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09-27-2002, 04:09 PM
Celtics sold to venture capitalists

By Teresa M. Hanafin, Boston.com Staff, 09/27/02

The Boston Celtics basketball team is being sold for $360 million to a partnership that includes venture capitalists Wycliffe K. "Wyc" Grousbeck of Highland Capital Partners and Stephen Pagliuca, a managing director of Bain Capital.

The partnership, called Lake Carnegie, also includes Grousbeck’s father, H. Irving Grousbeck, who with Amos Hostetter made a fortune in the cable business with Continental Cablevision.

The deal is subject to NBA approval.

General partner Paul Gaston said the team had become dear to his family, "almost like one of the children," since he took over the team in 1992.

"But things change in life, and it's time to move on," he said during a news conference Friday.

"As long-time community residents and Celtics fans, our goal is to build on the success that has already been achieved by the team's strong management, coaching staff and players," Wyc Grousbeck told the Associated Press. "We look forward to years of involvement with the greatest sports team ever."

About 51 percent of the Celtics is controlled by general partner Gaston, son of Donald F. Gaston, who bought the Celtics from Harry Mangurian in August, 1983. Although the purchase price was not disclosed at the time, it was believed to be $15 million to $18 million.

The rest of the team is publicly owned, with shares traded on the New York Stock Exchange (symbol: BOS). Check the stock price. Many of the investors are fans who own a share or two as a novelty item.

Wyc Grousbeck apparently has wanted to own a Boston sports team for awhile. In March, Globe business columnist Steve Bailey reported that former Red Sox general manager Dan Duquette tried to stay with the team by telling the new owners that he could bring big money to the deal.

According to Bailey’s sources, Duquette put bidders Tom Werner and Les Otten together with Grousbeck, who was offering to invest as much as $125 million in the team. (Duquette wanted to move up to president for his role as matchmaker.) The talks evaporated when Florida Marlins owner John Henry showed up with his millions, Bailey reported.

The Celtics have won 16 world championships, and although they have not hoisted a banner since 1986, they are considered a desirable sports franchise because of the team's storied history and loyal fans.

The Celtics become the second historic sports franchise in Boston to change hands this year. The Red Sox were purchased by a group led by John Henry earlier this year for $700 million, including debt.

Wyc Grousbeck

According to Grousbeck's bio on the Highland Capital Website, he has had a particular interest in start-up and early-stage medical technology and services companies.

He has been a director of AccentCare, Atomica, Conor Medsystems, and NuGenesis Technologies, and has been involved with Radiant Medical. In addition, he led Highland's investments in several now public companies, including Curis (Nasdaq:CRIS), EXACT Sciences (Nasdaq:EXAS), GenVec (Nasdaq:GNVC), Medscape/Medicalogic (Nasdaq:MDLI), Odyssey HealthCare (Nasdaqi/expressions/face-icon-small-blush.gifDSY) and SoundView Technology Group (Nasdaq:SNDV).

The site says Grousbeck is on a leave of absence.

Before joining Highland in 1995, Grousbeck was founder and president of MedWise, a start-up consumer medical information and research company. He also was director of planning and development at Glycomed, a biotechnology company in California. From 1986 to 1990, He practiced venture capital and start-up company law with Brobeck, Phleger & Harrison in Silicon Valley. He is a former national champion oarsman.

Grousbeck holds a bachelor's degree in history from Princeton, a law degree from the University of Michigan Law School, and an MBA from Stanford Business School.

He sits on the boards of several charitable organizations, including The Horizons Initiative, the National Braille Press, and Noble & Greenough School.

H. Irving Grousbeck

Wyc Grousbeck's father is a special limited partner at Housatonic Partners, another venture capital firm. According to his bio on the company Website, he is a consulting professor of management at Stanford Business School, where he began teaching in 1985.

From 1981 to 1985, Grousbeck was a lecturer at Harvard University's Graduate School of Business Administration. He was a co-founder of Continental Cablevision, where he served as president from 1964 to 1980 and chairman of the board from 1980 to 1985. Continental Cablevision was sold to U.S. West Media Group in November, 1996 for more than $11 billion.

Grousbeck is a graduate of Amherst College and the Harvard Business School. He is on the board of directors of Ancora Capital and Management, LLC; Carillon Assisted Living, LLC; Road Rescue, Inc.; Alta Colleges, Inc.; Rent-Wise, LLC; Med-Mart, Inc.; Wind River Environmental, LLC, and the Hewlett Foundation.

Stephen Pagliuca

Pagliuca joined Bain Capital in 1989 as a managing director. According to his bio on the company Website, before joining Bain Capital, he was a vice president at Bain & Co., where he managed client relationships in the information services and health care industries. He also was involved in developing Bain & Co.'s turnaround practice.

Previously, Pagliuca worked as a senior accountant and international tax specialist at Peat Marwick Mitchell & Co. in the Netherlands.

He holds a bachelor's degree from Duke University and an MBA from Harvard Business School. He is a certified public accountant.