Clueless C's Owners Plan To Extend O'Brien/Wallace'Papile's Contracts

[Way Of The Ray <wayray@xxxxxxxxxxxxx>]

And you thought Gaston was bad.....

Addressing the issues

In a wide-ranging interview, new Celtics owners sit down and discuss
business, personnel, goals

By Shira Springer, Globe Staff, 1/10/2003

he new Celtics owners officially have been on the job for 10 days, and
in a series of recent conversations, revealed some of their long- and
short-term business and basketball plans for the franchise. They want to
continue working with coach Jim O'Brien, general manager Chris Wallace,
and director of player personnel Leo Papile for the ''indefinite
future.'' To reach their competitive goals on the court, Wyc Grousbeck
said yesterday he wanted to extend O'Brien, Wallace, and Papile beyond
their current contracts, though the new owners will not deal with
contracts or enter negotiations until after the season, believing it to
be a distraction.



Grousbeck added that the new ownership would also like cocaptains
Antoine Walker and Paul Pierce to remain with the Celtics for the rest
of their careers. He praised their leadership and ''devotion to the
team'' and called Pierce and Walker ''the building blocks of the
Celtics' next championship run.''

Wyc Grousbeck and Steve Pagliuca traveled to Washington Wednesday
afternoon to have dinner with team president Red Auerbach and discuss
all aspects of the organization. Auerbach, Grousbeck, and Pagliuca
talked specifically about the importance of player continuity and
renewing the tradition where ''Celtics finish their careers with the
Celtics.''

The four managing partners - Wyc Grousbeck, Irv Grousbeck, Bob Epstein,
and Pagliuca - recently convened for an interview at the team's Merrimac
Street offices. It was the first time all four had met since officially
taking control of the team. (Irv Grousbeck joined the group via phone
from the West Coast.) It was also the first time they spoke publicly
about their plans for the Celtics.

The far-ranging interview and subsequent conversations followed a
question-and-answer format and touched upon topics as diverse as the
luxury tax, the decision-making process in place, and recent officiating
at Celtics games.

The first local owners of the Celtics in 40 years have a ''20-year
perspective.'' They are all Boston-area businessmen and lifelong Celtics
fans, now learning about the NBA from the inside and developing an
ownership strategy markedly different from the Paul Gaston regime. They
will ''spend to win'' and will pay the luxury tax at least for the next
two years in an effort to keep the current core of players together and
to continually make the Celtics as competitive as possible. They do not
want the Celtics to suffer through ''boom and bust'' cycles. They will
not employ ''bet the farm'' strategies.

To keep maximum contract players Pierce and Walker in the fold while
attempting to improve the team, the new owners made a conscious choice
to be taxpayers, budgeting for both the luxury tax and a 13th player. As
they try to balance sound business sense with a fan's passion for
winning, the new owners must contend with the 12-player, $53.56 million
payroll inherited from Gaston. If player bonuses and the veteran,
minimum salary for a 13th player are added to the equation, the Celtics'
payroll could be as high as approximately $55 million in a year when the
luxury tax threshold is expected in the low $50 million range.

By the end of next season, the owners expect to pay as much as $13
million in taxes. Like other taxpayers, the Celtics' money will be
redistributed to teams that do not exceed the threshold. Since tax
revenue gets redistributed to their competitors, the owners do not want
to become long-term taxpayers and do not anticipate paying the luxury
tax every year.

The extra money spent on the taxes comes in addition to the NBA-record
$360 million they paid for the Celtics. Since the Celtics do not own the
FleetCenter and, as a result, have limited revenue streams, some
industry analysts have questioned the financial feasibility of such a
large investment. The new owners, however, pulled together the financing
for the deal in three months, which they and other observers believe
indicates the deal is fundamentally sound. Pagliuca also said they are
''not running this to be a purely profit-driven enterprise.''

When The Abbey Group, a local real estate development firm, became major
investors in mid-December, there was speculation the new owners might
build a new arena. The team's FleetCenter lease expires in 2011. With
regard to a new arena, Epstein, The Abbey Group's chairman and CEO, said
business owners naturally explore all options that might improve their
business, but stressed that the Celtics have a rent-free lease agreement
with the FleetCenter.

Wyc Grousbeck met with high-ranking FleetCenter officials yesterday in
an effort to make it ''the best possible venue for fans.'' It was the
first meeting post-ownership change, but the fifth the new ownership has
had with FleetCenter officials. Wyc Grousbeck said the result of those
meetings has been that ''all signs point to both sides being very ready
to work constructively.'' Although the Celtics will not decide ticket
prices for next season until March, Wyc Grousbeck said that ''some
prices may go up and certainly some prices will go down.''

Less visible changes may occur in the Celtics' business offices. Wyc
Grousbeck does not plan to announce any reorganization or changes in the
business organization in the next month, but said ''over the rest of the
season or a shorter period of time, I reserve the right to announce such
changes because I'm working on a daily basis evaluating it. We're going
to make sure that we've got the team in place on the court and on the
business side that we want to have for the next 20 years.''

He added that when a group of experienced businessmen with many business
contacts takes over an organization it ''would not be shocking'' if
changes take place over time.

Although Wyc Grousbeck will oversee day-to-day operations of the
franchise and represent the Celtics on the NBA Board of Governors, the
new owners have undertaken a team management approach. The four managing
partners will be charged with making the final decision on
recommendations from the basketball staff, as well as daily decisions
regarding other team operations. The four managing partners plus three
additional investors - Glenn Hutchins, Jim Pallotta, and Paul Edgerley -
will constitute the executive committee, which will review long-term
decisions and such matters as the annual budget.

Wyc Grousbeck plans to speak with the other managing partners every day
and executive committee members on a weekly basis. While allowing a
group of people to factor into decision-making raises concerns about
bogging down the process, the new owners believe good communication will
allow them to act swiftly when needed. Irv Grousbeck noted that in his
experience as a trustee and on boards of directors, he has never been
involved in a close vote and expects the same to hold true with the
Celtics.

This interview took place in Wyc Grousbeck's office, where the
screeching of the Green Line was heard at regular intervals. The space
last belonged to Paul Gaston, but according to other sources, the former
out-of-town, absentee owner never used it and the office served as a
lunch room for Celtics staffers. The Grousbecks, Pagliuca, and Epstein
along with his partners in the Abbey Group, David Epstein and John
Svenson, plan on being involved, visible owners. In their meeting with
Auerbach, Wyc Grousbeck and Pagliuca felt the Celtics president
encouraged an active role by the new owners. Auerbach will be attending
games at the FleetCenter later this month and will be sought out for
''frequent consultations'' by the new ownership.

The new owners have been spotted regularly at games, sitting courtside
and jumping to their feet when key baskets are scored. They have named
the company that will sign the Celtics paychecks ''Banner 17.'' And not
to worry, they have also preserved the names ''Banner 18'' and ''Banner
19.'' Equipment manager John Connor has ordered logo gear for the
ownership group. Last week, the new owners met with staff in the
business office and asked that employees try to wear something green
every day. When the Celtics make their playoff run, Wyc Grousbeck wants
''the whole town to be green.''

Q: Antoine Walker now has the opportunity to extend the contract he
signed in January 1999 and which runs another two years. Will you pursue
that option?

Wyc: ''I'm not going to comment on that, on specific contracts.''

Q: If you could make it happen, would you like to see Paul and Antoine
remain Celtics for the rest of their careers?

Wyc: ''Yes, that's the Celtics tradition. I specifically discussed that
with Red [Wednesday] night in terms of Celtics finishing their careers
as Celtics.''

Q: Let's now turn to coach Jim O'Brien. His contract runs out at the end
of next season. Do you plan to extend his contract?

Wyc: ''I'm not going discuss contract matters.''

Q: Will he continue coaching into the future with the Celtics?

Wyc: ''Yes.''

Q: Beyond his current contract?

Wyc: ''Yes.''

Q: Does the same hold for Chris Wallace? Beyond his current contract?

Wyc: ''Yes.''

Q: Leo Papile? Beyond his current contract?

Wyc: ''Yes.''

Q: Where do you stand with regard to paying the luxury tax?

Wyc: ''The long-term path to success does not mean quadruple damages to
other owners, who can then pay players with it. The problem with the
luxury tax is that it goes to other owners who can then use it to build
payrolls against us. That's the twist of the knife. That's why we really
don't want to pay it. Beyond the dollars and cents, it goes to our
competitors. So, that's the point to stress. Nonetheless, we're heavily
paying it.''

Steve: ''We're in a situation where we're paying it and we've recognized
that and we've budgeted for that. You don't want to be a long-term
taxpayer because it's not good for you. It's not good for competitive
balance. As a group, we budgeted for the luxury tax and to get a 13th
player in. The process is the management group runs through the
financial ramifications of recommendations by the basketball staff. We
really listen to management and go with management's recommendations.''

Wyc: ''We're going to pay it [the luxury tax] in years where we need to
do it to be competitive. But it's not going to be every single year. We
are planning to pay it next year heavily because we see a chance to win
next year and this year, and we're paying both years because of that.''

Steve: ''On the basketball side, we've asked the management to identify
additional areas that are not luxury tax-related like scouting and
development, European initiatives. They're going to identify those areas
which will get put into place to help them further the cause.''

Wyc: ''I would say, if we ever stop paying the luxury tax we'll be the
first to let people know. We're paying now and we're paying it next
year. Period. We'll be $10 to $12 to $13 million dollars into the luxury
tax, in debt to the luxury tax, by the end of next season. So, we're
taxpayers. I don't think that will ever even out. It's bad this year and
it's getting worse.''

Steve: ''I think the point Wyc is also trying to make is ...''

Wyc: ''We will spend to win.''

Q: In terms of the investment, was $360 million worth it?

Wyc: ''Priceless. There's only one Boston Celtics.''

Bob: ''Did you see the Bill Parcells quote about why he wanted to become
coach of the Dallas Cowboys? He made reference to the Dallas Cowboys as
one of the fabled franchises. He said, `It is like getting hired to
manage the Yankees or the Red Sox or to coach the Celtics.'''

Steve: ''Right from the Tuna himself.''

Q: Let's talk a little more seriously about your $360 million
investment. Do you expect or desire for this to be a profitable
enterprise, particularly given the fact that you don't own the
FleetCenter?

Wyc: ''The original philosophy of my father and I from well back in the
80's when we started thinking about sports was to have a winning team
and not lose our shirts, to not write huge checks every single year, to
find a winning, legendary team and find a way to make ends meet. We
named this Banner 17, not 17 percent interest rate.''

Steve: ''I think we recognize the community legacy of this team and
we're investing to preserve that legacy. We're not running this to be a
purely profit-driven enterprise.''

Q: It would seem if Banner 17 is the goal, then it is your belief that a
successful team can also be a profitable team. The more you win, the
more people take interest, the more people attend games, the more
playoff games you have to garner revenue. Correct?

Wyc: ''The point is we're in a growing league. This is a great league.
There's so much interest. I look in our stands. I don't know if we're 30
percent kids, 35 percent kids. There are kids in the stands. This is
family. In 20 years, this is still going to be a vital part of the
entertainment landscape. It's the Celtics. It's Boston, the No. 1 sports
town in the country. It's why we can afford to put a winning team on the
court. It's because of that kind of fan support.''

Q: What are your plans to generate revenue? What about a new arena?

Bob: ''You could look into anything. If you're going to own a business,
you're certainly going to allow every possibility of how you would
manage your business. I think right now we're playing in the
FleetCenter. We're under a lease. We will continue to work with the
FleetCenter.''

Q: What is the overall vision that you have for the Celtics? Are there
any organizations, in sports or not, ones you have been involved with or
not that you look to as a model for the Celtics?

Steve: ''I think the good news is that in this town you have an example
where the Patriots have been very successful. To have a fan-oriented
approach, a community-oriented approach is excellent, but I don't think
you can take any one organization. I think you have to take pieces, the
best, the best from a lot of organizations that are out there.''

Wyc: ''I think we also start with the Celtics. We've won 16
championships, more than the rest of the teams in this town combined.
We're working closely with Red Auerbach and right on through to actually
learn how they did it.''

Q: How will the new ownership work effectively with the basketball
staff, especially with regard to making quick decisions on personnel
acquisitions and trades?

Steve: ''We have a quick response process where they [members of the
basketball staff] will never be weighted down by the management,
executive committee. We've developed a quick response process so that
our basketball staff will have responses on basketball issues faster
than, we believe, any NBA team.''

Bob: ''I would expect there would never be a close vote. I would expect
there would be conversation, discussions.''

Steve: ''The group comes from business backgrounds where we appreciate
the relevance of data and an analytic approach. We've found when you can
get enough data and the facts, normally an answer is apparent to the
entire group. Even in the short period of time we've had so far right
now, when we get all the facts, we all come up with the same answers.''

Q: What more specifically are the steps you plan to take to make the
Celtics continually competitive?

Wyc: ''Adding character players. Our cocaptains right on through the
roster are character players. We've gotten to know them. Our coaching
staff has character people. I don't say that lightly. This is a
phenomenal group of people, in our opinion. It is an unbelievable group
of players, warriors, led by the cocaptains, led by Jim O'Brien and his
coaching staff.

''We're going to add people who, in their opinion, add to that mix,
positively. When you have that kind of character, you're going to be
able to come back from 21 points down. The good breaks will go your way.
Character counts. We just don't want to do the boom and bust and bet the
farm and then be horrible for a few years.''

Steve: ''We're going to support the basketball staff. We want to be
responsive and quick. We support any creative initiatives that come
through from the team.''

Q: What is the game experience like now as an owner compared to when you
were simply season ticket-holders?

Bob: ''I have to tell you it's really dramatic. It was pretty dramatic
just the prospect of this. Now, after three games, a win is exhilarating
and a loss is devastating.''

Wyc: ''It's a total difference. It's like casually dating vs. being
married. It is a totally different experience. It's all consuming. It's
all you think about. The wins are exquisite and the losses are
absolutely devastating.''

Q: Do you find yourself wanting to take your frustrations out on
referees lately?

Wyc: ''My wife did give me [NBA vice president of operations] Stu
Jackson's number. The other night, she heard Tommy Heinsohn giving out
the number and she wrote it down. But we did not call.''

Steve: ''We don't need to talk about the officiating. Tommy Heinsohn's
out front on that.'' [Laughter]

Q: Can you name five changes fans might see in the near term that will
demonstrate the type of imprint you hope to leave on the organization?

Wyc: Wyc, Steve, Bob, Irv, John, David. That's six. [Laughter]

Steve: ''I think you're going to see ownership showing up to games in a
big way, as you've already seen. Somebody from ownership has been at
every game so far.''

Bob: ''I think supporting them in games, in practices, every which way.
The information back has been that the basketball people have really
appreciated that. They like it. The owners' support is a big boost.''

Wyc: ''We'll probably let our kids have input on the music. They have a
few thoughts.''

Steve: ''But Wyc's going to paint his face green.'' [Laughter]

Wyc: ''I was turning a little green [Monday night as the Celtics played
Washington] when we threw the ball out of bounds. We have done nothing
in terms of looking at game presentation, but it will be addressed.''

Q: Dancers?

Wyc: ''No current plans and, by the way, it would be over my wife's dead
body.''

Q: Where would you like the franchise to be one year from now, five
years from now, 10 years from now?

Bob: ''NBA champion. NBA champion. NBA champion.''

Wyc: ''That is the only answer.''

Irv: ''I would just append to that. That is points one and two and three
on our list. NBA champions. But I think we can stand for a lot more than
that in community outreach in some of the things we've talked about,
fair dealing, setting a standard for organizational integrity, player
character. Certainly, one, two, and three are NBA champion, but there's
quite a list beyond one, two, and three that we aspire to.''

Steve: ''It would be great if we could be NBA champions and highly
integrated into the Boston community in a positive way. Hopefully, that
will be the legacy of this run.''

This story ran on page E1 of the Boston Globe on 1/10/2003.
) Copyright 2002 Globe Newspaper Company.