtics don't own their stadium, and that was a big caveat to this deal because this is setting the table for NBA expansion. And if you're an expansion bidder and you're watching this, you don't want to pay more than the Celtics, obviously, because the Celtics are one of the oldest franchises. They don't own their stadium. And so when you're looking at this, it's like, okay, let's set the mark, and let's see what we don't want to pay. And this doesn't include a stadium. So$6 billion without a stadium is a lot of money. You think about Vegas. Vegas is a big market.

3:20If you think about Seattle, Seattle already has their stadium built. So I don't think Seattle will surpass this. But who knows? Who knows what the price could go up to? I think Vegas very well could, depending on who's buying. But they would get it as an expansion fee? Is that that high of an expansion fee? I don't think so. The expansion fee bankers and people around have told me that they expected to be between four and five billion. Now, if without a stadium, four and five billion. So just a fee straight up paid out to the NBA owners. But with a stadium, if you don't have a stadium, then you have to build one.

3:50That could be anywhere from$1.5 billion to$2.5 billion more. You add that on top of the$4 to$5 billion, and that's anywhere from$5.5 to$7.5. I don't think that an NBA expansion team is going to sell for$7.5 billion, but there are some pretty prideful people out there, pretty prideful billionaires out there who want into this NBA business, and who knows what's going to happen. Is that what we saw with this, was that he was just more willing to spend the money than anyone else? Or why did they get chosen? Still be determined. I mean, I think Bill had a good group. And when you have a private equity firm that comes with a billion dollars, that helps out tremendously.

4:31I don't know the specific details of what the other bidders had, but they had the best deal. And the Boston basketball partners will be moving out at the end of 2028. So let's dial it back here. I mean, Wick Grosbeck bought the team in 2002 for$360 million. 6.1 billion. I mean, Michael Barr, that's 17x in 23 years. And right now you caught me because I'm looking up NVIDIA stock, right? And I'm trying to figure out when you had to buy NVIDIA to get a 17 times return. I mean, like how many assets out there? And by the way, we're not talking about a dollar. I mean, you have to invest 360 to get 17x on that number is just frighteningly awesome.

5:08And you have to think about like Steve Pagliuca, who's also an owner. He had a 20 % stake, and he was bidding for this as well. So, like, he's technically not a loser when you think about him owning 20 % and his team being sold. Like, the other groups out there, I think, you could argue are bigger losers. But for Steve, who is a big Celtics fan, you know, it's not the worst thing in the world. You already own a piece of the team. You're being paid out even more than what he got in the first place. So there's no losers in this deal except for the people who aren't owning the team. Well, now, the Grospeck family, they wanted it.

5:41And I'm going to go back to what you were saying earlier, in two phases. Exactly. So can you explain that? So they said that they were going to sell this in two phases, 51 % and 49%, with this first piece being sold now. Bill Chisholm, he's going to purchase the rest of the team at a later date. So he's going to be the outright owner of this team, he and his ownership group. So I'm looking at the chart here on NVIDIA stock. You know, if you bought NVIDIA at the depths of the coronavirus, the COVID crisis, right? I'm talking March 2020. You could have got it at$7 a share. It's trading at$120. So, okay.

6:16It's been done before. Just let everybody know here. I mean, we could have bought NVIDIA in 2020. We wouldn't be here right now. Michael Barr, you and I would be on a beach. How can I? I can't do that. Why can't I do that? Randall, why can't I? You can. Vanessa, why can't I do this? I mean, technically you can. You just have to choose a smaller league. So whether you want to get into the NWSL, the WNBA, there are other sports investments out there for us everyday people. It's just about being able to raise the funds. Can you, Michael Barr, raise$250 million? It's not$6.5 billion, you know. It's a smaller number.

6:48But that might get you a WNBA team. It might get you an NWSL team. But$250 million isn't even going to get you 2 % of an NFL team. Oh, man. Boy, that's it. It shows you now you need private equity to do these deals. Exactly. You're going to see more of that in the future. can the the Celtics as a team and I agree with what you're saying earlier 6.1 that's only going to be out there for so long because somebody's going to come along maybe because this is any team now any pro team and one day come along and they say hey Jerry Jones listen uh you're talking Jerry Jones. I don't know about that, but keep going.

7:31If the price is right, why not? I think it does. There will be a team that eventually surpasses us. Now, the team to do it will have to be an iconic franchise or one that's in a big market. I mean, let's get right. I mean, Ishmael only paid what for the Suns? I mean, that's not... Yeah, you can't compare that. Exactly. Now, if I had to guess, it's easy to say for the MLB to surpass this, it would have to be another one of their iconic franchise for the NFL. I think it's the next one. Yeah, right. The NFL, it has to be just the next one and it'll keep growing on. So, right, because like in this idea of the NFL revenue, no one can come close to it.

8:09That's why this was almost surprising. Or was it just because it was a storied franchise? It's both. I think it's surprising that they got just a tad bit over. But for the NFL, I mean, you have to think about the last couple purchases from the NFL when the Panthers were sold. I believe that was around 2.2. Then you had the Broncos, which is$4.6 billion, and then you have the Commanders at$6 billion. Who knows what the next one could sell at? But if the Celtics are just surpassed that by$50 million to get to$6.1 billion. And they're the champs. They're the defending champs. And they're the defending champs.

8:37And they've got their players locked up and they're young. So I agree with you. Exactly. So you look at some of these secession plans that are out there. We know that the Seahawks have to be sold. We know that the Saints have to be sold. There's going to be somebody out there who's looking at the NFL's business and is like, these teams don't lose money. I am going to control my stadium. I'm going to make a whole lot more cash even after investing this money. I think it's inevitably going to be passed, and my bet would be on an NFL franchise at some point. Well, Randall, you know, I got to ask you.

9:06I mean, the Lakers look good, man. Talk to us a little bit about after this trade, you know, what do the Lakers look like to you, right? Are they a real contender? But more importantly, where does this leave Dallas? I mean, my God. I've never seen a franchise torn apart in a year the way that I have seen this franchise. I mean, like Dallas lost the finals. Luka goes out with an injury. You trade him in the darkness of the night, and then Kyrie gets hurt. Anthony Davis gets hurt. And, I mean, I'm naming the top players. There are other players who have also been hurt. In regards to the Lakers, the Lakers can contend.

9:43Like, it has drastically— They got Luka Doncic for Anthony Davis and a couple other pieces, but they didn't lose their soul when they traded for him, Which, if you're trading for Luka Doncic, you're expected to lose your soul. And so with that in mind, you think about how much that supercharges the NBA as a league with LeBron and Luka playing together. Here come the Lakers into the front court with the ball and a one-point lead. Reeves, top of the key. Goes to Luka, right side. Doncic, dribbling one-on-one against Walker Kessler. Three-pointer over Kessler. It's good! Luka's first three as a Laker, and the place goes nuts.

10:20LeBron with Marcus Smart on it. LeBron dribbles right. LeBron down the middle. They forgot to stop the ball. Slam dunk by LeBron. What does it look like? Think about these matchups for the Lakers. If they play the Celtics, you have the oldest rivalry in basketball going at it again. Jalen Brown against Luka Dacic. She's thinking about pulling up to the three instead. A couple of dribbles. Shot clock down to six. Jalen backs it out. He's near half court. Jalen pull up on Luka. Straight away three. Got it. if they play the Cavs, it's LeBron returning to Cleveland. Like, there's a lot of different stories.

10:56And granted, even in the matchup before there. They've got to get through OKC. I mean, they're the only... We're not worried about OKC. Golden State. Like, you think about the Western Conference Finals. Now you have LeBron versus Steph. Butler. Right wing. Gets it to Curry. Curls. Fires a three. Knocks it down. And he's now got 25 ,000 points plus in his career. The 26th player in NBA history to reach that plateau. Yeah. Again, so there's a lot out there. See, and you're right, because the L.A. against Boston, and okay, old man Barr is going to talk again. 1970, back in the NBA game of the week, when it used to be on ABC.

11:33Yeah, we had color back then, and TV and tennis. Well, Michael, did you see where Randall just went there? He went right to the playoffs. And, you know, we're talking about a$6.1 billion valuation to take it back to the Celtics. It's all about getting to the playoffs and more playoff games, more home playoff games. And now aren't the Lakers the two seeds? So L.A.'s got – it's showtime. They're around there. I mean, so much of this is fluctuating because I think the seeds between three and eight are just so close to one another. But if LeBron and Luka are playing and they don't make at least the Western Conference Finals, it would be a tremendous disappointment.

12:07Keep your eye, by the way, on the Cleveland Cavaliers. They're the real deal. They're the real deal. They don't get talked about enough because LeBron's not there anymore, but they're a serious threat. Spider. Mitchell crossover three ball. A 50. A 50 piece here in the first quarter for the Cavaliers. Randall Williams, my man, thank you again for joining us on the Bloomberg Business of Sports. Always a pleasure. Always dropping knowledge on us. Thank you again. Thank you for having me as always. Up next, we dive in on March Madness for my colleagues. It's Damian Sassauer and Vanessa Perdomo. I'm Michael Barr.

12:48You're listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.

13:00This is Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael Barr along with my colleagues Scarlett Fu and Damian Sassauer. The NCAA tournament is here. But before we go all in on March Madness, we want to touch on another big story in college sports which could have a huge impact. The NCAA is expected to approve a settlement that would pay out nearly$3 billion in damages to former athletes and establish a framework for player compensation. Bloomberg News Global Business of Sports reporter Ira Budwe has done a lot of reporting on this And he is here now to take us through the latest.

13:45Ira, welcome back to the Bloomberg Business of Sports. How's it going? The flawed plan to gain control of college athletes' pay. Now, as my father would say, how in the hell are you going to do that? It's interesting. I mean, I think people who follow college sports are aware of this settlement and the class action suit that were brought by former athletes over the fact that they weren't allowed to earn money off the field for years and years. And then the NCAA changed that rule back in 2021. And now we all know this term NIL, name, image, likeness deals. And that class action suit is supposed to be finalized in April, actually the same day as the men's NCAA basketball championship final.

14:30And it has in it these provisions, right, that schools will now be able to pay players directly up to 22 % of their athletic revenue. And everyone's sort of focused on that, this pay and this cap that are included in there. But there's also a provision in there that says that outside deals, third-party deals for NIL, which basically are what now drive the market, what athletes are getting millions of dollars for, are going to be subject to a fair market review by this outside entity that's going to be run by Deloitte. Basically, what they're trying to do is ensure that NIL deals are no longer used as pay-to-play, which is what's happening now.

15:12NIL is supposed to be like, I lend my name to your advertising campaign, you give me some money for that. But what it's become is, I come to your school and play quarterback, and you give me some money for that. And they want that to end. They want the pay to be capped and to come through the schools and to be under their control and for them to have full visibility into the marketplace. But I think it's going to be really hard to enforce. Yeah, how do you do that? I mean, how do you wrangle all this together? This all kind of developed organically, and there's no real regulatory body overseeing any of this.

15:45Yeah, it's very tricky. I mean, this world exists in pro sports. So athletes who do endorsement deals in professional sports are bound by rules in their collective bargaining agreements that basically say the owner can't come and make a deal with you on the side with his other company or whatever it may be and pay you basically salary off the books. Teams have tried to break these rules. So there are these fair market reviews. They exist in sports, but they usually are part of a collective bargaining agreement. And that's how this works normally. But college obviously is a special case. There is no CBA.

16:26There doesn't seem to be any movement toward one. It would require all this work about declaring athletes employees, forming unions or some kind of representation. And so they're trying to figure out a way to do this through this settlement and through this Deloitte Clearinghouse, which is basically going to say if you have a deal of more than$600, you have to bring it to the Clearinghouse. And the Clearinghouse is going to look at the deal and they're going to say, is this deal with somebody who we call basically a booster? like somebody who wants the school you're going to to win like phil knight very famously co-founder of nike supports the oregon ducks university of oregon he gives lots of money to their athletes and nil deals he would be one of these people on the list right who he's he's giving this money because he wants oregon to win not because he's trying to you know promote his new company uh and so if you're on that list then deloitte is going to take that deal and say is this what people are paying for the work you say you're going to do for for the name image and likeness of a person like you who plays as a sophomore and plays in this position, in this market with this many social media followers, is this the right amount of money?

17:29Or is this actually just the money that they're trying to pay you to come play for their school? If they think it's too much, they're going to throw it out. And then the athlete will either have to appeal that to an arbitrator or renegotiate or just abandon it. Those Deloitte guys will be really popular. Well, yeah. So that's one issue, right? Their authority is going to get tested in court and otherwise. And then they also then have to have this separate to the Deloitte clearinghouse, this enforcement entity that they're going to build, assuming this gets finalized. This gets finalized in April.

18:01This will all go into effect in July. So they've got a little bit of time to build it, but it's a real challenge because then they have to have a group of people who basically figure out if you have unreported deals, right? A lot of times these deals at this point, athletes are supposed to disclose their NIL deals to their schools. A lot of them do not. And so you're going to be back in the same situation that they've been in for a long time, which is athlete rolls up to school in a luxury car. You don't know where that money came from. It doesn't seem to make sense. You have to open some kind of investigation.

18:30Or, you know, guy at Alabama tells on guy at Clemson because he wants to get Clemson in trouble. And he knows that guy at Clemson made a deal without disclosing. And now you've got to chase down that tip. or guy makes a deal with a car dealership in town, you know, who's a booster for Kentucky, let's say. And the deal is, we'll give you$100 ,000, but you've got to show up to 20 events that we're going to hold during the course of the next year. Deloitte looks at that and says, all right, I think that passes muster. That's within the range of the reasonable. But guy no-shows, right? Goes to one event, skips the other 19.

19:06You've got to follow up on all of that. So I think it's going to be a real trick. By the way, in case anybody not familiar with the settlement part, the NCAA, if approved, would pay$2.8 billion in damages to former athletes and establish a framework for schools to compensate current players. Now, which brings me to the next question. The NCAA has just finally said, you know what? The heck with it. There's nothing we can do. Yes. The amateurism stuff. Okay. It's over. All right. Fine. Now you've got to clean this stuff up. I guess the first step is taking the third party out of it. That's kind of the goal here.

19:45I mean, I think what they want to do is have these boosters, give that money to the athletic department, donate it, and we will use it as part of our revenue because we're allowed to now pay 22 % of our revenue to players. So that'll boost the overall average that these schools are getting, right? It's pegged to an average. Give us the money and we'll pay. So this coming season, theoretically, the schools are going to have about$21 million, the schools that are part of this settlement, to pay players directly. And so they want to say, look, that's the money. That money we don't have to put into any kind of fair market value assessment.

20:22We can just give as much as we want as we see fit, and we will spread it out among different programs, different athletes, and we'll figure it out. It's basically like we're going to have payroll and salary cap management and GMs who are going to have to do that job, but don't go outside of that. Because the main thing they're worried about is competitive balance. When Phil Knight is willing to spend as much as he's willing to spend to support the University of Oregon, that's a problem for a school that doesn't have a billionaire patron, right? And so they're trying to make it a relatively level playing field, which is the whole point of salary caps and salary structures and professional sports in general.

20:59But again, those are all part of collective bargaining agreements, It's what gives them legal standing. And I think this, you know, basically the argument is this is antitrust behavior. Like you're being a monopolist if you tell people they can't sign a deal. Like how does the NCAA have the authority to tell two parties that they can't make a deal for as much money as they feel like? The answer is in the case of the professional leagues, well, we have a collectively bargained agreement. So everyone's signed on to it. And collectively bargained agreements generally have an antitrust exemption. So we're allowed to restrain this kind of behavior.

21:35NCAA is hoping that they can use a class action settlement to accomplish the same thing, but there really is no real precedent for that. Do you feel like from where you sit that CBAs are inevitable in college sports? I mean, it's interesting. I don't know where you go from here because getting to CBAs is its own challenge, and they've spent so long resisting that. And there is no current framework really for it. And you've got the problem of the rules for public schools would be different than the rules for private schools. At what level would players be represented? Who would be representing them at the table and who would they be negotiating with?

22:08None of these questions are answered. However, the CBA as a structure is obviously the solution to all of these problems. It's a solved problem. How do you pay athletes in an equitable way that is legal and that allows for competitive balance between teams? You do a collectively bargaining agreement. The transparency is all spelled out. It's all there and we know how it works. It's a solved problem. Baseball did it decades ago. Other leagues have adopted it. Works. But how you port that to college sports is no one's figured out yet. I think a lot of people, a lot of college athletes are forgetting, and you brought it up, about name, image, and likeness.

22:48Well, you've got to build a name first to cash in on that, which means you've got to play the doggone game. And if you don't play the game, you don't build a name. Hey, that rhymed. That was good. Which came first, the chicken or the egg? It's like, hey, guys, you want to build the name? Caitlin Clark's a classic example. She built the name on the court. And now she made a boatload of money from endorsements. And I guess I'm trying to pass that on. Maybe that's something that needs to be schooled into a lot of the college athletes. You've got to put the horse before the cart. Exactly. Yeah. Exactly.

23:27Yeah, I think that's true. I think the counter argument is like, look, leagues and conferences and schools are making a lot of cash off of our work, right? People are tuning in to watch us play. And so we should get a piece of that, right? And that's what this revenue sharing part of the agreement is really about, right? But what is that money for? It's for the performance on the field and on the court. And no one can quite admit that because that means you're an employee, right? And so they've tried every other way. You know, NIL. Saying that out loud would just change the game completely. Even in this settlement, they're not exactly saying schools are going to pay directly to players is for their play.

24:07They're basically saying it's revenue sharing money and it's still NIL because the players will be giving over some of their name, image and likeness rights to the schools. They don't want to open that kettle of fish, but it's like it's open. Right. In practice, it's there. And everyone knows what this is about. Well, yeah. I mean, it's like, think about it. before all of this came about, and I'm going to openly admit, before all of this happened with the can of worms of NIL, I was like, that's right, college athletes, you make that money. You get what you can. And then somebody didn't think it through.