Is there a potential snag in the Boston Celtics sale looming? Perhaps, but it is not yet time to hit alarm bells based on what we are seeing in the reporting from Axios business editor Dan Primack in a recent article on the topic. Per Primack, the purchase of the team by private equity magnate Bill Chisholm from current majority owners Wyc and Irv Grousbeck is at risk of running afoul of NBA rules regarding the permitted percentage of private equity ownership.
It seems that Sixth Street Partners, a contributing investor in Chisholm’s bid, currently represents an unallowable amount of the overall percentage of the funds being used to purchase the team from the Grousbecks. “Chisholm, the club’s presumptive new control owner, has committed less money to the two-part deal than has Sixth Street Partners,” writes Primack, who notes this is disallowed by the league’s rules, sharing that “a PE fund can have the lesser of 20% or below the percentage held by the control owner (who must hold a 15% minimum stake).”
According to the Axios reporter, this leaves two options for Chisholm. The first is that the presumptive new owner finds enough additional investment to lower the overall percentage coming from Sixth Street Partners to an allowable level.
The other would be a request to the NBA for a waiver, given the historic valuation of the team in the purchase. Primack notes that such a request, if successful, could transform private equity firms approach to investing in NBA teams.
Given that potential outcome, we are less inclined to think the NBA would grant such a waiver, and instead believe the league would likely grant Chisholm more (but limited) time to get his investments in order for a legal bid — or perhaps force the team’s current ownership to accept an alternate bid, such as that proffered by the group led by current minority owner Steve Pagliuca.
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This article originally appeared on Celtics Wire: Is there a potential snag in the Celtics sale looming?
