Wyc Grousbeck stood outside the gorgeous townhouse on the Upper East Side of Manhattan and took a breath. He’d been in and closed dozens of million-dollar meetings before, but none like this one in the summer of 2002.
In a few seconds, he planned to enter the building, go to the second floor, shake hands with a man he’d never met, and ask him to sell the Boston Celtics. And the Celtics weren’t for sale.
None of that made him nervous.
He was thinking more about his life. He had degrees from Princeton, Michigan, and Stanford. He’d graduated from law and business school. As a venture capitalist, he’d invested in software and biotech in Silicon Valley and made a lot of money, enough of it to be taken seriously in this meeting. All those things were a part of him, but they weren’t what made him feel most alive.
He was at his authentic peak when connected to team sports, just like he’d been as a college rower with his championship crew. He’d searched nearly twenty years for an echo of that, and now at forty-one years old, he was convinced that this would be the last of Boston’s professional teams to sell in his lifetime.
He was a Celtics fan from Worcester, Massachusetts, so he knew about the team’s legends and history. He didn’t know much about the owner, Paul Gaston. He had two dealmakers from Boston set up a meeting at Gaston’s office in New York. Before that introduction, Grousbeck looked up the publicly traded franchise’s income statement and got an idea. The Celtics hadn’t been to the NBA Finals in fifteen years, and they’d ended the 1990s with seven consecutive losing seasons, but they still made money. He’d factor that into the big offer he planned to make for the team.
Things moved faster than he expected when he met Gaston. He’d gone over numbers in his head, with a ceiling of what he couldn’t exceed. He’d rehearsed how it would go, and in his vision, things were more formal. In reality, he was barely in the office, just after the pleasantries, when Gaston got right to the point.
“Why are we here?” he asked.
“I’d like to buy the Celtics,” Grousbeck replied.
“But they’re not for sale.”
“Well, there must be a number, a crazy number, that you’d sell them for.”
Gaston’s family had owned the team since 1983. It was theirs for the franchise’s fifteenth and sixteenth championship seasons, in 1984 and 1986. It was theirs for the lean years, too. Gaston didn’t live in Boston, and he’d been to only a handful of his own team’s games in the previous three years. This just might be his time to cash out.
“There is a crazy number,” he said. “It’s $360 million.”
Grousbeck couldn’t believe it. It was as if Gaston was in his head. That was exactly his maximum figure.
When he saw that income statement with its numbers, slim but still positive, he’d put together his strategy then. He thought he could offer $360 million if necessary, borrow half of it, and pay it off with the team’s profits. It would support some debt, and it would be similar to paying a mortgage.
Yes, that was one half of the plan.
The other?
He’d have to raise it with investors in Boston, and he’d have to do it quickly. He’d also have to ask those investors, who were trained not to make emotional financial decisions, to do just that. Not to mention the crazy number—it really was insane. It was $75 million more than the Dallas Mavericks had sold for two years earlier, and they had their own arena. The Celtics were arena tenants.
There was no credible comp for what Grousbeck was about to say and do.
“If I pay you $360 million, you’ll give me the Celtics?”
Gaston hesitated briefly. Then he nodded. Grousbeck had already decided that he wouldn’t negotiate for a better deal. He wouldn’t suggest a knockdown by $10 or $15 million. The Celtics were right here in his grasp, in New York City. If he screwed this up, if Gaston changed his mind and auctioned off the Celtics, he’d be out of his element. He’d never win an investment-bank auction. He had to do this now. He had a joke in his head: If I’d gone to Harvard Business School, I’d still be doing the math on this. But I went to Stanford, so I’m just going to fucking do it.
He smiled and extended his hand.
“You’ve got a deal.”
The meeting had been intense, if short—no more than twenty minutes. After the rush of it was over, and after Grousbeck laughed at himself for violating every principle taught in business school, it started to sink in. He’d agreed to purchase the Celtics for a record price, and he needed a monied team of investors to help him make it official. He had a commitment from his father, Irving, cofounder of Continental Cablevision and also a business professor. He needed his father’s contribution and the contributions of, roughly, ten to twenty others. If he asked everyone to contribute $20 million, it would be ten. If the ask was $10 million per, he needed twenty. His first surprise on the fundraising trail: His projection of needing to raise $180 million was off; the actual number was closer to $200 million.
As he searched for people who would, as he put it, “be in because it’s about Banner 17 and not a 17 percent return on your money,” his wife thought of someone who could partner with him. His name was Steve Pagliuca, also known as Pags.
“He must be some basketball freak,” Corrine Grousbeck reasoned. “He’s got a basketball court in his house.”
She was right. Pags was the father of four, and he’d installed the home gym for his basketball-playing kids and himself. Pags knew Grousbeck, but not well. They lived in the same Boston suburb, Weston, and their daughters, Stephanie Pagliuca and Kelsey Grousbeck, were seventh-grade classmates.
Pags played in college, on the freshman team at Duke. He’d never gotten over ball, even after going through Harvard Business School and working at Bain Capital, a global investment firm. When Grousbeck initially called with a request to invest, Pags was in his office and smiled at his desk. When another call came a week later, with an offer for Pags to be a co-owner, he showed up at Grousbeck’s house, beaming and wearing Celtics gear.
Then he looked at those income statements and had a thought that he tried to quiet: How can somebody pay $360 million for something that has declining attendance and hardly makes any money? It doesn’t make any sense to me.
He was in anyway.
Soon after agreeing to partner with Grousbeck, the scrutiny of NBA life became real to him. In late September, he and Grousbeck walked into a packed press conference at the Celtics’ practice facility for the sale announcement. Pags had negotiated bigger deals than this one. At Bain, they’d bought Domino’s as a private company, taken it public, and watched it become a giant. They’d founded Staples as a venture capitalist company, and it became huge, too. Yet those deals didn’t draw a crowd like this.
Everyone was paying attention to what they did and said, including a man in the balcony who was staring at them intently. He was Jim O’Brien, set to enter his second full season as the Celtics’ head coach. Grousbeck and Pags made eye contact with him and gave him a wave, and the stare became a glare.
They had a problem. No one had told O’Brien about this. And since they had just been introduced as the owners—even though they were far from the money target—they’d eventually be the ones to explain to O’Brien what this meant for him and everyone else on the basketball side of the business.
In a lot of ways, O’Brien had saved Paul Gaston’s Celtics. He’d taken over as head coach after Rick Pitino, who had been installed as a franchise savior in 1997, walked away from the job in January 2001. Pitino was a complicated mix of brilliance, generosity, intensity, and, most notoriously, impatience.
Everywhere he went in his coaching career, his teams delivered more than anyone expected. He led a Providence College team with no first-round NBA prospects to the 1987 Final Four. His 1996 University of Kentucky team, stacked with six first-rounders, won the national title. But even that came with something extra: a twenty-seven-game winning streak. One of those high draft picks from Kentucky, Antoine Walker, was selected by the Celtics one year ahead of Pitino’s arrival.
When Pitino got to Boston, he planned to surround second-year star Walker with talent and then win games fast. He got the city’s attention in his first game, a win over Michael Jordan’s Bulls, and then toasted with the city afterward. He went to a sports bar, the Fours, across the street from the arena and savored every sip of victory. He coached the Celtics to a twenty-one-win improvement in his first year, but they still had more losses than wins, and the slow build toward contention made him miserable.
He wanted quick turnarounds with everything, including physical appearances. He was so obsessed with having well-conditioned players that he raised the stakes off the court. In Boston, he was the weight watcher who required members of his staff to reduce their size. The first general manager he hired, Chris Wallace, got a letter from Pitino, and the message was simple: drop weight. Wallace lost fifty-three pounds. Pitino rode him relentlessly but then bought him a $3,000 suit from a high-end boutique, Louis Boston, at the end of the journey.
Pitino was generous: He once endorsed a $25,000 check he’d received from a speaking engagement and dropped it into an offering basket. Saint Patrick’s Church in Natick needed funds to help retired nuns and priests. The request happened to be made on a morning when Pitino had slipped into Mass there, not far from his house, before going to work.
Pitino was insecure and offbeat: When he took the job in Boston, one of his conditions was being named team president, a title that Red Auerbach always had. While Pitino had an eye for talented coaching and support staff, with his hiring of O’Brien, Wallace, and Frank Vogel, he also relied on the other Red. He was a high school home ec teacher known as Jersey Red, who cooked for Pitino when he was a college student. Jersey Red, a Pitino sycophant, was more privy to basketball decisions than Auerbach. He was so much a part of Pitino’s inner circle that he traveled on the team plane, shared staff members’ hotel rooms, and occupied a seat in the draft room.
The Celtics’ atmosphere was wild and unpredictable. It could have derailed if the steady O’Brien hadn’t stabilized things in 2001. He earned the trust of the team’s two best players, Walker and Paul Pierce, and they immediately responded to his hands-off approach. In fact, “hands off” had become the organizational mantra, with everyone taking ownership of their own plots. Wallace and Leo Papile handled basketball operations, O’Brien coached, and Walker and Pierce called the shots—lots of them—on the court.
That’s why Grousbeck and Pags got that glare. No one just dropped in like this. Who in the hell were these guys? There was already an undercurrent of resistance, and they hadn’t done anything yet.
Gaston wasn’t an owner who hovered, so the franchise often ran itself. When Wallace made a controversial trade two months earlier for former All-Star Vin Baker, Gaston didn’t stop by the office or call for an exhaustive review. As it was, Baker had four years and $50 million remaining on his contract, and his game was in decline. It was an open secret around the league that Baker had a drinking problem, although not many knew the extent of it. The trade was a mistake, on multiple levels, and it wouldn’t be long before the new Celtics owners would ask questions about why it was made.
In their day jobs, Grousbeck and Pags craved precise information and details. The Celtics’ way of doing business in every corner of the organization was about to change.
As November approached, Grousbeck and Pags still didn’t have the money they needed to satisfy Gaston’s terms. He’d given them until the end of December, so they needed to continue meeting with investors. It was what they spent most of their time doing. There was the pressure of the deadline and the pressure of getting into a business that they didn’t know well enough.
Fortunately for them, New England was populated with wealthy businesspeople whose love for the Celtics rivaled their love of business. Bob Epstein, cofounder of the Abbey Group, a high-end real estate company, was one of those people. He grew up in Newton, a quick Green Line trip away from Boston Garden. As a kid, he’d played basketball constantly and once had a brief conversation with Bob Cousy; he considered that chat a highlight of his childhood. But that was years ago. In 2002, he knew better than to put a lot of financial faith in a pro sports team. One of his friends warned him, “Forget everything you know about business when you get involved in pro sports.”
It didn’t matter. It was the Celtics, and he’d dreamed of owning them for years. Once, in his thirties, he thought of making an offer for them and soon realized he and his group were in over their heads. He comforted himself after that with his own mission statement: I buy real estate; I don’t buy companies. And then Grousbeck called, looking for a second co-owner. He’d never said no to the Celtics in his life, and he wasn’t going to do it now. He was in.
One Friday afternoon, it became obvious that Grousbeck felt the enormity of what was at stake. He was agitated. He had a Monday-morning meeting with even more investors, and he wanted to be sure he could answer any questions they had. But he knew he was deficient in a key area. Surrounded by members of the consulting group the Celtics hired, he said aloud, “You know, I don’t understand the salary cap well enough yet. I just need to know. What can we spend, and what can’t we spend? What kind of players can we get? I just need to know more.”
He was frustrated, so he didn’t notice that his complaint spurred a thirty-year-old case team leader of consultants into action. He was an analytics savant, an MIT graduate who secretly wanted to be involved with basketball one day. His name was Daryl Morey.
He started making phone calls to the NBA office immediately after Grousbeck spoke. He was dogged with this assignment, and he’d been persistent enough to get the NBA commissioner, David Stern, on the phone.
After a brief exchange, a plan was in motion, and suddenly Morey was out of the room in Boston and on his way to NBA headquarters in New York. Stern had agreed to open the building to him for the weekend, and a team of half a dozen NBA staffers gave Morey a rushed tutorial on the various pockets, spins, and twists of the salary cap. He spent all day on it Saturday and parts of Sunday.
He left New York on Sunday and called Grousbeck.
“I prepared a memo,” he said.
Did he ever. The memo was a beautifully presented booklet with a fountain of data. They spent hours going over the major points of the cap, with Sunday night turning into the early hours of Monday morning, and Grousbeck was prepared for his meeting a few hours later. He also had a new hire.
“Daryl, you’re going to look good in green,” Grousbeck said. “You’re coming with me.”
After Grousbeck and Pags reached their financial goals, they were able to focus fully on the organization. It had the Celtic quaintness and charm that they all loved, but the franchise was outdated. That meant upgrades, and most of those would be welcome.
In basketball operations, no one in the office had computers. They were using calculators and notebooks to tally salary-cap information. Their international scouting wasn’t competitive at a time when the league was becoming more global. They were spending about $6 million in operations, well below the top teams in the league, and Pags’s recommendation was that the number had to at least triple.
On the court, with front-row seats at opposing baselines, Grousbeck and Pags were able to see the best players in the world up close. Grousbeck didn’t view himself as a basketball expert, so he knew that he didn’t have the vision to remake the basketball-playing Celtics. He could do that in other parts of the organization by expanding its sponsorships, reenergizing its sales approach, and embracing the concept of marketing, which the organization had been historically reluctant to develop. It was as if the love of pure basketball couldn’t coexist with an aggressive and fun marketing plan, which was somehow viewed as the ugly other.
One of the first things Grousbeck did when the sale became official was write a letter to each season ticket holder. He introduced himself and the group, said he wanted to win a championship, and left his email and phone number if anyone wanted to share feedback.
Grousbeck knew he could identify creative and quick-thinking individuals, collaborate with them, and make the total Celtics experience more modern and lucrative. He was content to find them through his own experience, as he did with Morey (his vice president of strategy and information), or by leaning on the advice of his friends in business.
One week, he had multiple meetings in which Rich Gotham’s name came up. He didn’t know Gotham, but he took that as a sign that they needed to meet. Grousbeck got his number, told him that he sounded like someone who would be good for the Celtics, and then told him that, if not, “the worst case is you can tell me what you think of the team and consult a little, and I’ll flip you some playoff tickets.”
Grousbeck had done his homework, so he knew exactly what he was doing. Gotham was an internet media executive with a company named Lycos, yes, but he was also a Celtics fan from Milford, Massachusetts. He grew up idolizing Larry Bird, Kevin McHale, and Robert Parish. This was a dream offer. Grousbeck was prepared for him to accept it and had a title waiting for him when he did: vice president of sales and marketing.
The new strategy of the Celtics was simple. Find the best people, and waste no time hiring them. That could be done efficiently on the business side. If only that were the case for bringing in players. Pags was all in, spending the bulk of his time in basketball operations. He sometimes slept on the couch in the office there, trying to understand everything he could about running an NBA team in general and the Celtics in particular.
There were some good things to see early in 2003. Pitino may have tried to trade every other player on his roster years ago, but he never thought of moving Paul Pierce. He knew how fortunate he was that the Celtics had been able to draft him in 1998. Pierce, a Los Angeles kid who attended the University of Kansas, was supposed to be a top five pick that year. He didn’t visit teams with lower selections. The Celtics had the tenth choice, and when Pierce started to slide toward them, Pitino got nervous.
“What’s wrong with him?” he asked Wallace. “What do these other teams know about him that we don’t?”
He was too good to be coming their way, and the rest of the league finally figured it out just before Boston picked. The Celtics got multiple offers for their slot, with some packages including as many as three first-round picks. They stayed put and took Pierce. In his fifth season, he was no longer a basketball secret.
He was six foot seven, and he had a knack for looking at a player directly in front of him, fifteen feet from the basket, and then suddenly having that same player on his hip while Pierce was at the rim. It was a trick that defenders couldn’t quite figure out.
Pierce was faster than he looked, thanks to his expert footwork and uncanny instincts. He was strong near the basket, too, so he could take a hard push and score at the same time. He looked around the league and saw peers, like him, who could score with ease. There was Kobe Bryant and Allen Iverson and Tracy McGrady. But no one, not those three and not even the big men like Shaquille O’Neal and Tim Duncan, attempted and made more free throws than Pierce.
In fact, after he put 42 points on the Los Angeles Lakers in the spring of 2001, an approving O’Neal excitedly declared, “Paul Pierce is the motherfucking truth.” The comment stuck, with edits, and Pierce had a nickname that was as simple and thorough as everything he brought to a game: “the Truth.”
He and Walker looked for each other on the court constantly, and it wasn’t unusual for the six-foot-nine Walker to venture to the high post and call a play for Pierce to post up. They’d mastered that two-man game, and it was a big reason that for three years in a row, Pierce led the Celtics in scoring while Walker topped them in assists.
In February, both Walker, twenty-six, and Pierce, twenty-five, represented the Celtics in the All-Star Game. They had the profile of two young building blocks for a team on the rise. But Grousbeck and Pags didn’t see it that way, and neither did an opinionated former Celtic, Danny Ainge. Pags and Ainge were both board members for Hall of Fame quarterback Steve Young’s Forever Young Foundation. They were friends who loved basketball, so conversations about the Celtics were inevitable.
Ainge had it easy. All he had to do was watch the games, share his thoughts on what he liked and didn’t for his TNT audience, and then go home. Pags, meanwhile, was one of the people charged with fixing it. He, Epstein, and Grousbeck never told Wallace that they were looking to hire someone who would become his boss, but Wallace knew they weren’t happy. They were accustomed to excellence and success in their industry, and they had the same expectation for the Celtics.
The Baker trade had become such a costly and embarrassing disaster that it followed Wallace wherever he went. He was driving on Cambridge Street, near the arena, with his wife and six-year-old son. At a red light, a man in the car next to Wallace looked, recognized him, and motioned for him to roll down his window.
“You ruined our cap, Wallace!” he yelled. “Terrible trade.”
Baker never became a starter during the season, and as the playoffs approached, he was suspended for them. He was headed to rehab. He averaged five points and four rebounds, negligible production for such a substantial salary. It was awkward to discuss, but it was obvious that Baker was fighting for his sobriety and the millions remaining on his contract.
Beyond Baker, there wasn’t ownership excitement about how the Celtics were built. From afar, Ainge thought they were scrappy and defensive-minded, but he actually saw a team getting worse. He also didn’t see the two stars that many people in Boston did. He saw one, Pierce, as critical to any championship plan the Celtics had.
Pags knew the ownership group had to do something about it. They’d all structured complex multimillion-dollar deals on their own, but they wanted a blessing of sorts before they moved forward. Auerbach had arrived in Boston for one of his organizational check-ins, so Grousbeck and Epstein decided to get his advice on what to do next.
“Red, we’re going to be searching for a new GM,” Epstein said. “Can you think of anyone we should be talking to?”
Auerbach looked at the two men. Whether they followed his suggestions or not was secondary. He liked that they sought his opinion.
“Oh, I can think of a couple,” he said. “Call Wayne Embry. Or Danny Ainge.”