PE Uses Preferred Shares in Celtics Deal
An analysis of the Boston Celtics' ownership structure reveals a private equity firm financed a stake sale using preferred shares. This creative financing mechanism is altering control dynamics in professional sports, showcasing how PE is reshaping team ownership beyond simple equity investments.
The deal, led by private equity investor Bill Chisholm, valued the Boston Celtics at an initial $6.1 billion, potentially rising to $7.3 billion. This acquisition surpassed the $6.05 billion paid for the NFL's Washington Commanders, making it the largest transaction for a professional sports team in North America at the time. Chisholm, a co-founder of the tech-focused private equity firm Symphony Technology Group, led the consortium. Sixth Street, a global investment firm, was a major participant in the winning consortium, contributing over $1 billion to the investment. The firm has been an active investor in the sports industry, with investments in the San Antonio Spurs, FC Barcelona, Real Madrid, and Bay FC of the National Women's Soccer League. The deal was structured for the consortium to acquire a 51% controlling stake initially, with a full takeover planned by 2028. The use of preferred shares in private equity transactions offers a hybrid financing instrument that combines features of both debt and equity. For the issuer, it provides capital without the immediate cash-flow burden of debt service, as dividends can often be paid-in-kind (PIK), and it may be treated as equity by regulators. For investors, it offers a higher potential yield than debt, seniority over common equity in liquidation scenarios, and potential upside through conversion rights. The NBA began allowing private equity investment in 2021 to provide teams with a new source of liquidity as franchise valuations soared. The league's rules permit a single fund to own up to a 20% stake in a team, with a total of 30% of a franchise allowed to be owned by multiple funds. These investments are required to be passive, meaning the private equity firms cannot have any governance rights or say in team management. Initially, a single firm could invest in a maximum of five teams, but this limit was raised to eight in December 2025. This rule change was seen as a way to help franchises access the capital needed to keep up with rising valuations. Firms like Arctos Partners, which holds stakes in multiple NBA teams including the Warriors, Kings, and Jazz, have been prominent in this new investment landscape. The new ownership group, led by Chisholm as the team's governor, also includes Aditya Mittal and former majority owner Wyc Grousbeck as alternate governors. Grousbeck, who led the group that purchased the Celtics for $360 million in 2002, will remain as CEO, running day-to-day operations alongside Chisholm. The managing board now consists of a mix of individuals from the new and old ownership groups.
